Talent Pool or Brain Drain

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					Talent Pool or Brain Drain? Introducing the Public Service
Center for Public Service, Brookings Institution
January 19, 2000

M. Armacost: Ladies and gentlemen, I'm Mike Armacost and it's my pleasure to welcome you to
Brookings for this formal and public Launch of our Center for Public Service. This center is new. It
has a kind of a pedigree in the sense that we had a Center for Public Management for a number of
years. It did very excellent work. It largely focused on the devolution of federal responsibilities to
states and municipalities, did some interesting work on reinventing government. It was run by
nonresident directors, John DiIulio and Don Kettl from Princeton and Wisconsin, respectively. We
were fortunate enough to recruit Paul Light to Brookings about a year ago. It was with the express
purpose of having a resident director, changing the name, refocusing the agenda of the center and
giving it more operational style.

The purpose of the Center for Public Service is to undertake a progressive research agenda to define
the current state of the public service, and Paul defines that rather broadly to embrace the
government nonprofit agencies, private firms that are delivering public services under government
contracts and grants. And secondly to develop a pragmatic set of ideas for making the government
much more competitive in what has become a rather brutal struggle to recruit and retain talented
people.

The Center, I think, has quickly become recognized in the last year as a terrific place to go for
innovative thinking on the public service, and I was reminded of how timely this is on Saturday, at
the memorial service for Elliott Richardson, who died on the last day, I guess, of the last
millennium. Elliott was a great public servant. He had to be my first boss in the government. I came
in 1969 and worked as the White House fellow in his office. It was hard to leave—I found a college
teaching career—because everybody I associated with in that enterprise in his office were young,
they were exhilarated to be working on big issues, issues that involved defining the national interest,
helping with a lot of crises that affected Americans in general—I think issues whose resolution had
impact that seemed larger than one in comparable levels in the private service could have grappled
with. The pay wasn't great but nobody worried about it because everybody was having such a
wonderful time. It seemed the kind of public service that attracted and retained people.

Elliott worried a lot in his later years about preserving the public service. He used to say wryly that
part of the problem was that we probably emphasized the term public servant too much, and that
even those people who were above looking down on servants found it difficult to look up to them.
He was a member of the Volcker Commission, which report played such a significant role. I
remember saying many times that it was getting harder to provide the kind of incentives to attract
people with that balance of competence and loyalty which the public service needs competence in
order to get the public's work done efficiently, and loyalty to assure it's done in a way that's
consistent with the direction from those who risk themselves at the ballot box.

It's hard to look at the public service these days without, if not despair, at least real concern. Those
in the career service have seen for years a vast proliferation to the number of political appointees,
layering of the government of the sort that Paul has written so amusingly about. And a deflation of
the currency of respect which has traditionally been accorded to the public service. So naturally
responsibilities in the career service seem to be contracting and it gets harder to get things done.
Meanwhile, the political appointees face this clearance and confirmation process whose self-
righteous finger-pointing is akin to a witch hunt. Very often there seems no aspect of one's personal
life is too trivial to escape investigation. Just filling out the forms seems to be a protracted and
expensive ordeal. I have to confess in my own case filling out financial disclosure forms was rather
embarrassing, I could do it so swiftly. I didn't have many details to fill in.

In any event, I think that we could all perhaps debate the proper scope of government, but we
would all agree it has tremendously important responsibilities to fulfill. It's hard to see how it can
perform those responsibilities unless we restore to public service the respect it once enjoyed. These
are the issues which Paul Light is directing his attention to through the projects already initiated in
the Center. They are the issues which he has dealt with in such a convincing and interesting fashion
in his recent publications.

One, "The True Size of Government," explores how to manage the growing number of contractors
and grantees who are doing jobs that once were performed in-house within the government. His
latest publication, "The New Public Service," focuses attention on how the government can make its
careers more responsive to a changing world. So I believe already the Center has got its hands
around issues of great interest, great importance that are extremely timely. It is led by someone who
brings great experience to the word "rigorous scholarship," an unusual entrepreneurial player, and a
missionary zeal to transform the public service for the better.

I think the Center is already making a difference. That's why it's attracted substantial support from
foundations and individuals. I would be remiss if I didn't say that one of the reasons we were able to
get up and running fast was because of the very generous grant from the Dillon Foundation, a
generous gift from our chairman, Jim Johnson. And because the projects were well-formulated and
swiftly conceived and marketed, we are happy to say that in these first 12 months we've been
supported by very large grants from the Packard Foundation, the Pew Charitable Trust, Ford
Foundation, and an anonymous donor.

So we have great expectations for this center and we're delighted to have you join us for its
launching. We now introduce someone who in a sense is a reflection of this new public service. Jim
Johnson has worked in the government at a high level. He became lieutenant chief of staff for Vice
President Mondale, [and] he has worked in the private sector. He is chairman of his own consulting
firm, and he has worked with extreme success in this nexus between the two as CEO and chairman
of Fannie Mae, the private corporation that has done great things in advancing the public interest in
making affordable housing available to millions of Americans, and for six years he's been the
chairman of a nonprofit Brookings Institution, which covers .edu and .org.

J. Johnson: I'd like to extend a warm welcome to everyone. I'm just going to speak for a quick
minute, but I wanted to be here to underscore again our strong institutional commitment to this
endeavor. We think making public service a viable option for more and more talented young people,
more and people in our society, people who have broad array of background and experience is
vitally important to the success of our country. So I'm thrilled to be a part of this.

There is a very intense competition, as you know, these days for talented people. We are very close
to full employment and in a number of areas, key technical areas, scientific areas, and other areas, we
are well beyond the full employment mark where we have a tremendous velocity of movement of
people in these fields, a tremendous competition. In this area alone in the Washington, D.C.
metropolitan area there are tens of thousands of jobs going unfilled. So we are all well aware of the
fact that in order to attract people to government, give people an option for service in government,
we have to be very successful in shaping the kind of contribution they can make, the kind of
employment opportunities they have, the ability to come into government, leave government, come
back into government. We need to be very clever in competing for people who have a wide range of
other alternatives.

We also know that we need to do a better job over time of making government work successfully
and we know that from many of the experiences that people have had in the nonprofit sector, state
and local government, in the private sector, in the corporate sector, that there are many ideas that
will help the federal government operate more effectively. We need to get a regular exchange of
those ideas and a regular opportunity for people to contribute to make the government as effective
as it possibly can be.

So I'm just here to underscore our institutional commitment, to underscore my personal
commitment to do everything I can possibly do to make this Center for Public Service an important
success, and also to say how thrilled I am that Paul Light would lead this effort. Paul, as I am, is
from the upper Midwest. As I did at one time, was at the University of Minnesota, someone who I
feel a real kinship with and has done a remarkable job now of leading this area of focus on effective
government. He's written 13 books, four in the past decade for Brookings. He has done a
remarkable job of focusing now on exactly what government does, how it does it, what makes it
effective, what isn't as effective, and it's really a remarkable contribution, Paul, that you have made.

He now is wearing four hats at Brookings. He is of course the head of the Center of Public Service.
He's the Douglas Dillon senior fellow. He is vice president and director of government studies, and
of course a very active scholar on a wide variety of subjects. So I'm delighted to be here. My friend
Donna Shalala, I'm delighted that you're here, and the other members of the panel, but most of all
simply to say welcome. We're delighted that you're with us in this enterprise, and we'll focus as time
goes by on making all of us at Brookings even more effective in this arena. Thank you.

P. Light: I know it seems a little odd that I'm so critical of titles, and yet I'm accruing them. You
could de-layer and flatten Brookings in a single stroke by running me over, as I almost was run over
last night crossing the street in front of this building.

I came here to do a number of different things in terms of focusing on public service. I'm not going
to spend much time talking today about it because we've got wonderful representatives of the new
public service here. The mission of the new Center for Public Service is both to understand what's
going on out there, where there are these dramatic and important shifts in how we do the work of
government, who does the work of government, how we maintain accountability in a workforce
where you've got tiers of private and public and nonprofit government working together, as they are
in Milwaukee, where Goodwill Industries is delivering services and welfare to work under a contract
in Milwaukee County, but has a subcontract, as I understand it, at EDS for a little bit of help on
technology.

There is a government-to-nonprofit-to-private relationship and we see all of this stuff happening. It
feels a little bit like a bowl of Jell-o. You kind of see it moving and shaking and you don't exactly
know what's going on, but there are these big shifts underway that we're trying to document as we
study the state of public service today, and also struggle with how government can be competitive
for its fair share of talent in this very tight labor market. One of the issues we're struggling with in
the center is how do we develop a meaningful agenda of reform for making government
competitive, or more competitive for its share, as far out as we can see where government is going
to be competing, and we hope that Secretary Shalala will shine some light on that today.

I have the unique honor of introducing a panel here to my right of people who represent the new
public service. We originally were going to have little paste-on dots that you could put on your name
tags that would represent the different dots that you've been in during your career, like .org and
.com. I have been in four dots. I've been in .edu, .org, and a .com right before coming here. The
Pew Charitable Trust was and is a .com and behaves like a .com. Brookings is a .edu or a .org
depending on how you feel. It has both addresses because it has that history.

And actually, as I was looking through the records here of our panelists who represent one of those
sectors, actually they can claim a fair number of dots in their backgrounds, and I'm going to
introduce each one of them right now and talk a little bit about their backgrounds. But also I've
asked them to talk for five minutes or so about how their own careers represent the new public
service and what they see going on out there.

Let me start with Constance Berry Newman, who I've known for some years. She's currently the
acting secretary of the Smithsonian, which is one of these odd organizations which is actually a
.edu—[Laughter]. It's not as odd as Fannie Mae, which is a blend of dots. Some of these
organizations we deal with—the Smithsonian Institution is actually a .edu on the Web. It is a
government organization, so it's a .gov. It has significant educational responsibilities, a .edu,
although Connie Newman served for a time earlier in her career as a member of the adjunct faculty
of the Kennedy School, so she can claim a .edu. She has been in the private sector as president of
Newman and Hermanson Company, which is a .com. She has a distinguished and long history of
government service–

C. Newman: You don't have to say long.

P. Light: Well, multi-faceted, multi-job history. One of the characteristics of the new public service
is this multiple destination effect, so we see students heading toward the nonprofit, the private,
government, but there's also a lot of sector-switching that's going on out there, where students are
starting out in one sector and moving to another, and moving to another. Actually the most difficult
sector to move into right now from the outside of the government—if you don't start in
government, it's very difficult to move into government until you get to the more senior levels.

Connie has a sector-switching career, and she's moved within the sectors in a number of different
positions, and has a terrific and vibrant public-service career, that I would say is characterized more
by a .gov than any of the others, but still a significant .org and .edu history. It's just a delight to have
her here.

Fred Grandy has two levels of government service as well as a .com. He's from Sioux City, Iowa,
which is important because I'm from Sioux Falls originally. Much as I'd like to claim Minnesota, I
didn't know what hockey was until I went to school there. In South Dakota we didn't do it. Fred and
I had a little bit of a dust-up because we were talking about our respective baseball teams, and it is
true that Sioux Falls has a minor league ball club called the Canaries, the Sioux Falls Canaries. It's
not exactly the kind of ball club that invites fear among other teams—we're going to play the
Canaries. But they're a good team and they're good-hearted. [Laughter]

Fred Grandy has a very interesting career. He started his career after finishing college as an actor.
There are many facets of public management, public service that involve acting. [Laughter] I would
say that his career before entering public service was a .com, and I think he felt that pressure that
comes with being on the edge of the .com. He went back to Sioux City, ran for Congress, entered
government as a member of Congress, served on the House Ways and Means Committee with
distinction. Received a calling from the voters of Iowa to return to other than the .gov position, in a
bid for governor of the state of Iowa, and came back to Washington and became the CEO of
Goodwill Industries, which itself is a .org but it behaves in many places and many ways like a .com.

I've asked Fred to talk about sort of his experience with public service when he believes his career in
public service began. But it's a distinguished career pattern and there are several of you in this room
who are in .org's right now, and Goodwill Industries is really feeling the pressures, I think, of the
nonprofit sector right now to be competitive, to be aggressive, and to infuse the organization with a
real entrepreneurial spirit. I think that's really a challenge.

Our final panelist is Ed Gund, and I just have gotten to know him just recently. He's a delight. I was
introduced to him by Peter Harkness, the publisher of Governing magazine. I've wanted to meet
some people who are in the private delivery of public services, and Peter spoke so highly of Ed. I've
got to say, I came out of sort of a strong advocacy view of how to restore government and I'd like to
believe that people who are in private firms delivering public service have horns and are nasty and
difficult, and Ed just doesn't live up to it, although I haven't talked to his staff in detail.

Ed, like many people who are in the private sector, working with government under contracts and
grants of one kind or another, has a distinguished public service career of his own in government.
He finished his graduate work at Stanford with an MBA, but with a public management
concentration. Came here to the District of Columbia and worked on the water billing problem.

I thought of Ed yesterday as I was trudging around, slipping in front of cars and so forth, thinking
that perhaps he could turn his attention to that salt delivery issue. But he worked in the District of
Columbia government. He actually, according to his bio, had actually started his career after graduate
school as a program manager for the data processing training program of Internal Revenue Service,
.gov federal to .gov local. Then in 1984 he went to work for IMS, which is now part of Lockheed
Martin, and he is COO of this growing enterprise, responsible for delivering considerable amounts
of direct welfare-to-work training, as well as other services under contracts to state and local
government.

There you have it, really. Here in these careers, and we'll get to Secretary Shalala, who can claim
multiple sectors as well.

I ask each one of these panelists, and I'm going to start with Connie, I think, to talk a little bit about
their careers in the public service, or this general challenge of making government competitive. Then
we'll ask Secretary Shalala to talk for 15 minutes or so about the federal government in particular. So
Connie?
C. Newman: Thank you. Since I don't like talking about myself, I'm going to talk about something
else. In 1991 I prepared a paper, and here's the topic: The Civil Service: Rebuilding and Preparing
for the 21st Century. I mean, that was heavy. In preparation for this panel today I went back to that
paper to see whether or not I was brilliant at the time, should I be embarrassed about my findings
and recommendations, and was I smart enough to perceive Paul's enlightened theory of the new
public service. The review is mixed.

I had 60 issues, and I won't go through all of them, but the first was that there's a question about
whether or not there is the right environment and image, whether that has been established to foster
civil service of excellence. The question being whether or not it really was realistic to think that you
could have a civil service of excellence if you did not have an environment that fostered it.

We must all agree that there's a need for public understanding and respect for government and the
people who do the work of government, and the truth of the matter is, the general public didn't
then, and I think today didn't really understand, or was not realistic in its expectations about what
government could do for them and the relationship of that to their own lives. So what unfortunately
happens is that many conclusions about government and the people who work for government are
drawn from narrow dealings with an agency, some personal fit that somebody had about dealing
with the IRS, or some other agency, be it local or state level. Some of what the public thinks about
government comes, frankly, out of a thirst for dirt. And out of the fact that many people
campaigning for office find it very easy to use government and the people who work for
government as the issue, rather than dealing with the tough issues.

Therefore, then and now I do believe that the environment makes it difficult for this to be a career
that people seek, and for there to be great change in the quality of the way in which government
operates.

The second issue I dealt with, is government responsive to its public and organized to do the
government's business. Then and now I say that the answer is probably, not really. There is still a
great deal of work that needs to be done in the organizational structure of government, and the way
in which people come in to government, the classification system. Although this administration has
done some things to try to change that, there is still quite a bit that needs to be done to change the
organizational structure.

But more importantly, there's a great deal that still needs to be done to change the culture. That
means getting people at all levels to understand who it is that they're serving. I think it is so
surprising, often, when you query people about who their customers are, and the answer is often
other people in the agencies, rather than the general public. Until public servants realize that they
really are there serving the citizens and the general public, we're going to have a hard time getting
people moving toward excellence.

It also was then and is now, I think, still difficult to get people at all levels participating in the
decision-making about how to improve the service. This means there has to be real employee-
management-partnerships and I will say that the Clinton administration has done a great deal to try
to bring about a sensitivity about this. But we are not there. We are not close to being there because
often employees and their representatives, their unions say they want to be partners and want to
have a relationship, a power relationship in organizations. Until the other part of that, which is they
have to be accountable for the outcome, becomes very uncomfortable. And there are managers,
supervisors who don't want to give up power and turf, and frankly, often haven't been trained to do
so, making it difficult for the real effort at partnerships to have meaning. Then and now I think
there's a great deal of work that still needs to be done along those lines.

There is a need still to be able to recruit and retain, as in Paul's point, the best and the brightest, and
the system, no matter how many FPMs—for those of you who aren't in the federal government,
federal personnel management—manuals; they threw them all out. Well, they didn't really. They
didn't really throw them all out. There are still too many rules and regulations that make it frustrating
for anyone trying to select another person, promote another person, provide incentives. There is still
too much now.

Who is to blame for that? In part it is the government structure, but frankly in part it's veterans
groups. I'm not running for office, so I can say that. In part it's the unions because they are
protecting a turf that they have, and they believe that what they're doing is in the best interest of the
people that they represent. But in the long run it isn't even in their best interest. So we still have
much work to do there.

Then and now there is recognition of the importance of diversity in the workforce. Anyone who is
an employer has to know that it's about quality in the workforce. That's the real deal. But the
practical deal is, you're not going to be hiring anybody if you don't open up to women and
minorities because that's who's here. I think that people more and more are understanding that, but
there—you're looking pained. I'm almost through. There is a way to go.

The fourth and fifth issues I dealt with had to deal with performance management systems and
training and development, and Paul highlighted the importance of career development. I'll tell you,
we give a lot of lip service to that. We did then and we do now. But the first dollars, discretionary
dollars out the door when there is a budget crunch are the dollars for training and development.
People deep down in do not believe that there is a relationships between the dollars they spend on
training and the quality of the work that is done. And I don't know what it's going to take to have
people understand that.

Some of what it's going to take is what Paul is trying to get us to think about, is you're not going to
attract the best and the brightest if you don't build into the work environment a real pairing of
dollars to go with that for the development of the workforce, and giving them the opportunity to
move around because you have invested in them.

I contend that then and now that everyone was saying the right thing about preparing for the future
of managing the public's business with excellence. We have great rhetoric, and we know that the
public talks about expecting the quality of government services, that the public should expect
employees in the government to be helpful, ethical, committed to quality, but there is a gap, and
that's something that we can talk about later.

Was I brilliant? Should I be embarrassed by my thinking at that time? I'd say that my observations
still hold, therefore I was brilliant. Except that it has to be discounted by my missing Paul Light's
major point, that the government-centered public service career has been replaced with a new multi-
sector career. I feel stupid about this because as Paul pointed out, when I look back over my own
career in preparation for this meeting, I realize I have been across most of the centers. So really I'm
partially brilliant and partially very stupid. [Laughter]
P. Light: I think you're mostly brilliant. [Applause]

Fred, why don't you weigh in.

F. Grandy: Picking up on Paul's motif of who's .gov and who's .org and who's .com, let me take this
opportunity to confess openly and publicly, I am bi-dottal. I don't normally take an opportunity like
this to say this, but it seems to fit here because I represent Goodwill.org, which is the organization
of employment and training that many of you may know, at least through the donation of old
clothes. But I also represent shopgoodwill.com, which is our new tentative alternative to eBay and
Yahoo! and Amazon.com, which is a way to take all of that collectible stuff we get in our 1,700
stores around the United States and Canada and sell it in a new way that provides more money for
more Goodwill's to provide more services. That kind of brings what I wanted to talk about today in
terms of public service.

One of the things that I was asked a lot, when I first left the House in 1995, was what is it like
moving from the public sector to the nonprofit sector. The best way really to describe that is
something that happened to me accidentally. I was giving a speech in Atlanta and a guy got up to
introduce me. I'm sure what he meant to say was that I was a retired congressman, but he slipped
and referred to me as a recovering congressman, which is really something I like and have used ever
since. This whole idea of moving from public government, public payrolls to the private sector as a
kind of rehab is interesting.

But [it's] not that far off because when I think back on what I did when I was in the House, I was
involved in the early writing and passage of the Americans With Disabilities Act. I was involved
when I was on the Ways and Means Committee with the very early drafts, almost the Jurassic edition
of welfare-to-work, when we were just beginning to experiment with time limitation of benefits, and
I was also involved in some of the early attempts to kind of make job training programs more
customer-focused.

What has happened since I left subcommittees and full committees working on this and have moved
to a CEO position that now presides over the largest network of employment and training in the
United States, that stretches all the way from customers who have traumatic brain injury over to
moms just coming off welfare or individuals just coming out of prison, is I have effectively moved,
in my view, from the debate side of public policy to the delivery side. And that is an enormously
valuable perspective, particularly for somebody that used to be a lawmaker but never really got from
the corporate HQ down to the shop floor to see how well the laws worked.

And let me give you an example of how that is manifesting itself now. Obviously when you are in
the rehabilitation business, as Goodwill is, you are inclined to run programs that can be
controversial, not the least of which are the so-called workshops and shelter workshops, which for
years and years and years have been ways for people normally with profound mental illness or
mental retardation to do some form of work activity. If you followed this at all, you know that in
many cases these programs can be abusive. There's really perhaps more adult daycare than there is
work there, and it's been a somewhat controversial provision, and Goodwill and other large
rehabilitation organizations, like Easter Seals or the Ark have been involved in trying to find out
what is an appropriate setting for this.
Recently I was down in Roanoke visiting our Goodwill there, which has just merged with the Ark
and with two other community facilities to create a kind of new, broader workforce development
entity. But I think I saw down there the 21st century edition of what used to be the sheltered
workshop. We are now putting people to work, with albeit repetitive tasks, but taking people with
usually profound mental retardation and putting them to work filling orders for pets.com. So we are
no longer a workshop. We are now a fulfillment center.

What we are doing, because the growth of sales in e-commerce is throwing off so much business
now to fulfill orders, to provide the inventory that people order over the Net, that that is just
beginning to produce an opportunity for people with very limited skill sets, and obviously a cap on
their ability to perform tasks, that will provide real work with real benefits with real pay. Now that,
had I still been a member of Congress, would still have looked like a workshop to me. From my
perspective now, I can see the difference between my own perception and predilection about that
concept, and what is happening now in the new world of work that we're very much a part of.

For nonprofits, though, which are now beginning to pick up some of the outsourcing that
government is involving itself with as they devolve the welfare bill, as they take the Workforce
Investment Act and make job training programs more customer focused, the Workforce Incentive
Improvement Act, which is now providing a kind of ticket to work for people with disabilities, is it
now forces us out of our old protective shell of being a kind of faithful but quiet and obedient
community steward, to being much more public, much more market-driven, but also maintaining
our mission focus.

It requires us to be much more accountable, just the way we were if we were working for a police
force or for members of the state legislature. That is, to some degree, shaking the foundations of the
nonprofit service community because a lot of our organizations are much older than any of the
federal departments that supposedly are accused of being overbuilt bureaucracies. Goodwill is
almost 100 years old. In many cases we have had to change our thinking to be much more
customer-focused, much more competitive. As a matter of fact, Lockheed, Ed Gund's firm, and
Goodwill, my firm, compete openly for contracts. And just as I walked in the door today, I learned
that Goodwill and Lockheed have just signed a peace treaty over an account in Hillsborough
County, Florida, which we've been at war over for at least a couple of months. In this world it's
who's the contractor and who's the subcontractor. Normally when Goodwill and Lockheed go head
to head we usually wind up being the subcontractor and they are the contractor. Not true in
Hillsborough County.

That is a whole new way of providing work for services that is now part of our public service, but
what we are finding to be real public servants is we must maintain our mission drive. We must
always be true to that, but we've got to be market-focused. We've got to know that we have to be in
the marketplace with Lockheed, or for-profit thrift companies which are collecting goods and selling
them just the way we are.

We have to understand that we, in order to earn the public trust of running a TANF program, as we
do in Milwaukee, or managing Medicaid dollars, as we do elsewhere, we basically have to prove that
we are as accountable as the public institutions that used to do this. So it's forcing us to the same
kinds of critical self-evaluations that Defense Department has been through, that I'm sure Lockheed
has been through, that most large corporations have been through, and now, not surprisingly,
Goodwill, United Way, Boys Clubs, the YMCA's are all going through themselves.
I guess the way I would kind of sum this up is that late in my congressional career—I was in the
House for eight years—and near the end of my tenure I got a call from a constituent who was
having a terrible problem in Des Moines. The basic problem was he was a small, private sector
ambulance driver and he was losing all kinds of business to the large Catholic hospital in Des
Moines, who was sewing up the Medicare contracts. He came into my office and he was almost in
tears and he said, congressman, the Sisters of Mercy are killing me. He said, will you please go in
there and talk to Sister whatever-her-name-was, and just plead in my behalf? I said, I'd be glad to do
that.

So I walked into this large, very successful but very foreboding office, what I believe the Lockheed
offices look like [Laughter] and there was this woman sitting there. I don't want to characterize this
woman, but imagine Jesse Ventura in a habit, and I started my case. And she basically cut me off and
said, let me tell you something. No money, no mission. You got that? Next question.

And I didn't think too much about that at the time, but I think about that every day now as I run
Goodwill because in order to do good you have got to do well. And even though that's something
that I'm seeing in the nonprofit sector now, kind of on the cusp between the public and private, I
think that applies as equally to government as it does to Lockheed, and that may be one of the
reasons I think that now public service can be .gov, .edu, .com, as well as .org. And that is, I think, a
very valuable lesson that certainly organizations like Goodwill need to know because in order to
retain that public trust we are going to have to be competitive in the marketplace but consistent to
our mission. Managing that balance is probably the greatest challenge we face. Thank you.

P. Light: And I suspect Ed is thinking now what kind of legal talent he can bring to bear on the
negotiation of this subcontract.

F. Grandy: That's a done deal. Our representatives went to West Virginia to work it all out.

P. Light: Ed Gund, can you give us a few minutes and we'll segue to Secretary Shalala.

E. Gund: Well, Paul started off giving you some sense of my fairly bizarre work history, but he left
out the starting point, which is odd in itself. I was studying to be a Catholic priest as an
undergraduate, and when I decided I didn't really want to do that I was faced with my first career
choice—what in the world was I going to do next. And I really didn't know. Being in the seminary
doesn't prepare you to do a great deal. So one of the things I thought, though, was that while I didn't
know specifically, I knew I wanted to be part of something that felt like the enterprise that I would
be part of would be doing something worth doing, at least as best my lights could reckon it.

Public service clearly appealed to me in that regard. Not very much in business did. And I found
myself inartfully pursuing that for the Internal Revenue Service, which may not seem like a
particularly noble form of public service, but there I was. I spent a few years there and decided that
really didn't feel like my calling in life, and after going back to school, as Paul mentioned, I ended up
in the D.C. government. I was there because I really was drawn to working in government at a level
that felt much closer to service delivery than the federal government had felt to me, and I loved
every part of it.
There is—you are, as many of you will know, much closer to service delivery, and in fact, for good
or ill, you will often read about what you do well or badly in the newspaper the next day. I had a lot
of fun in five years working in the District in the city administrator's office, and then in running a
not-very-complicated water billing operation, but it was a lot of fun. And there were things that were
messed up and it was a great challenge to work and try to turn the performance of that agency
around.

When after five years what had been a wonderful challenge in the District, it was clear to me that
that would be a tough way to spend the rest of my life so I decided I was ready for a change and I
didn't really know what I wanted to do. But the same thought process was in place. I wanted to do
something, be part of something that felt worthwhile. Through an old friend in the District I found
my way to what is now Lockheed Martin, IMS. The company then and now was involved exclusively
in providing services to state and local governments. That's the only thing that this particular
Lockheed Martin company does.

When I joined the company, after I was there for a while and people asked friends and colleagues
from the government, what does it feel like, my version of the question was, it felt like working in
the private sector. My observation was that since all the things that we were doing involved
executing government functions now under contract to government agencies, but executing
government functions, this frankly didn't feel very different at all from being in the District
government.

Functionally the issues, the problems seem much the same. The difference was that everything was
just a lot easier to do. When we wanted to hire somebody, we hired them. When we wanted to buy
something, we bought it. When we thought we needed to do something, we did it. And it was a huge
pleasure to pursue public service in a setting where it just seemed easier. Our company has grown a
lot since that time and we too have become more bureaucratic as we get larger, but I think that
experience still holds.

In terms of IMS, IMS is a kind of company that Paul talks about. We are a business, to be sure, and
we do have to make money to be in business, but we do public service. We do lots of kinds of
public service. We collect property taxes over the Web for counties in California. We process 40%
of all the child support payments in the United States. We supply the easy pass, electronic toll
collection system and service in New York metropolitan area. We place 35,000 welfare recipients in
jobs last year.

We operate the program for the District of Columbia metropolitan police department, the red light
camera program which has caught my vehicle and perhaps one of yours proceeding through a red
light. Clearly this is all public service. But we are a business. We're not a government agency,
although everything that we do is authorized and awarded to us by a government agency. We do
have, and it's a crucial characteristic of this company, IMS—we have and, I think, need to have a
very strong public service ethic because that's crucial to what we do and how we do it.

While we are in the private sector doing the public business that has been contracted to us, doing it
well and being held accountable for it, it is not just business. In my reckoning it does require a public
sector and a public service spirit to it. On the issue of the new public service that Paul talks about,
and what is the best approach for public service in this era, I think the question really is about how
do we best serve the citizens of our various governments. My experience tells me very clearly that
there is no single, there is no one-dimensional answer to that. No one of the three sectors, public,
private or nonprofit, always does a great job in serving the citizenry through contracts or through
direct service delivery. We all know that.

We all make—in my opinion we all make each other better. Our primary competitor is not our
private sector competitors. Our primary competitor is government agencies. We won't win a single
piece of work if we can't make the claim substantiated that in some particular area we can do a better
job than a government agency. That competition, I think, is good for all of us. We also compete, as
Fred alluded before, with nonprofits. We compete with Goodwill and we partner with Goodwill. As
Fred mentioned, that challenge has been unsettling but creative, I believe, for the Goodwill
community, and we have benefited by partnering with them and it certainly is a strange new world
that we live in where Lockheed Martin and Goodwill Industries are partnering with one another, but
we do frequently.

I think that the citizens are—all of our government agencies, governments are well-served by having
lots of choices for how service is delivered. That makes us all better. It gives us lots of choices for
the best vehicles for service delivery, and I think very powerfully the subject of Paul's writing, it is in
the public interest to have those people who aspire to public service to have a broader and richer set
of career options to allow them to pursue public service their whole career, whether or not it is as a
government employee or a Lockheed Martin employee, or as a Goodwill employee. That's in the
public interest, to me, to create a structure that allows people to do public service that they want to,
and to do it their whole careers.

P. Light: This is sort of the kind of dialogue between people involved in public service that we
hope to have more of. I like to think that the peace that you've reached in Hillsborough in advance
of this meeting, I hope it's good for the residents of Hillsborough.

The Secretary of Health and Human Services might be able to shed some light on that. Through her
own career, a multi-centered career, she's had a remarkable impact on the public service. She leads a
significant and important department of government. She's the longest-serving secretary of HHS in
its history. She has made public service a significant portion of her message throughout her
department and is known in the department and elsewhere as being an active recruiter and promoter
of public service as a career in government.

She runs some of the most effective agencies under her leadership. Social Security Administration
emerged as having the most effective 800 number in terms of customer satisfaction in the United
States—public, private, .com, you name it. She's had extraordinary impact on the department as it's
gone through a major welfare reform and continues to lead a department with a strong team that's
one of the most durable and long-serving teams in government. You can see the impact of having
top-level appointees who stay put through her leadership.

Her own career marks this multi-sector. I give her three and a half dots in her career. She served as
the president of a private university. I'm going to give you an .edu and maybe little bit of a .com. I
don't quite know where to classify New York City's Municipal Assistance Corporation, where she
was treasurer. Is that a .org or .edu?

D. Shalala: Both.
P. Light: And of course she was president of the University of Wisconsin system during a period
where they rebuilt their football program recently. [Laughter] That's not a .com. That's a .edu, but
she did it very well. And of course she came to government early in this administration and has
stayed put, which is a remarkable achievement. I think there have been several secretaries in this
administration who have stayed put and have been terrific, and it shows in the sustained
commitment to management improvement.

I think you're free to begin.

D. Shalala: Thanks. I think I'll go through this a little more informally and keep within the number
of minutes that my colleagues took here. First I want to congratulate Brookings and getting Paul to
come and do this. I think Mike and Jim, this is a remarkable appointment to get someone of Paul's
breadth and depth to head particularly this particular time in government. You can hear from my
colleagues here how much government has changed. While we still deliver services directly, we
manage contracts, and our relationship with the contractors are enormously complex.

In some ways, Paul, your work will redefine American federalism, and the way in which we think
about the role of the federal government in particular, but also the role of the state governments
because many of the contracts they're talking about are not contracts directly from my department
but contracts with state governments which have now been transferred the responsibility for the
delivery of welfare services.

These relationships with contractors change both the way we do business and the way in which we
can build in accountability on behalf of government. The contractors also are free to go lobby the
Congress, so they can as they have in some cases limit the amount of information the federal
government can get to hold them accountable, or actually stop the federal government from holding
them accountable, as our contractor for organ transplants did recently, where they simply do not
want to respond to the secretary's directives about both giving us information or developing a fairer
system, which couldn't be more fundamental to the role of government because it involves life and
death.

Or a contractor can work with Congress and with Cabinet-level department, as Fred has recently, to
make a government program that was too restrictive in the first place more responsive, in this case a
welfare-to-work bill in the Labor Department that just wasn't working. There were just too many
restrictions on it in terms of who could participate in the program.

It has made our role much more complicated than ever anticipated before, and it means that moving
from, in some cases, direct delivery of services or the more traditional relationships with states and
with counties and with cities, a relationship with the private sector, and with a powerful private
sector that in fact can move and change the nature of that accountability. I would simply say on the
basis of what you've heard you begin to see how complex this is.

Sitting in the middle of that, of course, is the other issue that we really came to discuss, and that is,
how do you attract and bring into government an extraordinarily bright and able group, particularly
of young people initially, who are going to spend their careers in the public service? I deeply respect
Connie and her comments, whether that requires a different kind of institutional arrangement, given
the choices that young people have. They can go into the private sector and still do public service.
They can go into the nonprofit sector and do public service.
It means the government is competing not just with Wall Street any longer. It's competing for
talented people with institutions that are doing some of the same things that government does. So it
makes it far more complicated. It means that governments and Cabinet-level departments like my
own have to think through what their roles are fairly clearly if they're going to hitch a new
generation of people to come into government and explain to them why they want to be in
government as opposed to taking what seems, at least on the surface, a more flexible career role in
other places.

It also means that we have to attract at the highest levels both the political appointees as well as the
highest level of civil servants, a group of people that can work in the context of this kind of
ambiguity and complexity and think through their roles because they are the major recruiters of
young people.

I suppose it would be helpful for you to know that the reason I'm so upbeat about all this is because
running a major research university in this country is far more difficult than what I now have to do.
There in a non-hierarchical setting, where you're really not in charge, you become a world-class
nudger and consensus-builder, which gives you a set of skills actually to deal with ambiguity and
often a lack of consensus by the legislation you're given. You may be able to work out consensus
with all the actors, but often you have very messy legislation to administer which you're going to be
held accountable for because the people that drafted that legislation will always say it's the
government regulators that messed it up, not the language that we were given in the first place.

So let me make a couple of points because you asked me, I think, three questions. How do we
compete for talent in this new public sector? I think the same way everybody recruits for talent. We
make the pitch that these are very good jobs. We make sure that we pay adequately, and we given
people opportunities in these jobs to have experiences, hopefully, that make them excited about
what they're doing. And let me give you—I could go obviously long into Gore's reinvention. There
are people who really know a lot more about it than I do in other agencies.

When I came to the Department of Health and Human Services, at the awards day where we give
these awards out to people who have done a good job all of the awards were individual awards. This
year all the awards will be for teams. We have fundamentally changed both the incentive system and
the awards system in the department and the way in which we work, in part because it was the best
way to get the job done and because we have these complex jobs to do, but in part because we were
trying to maintain and enrich a workforce that really both needed to be stimulated but also needed
to be maintained at the kind of quality that we wanted. That's number one.

Number two, we ad hoc-ed our first couple of years. Because as Connie knows, I was both a student
and mentor–

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–in public service, Scotty Campbell. I knew about the presidential management intern program, and
since that is a pre-screened program for talented people coming into government, our first year we
took 70 percent of the PMI's and slotted them into every vacancy we had. So we basically used the
PMI program pre-screened to recruit very bright young people, and then we paid attention to the
experiences they had in the department.
The third thing I want to say is that I just left the department's retreat, its seventh retreat, the senior
civil servants and the political appointees. Once a year we all get together for four or five hours. And
the last thing I said to them was to remind them not to go narrow in their meetings, that for our big
policy meetings in the department they are not only to bring their deputies but also their interns and
the new people that were in the department. We like larger meetings rather than smaller meetings,
and one way of continuing to excite people about public service is let them see the senior people in
the department making decisions and the kind of information we bring to bear. I reminded them
again that they're supposed to give them the same piece of paper that the secretary has so they had
all the backgrounds for the decision, and that's part of the way in which we work in the department.

And finally let me say something about recruiting people and about managing big departments. The
difficulty in talking about something called the public service is that government does so many
different things. The recruitment and reinvention strategy for the National Institutes of Health, with
the culture of science, is very different for us than what we did with the Public Health Service in
general. The Food and Drug Administration, the Centers for Disease Control, Social Security, all
have their own cultures and their own traditions. And therefore, each part of this empire requires
different strategies for the recruitment of the next generation of leaders and for what kind of
legislative strategy we were going to have, both on personnel and on—because we had to
understand our markets. Much like the private sector.

My market for the National Institutes of Health is a market competing against both the private
sector researchers, but also the great research universities. Brookings has the same kind of problem
when you're competing to recruit full professors. But in our case you're not only recruiting some of
the world's greatest scientists but you have to recruit their post-docs and their laboratories and you
have to put together packages for these people. So understanding the markets in which we operate
and having a strategy for bringing in younger people as part of their careers at NIH, appointing the
appropriate leaders, I made an early-on decision that not only were we going to double the budget of
the National Institutes of Health but we were going to change the complexion of the leadership so
we would recruit the best scientists in the world at the top, that would set a very different tone. All
of my experiences with scientists is that they only respond not to skilled managers or to skilled
politicians but to scientists that are as smart or smarter than they are. So we recruited a Nobel
laureate to head NIH, and to get that person we de-centralized personnel and budget authority to
the NIH.

One of the great complaints about leadership at the NIH is that they had to go through the entire
department of personnel for hiring. Connie, you would have loved the meeting I had because there
was huge resistance in the department from the personnel people, and in particular about approving
scientific appointments at NIH. So I lined everybody up that touched that piece of paper that came
from the National Institutes of Health and asked them how many science courses they had taken,
how much recruiting they had ever done, and what the value added was.

At the end of the day the only person that had ever recruited a scientist at this level was the director
of the National Institutes of Health, the institute directors, the assistant secretary for health, who
didn't want anything to do with the recruiting, and me. So we simply eliminated that and changed
both personnel, budgeting, without cutting them completely loose, obviously, because we use
processes to tie them in. And NIH today is seen as it was three generations ago as a place for young
scientists to go as part of their careers. But more importantly, as a place where some of the world's
greatest scientists will come and stay and lead and put that institution in its relationship with the
great research universities on the cutting edge.

We did that systematically with each part, but the personnel policies, the recruitment of the next
generation of young people required an understanding of both markets and the culture and the kind
of packages you had to put together, so it's not so easy to go back to OPM and say, these are the
institutional changes you need to make that will change or attract young people because each of
these places are quite different. But it also requires that you get leadership at the political level that
both understands this and cares about it, which is a much more complex issue.

But I throw all of this out just to show what a great challenge Paul has ahead of him, and also to
indicate that people like me, who have tried to do it, [who have] been successful in some places and
not successful in other places, will always be anxious to help you do what I think is an
extraordinarily important service in the context of enormous complexity. But I also think an
enormous challenge. Thank you.

P. Light: We're going to have a reception in about 15 minutes. We've got some time for some
questions. Let's see what's on your minds in terms of what you'd like to ask our panel or Secretary
Shalala. Yes?

Participant: Donna Ridgeport from OSD, DOD. I would like to ask if you are changing your
thinking or the approach that you're going to be taken, given the downsizing that has taken place,
but also with the aging workforce, the enormous numbers that we see going out. Some of our
traditional approaches, which in DOD we haven't hired in 10 years to really speak of, and now we
see about 50 percent of our workforce being eligible for retiring in the next five years. I'm very
concerned about that knowledge transfer and some mentoring and different approaches, and how
we do this in large numbers and get a mix of people so we don't have all just very young people and
then very old people.

D. Shalala: Yes, we have. And one of the tricks is to try to keep some of the more senior people for
a long enough period of time as you go through the transition, but also simultaneously to take
advantage of the downsizing as a way to retrain some of the workforce. So each of the agencies
actually have been over the last seven years obviously thinking that through.

The other problem, of course, it didn't affect DOD but some of the rest of us, is the closing down
of government had an effect which we have not mentioned here, on the way in which government
workers think of their jobs and their security that's just devastating. Connie knows that because she
spent years in government. People underestimate—they see it as a kind of political thing—what that
did to the mindset of whether or not they were involved in an agency or not, but that basically
closed down in a mindset of civil service. Overcoming that as part of our strategy and getting some
of our senior people who work in different ways with these teams, for example, has really both
excited them and kept them interested enough to stay on for a longer period of time.

We've used those kinds of approaches, giving people different opportunities, as a way to keep the
workforce, even giving people short leaves to try different kinds of things. We're sending teams now
to India for four months and we're going to try to end polio by the end of this year. Our Fort Dix
operation with the refugees actually probably extended the life of two dozen senior civil servants in
the department because they got to do something quite different, which stimulated them to actually
come back and try different kinds of things.

So we've used a variety of approaches, but have thought very seriously about this transition we're
going through. Of course, GPRA, the weapon of choice, which will hold us accountable, is going to
change the complexion of a lot of these accountability things that we do.

Participant: My name is Greg Shekman and I'm the director of communications and corporate
relations for a .org here in town, but I'm also on the board for a presidential classroom and am
applying for the White House fellows program. So I'm one of these new public servants, people that
you're talking about.

My question to you, though, and I guess this is for all of you, is attracting people to engage in public
service seems to be a bit more of a challenge these days because of the declining interest in politics
and citizenship, and we've seen the National Commission for Civic Renewal and we've seen the
studies that have come out about high school seniors and their interest in politics and community
service and on and on. So perhaps my question, I guess, that I'm asking is, do we need to start
further back, perhaps in high school, and certainly on college campuses to get students re-engaged in
community.

D. Shalala: Well, I fell in love with Washington when I came here on a Washington semester
program with the American University as an undergraduate, and one of the things that I do that I
wish some of my colleagues would do is I talk with practically every intern program that comes to
this town. It drives my scheduler crazy. During the summer I probably do two or three, but it makes
a huge difference for those young people to see someone in the government that's actually excited
about it, that can answer their questions, that will jump up and down.

My White House fellow happens to be here today, but my senior people and I go out of our way to
work with the young interns that are in our department, invite them to things. We have an under-30s
club in the department, but we go out of our way to talk to young people, particularly those that
come through town because somewhere in that group is someone that's thinking about a public
service career and they ought to see us all talking upbeat and talking about the kinds of things we
can do, and answering any question that they might have.

Their usual question is—I had a group of 30 the other day—how do you get to be a Cabinet
member. Here's the answer to the question. You look around the room and you figure out which
one of your friends is going to run for president and you stay in touch with them for 30 years.
[Laughter]

P. Light: One of the things we've noticed going out in talking to human resource people—I think
Frank's poll from the National Academy of Public Administration, Center for Human Resource
Management is here—is that sort of a sense of beleagueredness in the HR community. What we're
finding is that in terms of the recruitment process government's not showing up, that it's not out
there. So one of the issues is how do you get people activated. You don't have jobs at DOD, but
you will. In fact, this retirement bulge is very significant and will create tremendous pressure to get
more aggressive about hiring.

Very shortly I had asked all these panelists --
D. Shalala: I want all the Ph.D.'s in humanities because they can write.

P. Light: I've asked all these three panelists earlier in an e-mail to say, what are you looking for? I
suspect that the top recruiters are the same across all three sectors.

C. Newman: I can say this as an HR person. You really don't send the HR people out to do the
recruiting. You really have to get the people who are doing the work and are in fact able to talk
about it and show excitement of it. And yes, you do need to start back in high school. There are
many programs that I think we need to encourage to have people, young people involved in public
service and in these other services, earlier on.

F. Grandy: It must have been about two months ago the White House had a conference on
philanthropy, and a lot of the more hidebound institutional nonprofits showed up, like us and
United Way and Salvation Army and the old bulls of the business. But it was all run by all the e-
philanthropists, all the young venture capitalists, who are now not just making a fortune with their
IPO's but reinvesting that into foundations that are actually doing things, that are not necessarily the
kinds of things that Goodwill does or Boys Clubs and Girls Clubs.

What I found refreshing about this was that that interest in taking leadership beyond just the
fulfillment of your own bank account or building your own company or creating your own wealth,
but actually reinvesting. Quite honestly, from Goodwill's point of view, we would like those folks to
come to us when they're about 30 or 35, have had perhaps a very successful career in the private
sector, and now would be interested in running one of our larger operations because that's exactly
the kind of leadership skills that we would need. From a government perspective, I think that that
would be just as attractive.

I think the one thing that has changed from even when I was in government, even though I was on
a short leash as a member of Congress, that we know now that the fastest growing mode of
employment in the United States is temporary employment, and most temporary workers work
permanently, which means they move from job to job because they like it to a large degree. It is a
seller's market. The buyers will have to accommodate their workplaces by allowing that kind of
flexibility, whether we're Goodwill or the Department of Health and Human Services. That's what I
would predict will attract people into government. Maybe not for as long a tenure, but for perhaps a
greater amount of productivity.

Participant: I'm Nancy Kingsbury, currently with the General Accounting Office. I was struck by
Connie's starting with her paper from 1991, in which she made some observations. I think there are
some people in the room who with me could go back to 1978, and we would have had the same
rhetoric, and go back even further than that. And yet the system is not changing. Even an agency
like the Border Patrol, which has authority and money to hire has a hiring process that takes—
they've improved it. It's now only six months, it's not eight months to complete.

What are the barriers in the public—government part of the public sector? And I certainly think
opening this up beyond that is an important new step forward. But what are the barriers that have
kept us from fundamentally grappling with whatever it is in the government's glass house that keeps
us from being able to hire who we want to hire, and still doing it consistent with the principles of
public service?
C. Newman: Well, some of it is inertia, and some of it is mistrust. And when I say mistrust, it is
that people do not necessarily believe that systems are going to treat them fairly, so they build into
the process all kinds of stuff that they believe in fact will make it a fair system when in fact it doesn't.
And so as you go back and trace through what are some of the steps in recruitment, and in
promotions, and the panels of three or five—I haven't kept up with it that much, but I know it's still
very cumbersome. And all the places that you have to post, and whether you do it in or out. That
comes from people not believing that the selection process is a fair one.

I think some of it's a hangover from the past, but some of it is still present today, and so we've got
to give confidence that if we remove many of these steps that frankly don't necessarily bring about
fairness, but if we remove them that people will have a fair shot.

D. Shalala: There are some flexibilities within the federal government that you can use for the
hiring of minorities, for instance, that agencies just have to use. And if you're hiring a large number
of the people the way our IG's office has been, they're just always in a hiring mode, which means
they know that they'll lose the money. So they've got a back-up pool and they're just moving all the
time.

E. Gund: I'd like to tell a story that I heard former Mayor Steven Goldsmith of Indianapolis tell
about when he became mayor he wanted to try to introduce what he called a competition in the
delivery of government services, and when he left he felt like they had had some success. The story
that he tells is that one of the areas that they chose to compete was for garbage services for parks in
the city. They held a competition and the government workers who served that part of the city were
free to compete, along with the private sector garbage collection companies.

The first couple of times the private sector won. After two or three times the leadership of the
employees in the department came to the mayor and said, this isn't fair. We're never going to win
one of these competitions because we're saddled with old crummy technology and bureaucratic
processes that impose inefficiency on us and we're never going to get there. He said, if you're serous
about competition and allowing government agencies to truly compete for the right to deliver
service then you've got to change something. He said they were right.

I can't catalog the specific things, but he gave them considerable flexibility that they had not
previously had, both in terms of investment and process changes, and shortly thereafter in ensuing
competitions the government employees beat the private sector. I think there's a message in that,
that a lot of the processes—and I think this is what Connie was saying—when you look at them in
terms of impact on service delivery, do you really need them? Do they improve the quality of service
delivery, and the answer is no. What is lost is some of those processes go away, perhaps not much.

Viewed in a landscape where somebody else can do this if a government employee does not, it
inspires a healthy thought process. What can government employees do differently in a government
setting to allow them to do their jobs better and more efficiently?

P. Light: The only thing that now stands between us and the reception through the back door, to
the left, is a last question. And if not a last question—you can see why I'm having fun here, because
I get to talk with very interesting people, with very different points of view. I get to work with the
nonprofit sector, I get to work with wonderful people in government, interesting organizations. I'm
not getting any IPO's or any benefits out of the private sector, but it's nice to see how the other half
lives from time to time.

Thank you so much for coming. I hope you'll stay in touch with us. We have a new Web page.
Thank you for coming.

[END OF EVENT]