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Special Briefing on the Navy's New e-Business Office

Presenters: Charles Nemfakos, Deputy Under Secretary of the Navy
December 07, 2000 1:00 PM EDT

(Special briefing on the Navy's new e-Business office. Also participating: Navy Rear Adm. Linda Bird, vice commander, Naval Supply Systems Command, and Navy Rear Adm. Craig Quigley, deputy assistant secretary of Defense for Public Affairs)

Quigley: Good afternoon, ladies and gentlemen. This afternoon's briefings we will break into two parts. For the next 30 minutes or so, we will do one topic and then take a very short break, and Mr. Bacon will be here at 1:30 to do the regular briefing.

Right now we have a sole topic for the next 30 minutes or so. I have Mr. Charlie Nemfakos, the deputy under secretary of the Navy, and Rear Admiral Linda Bird, the vice commander at the Navy's Supply Systems Command, here to discuss some new initiatives within the Navy Department on e-Business.

Mr. Nemfakos?

Nemfakos: Good afternoon. The last couple of years we've been working towards making fundamental cultural shifts in what we'd call how we work, how we live, how we fight. And we've been attacking these propositions across a broad range.

Obviously, while a piece of it is aimed towards the "let's become more efficient, let's try to get economies out to be able to reapply either to operations or recapitalization," the more fundamental purpose is to change the working conditions, the living conditions, to allow people to do a better job because we're giving them the tools to be more productive, to try to bring inside of the Department of the Navy the same kind of productivity gains that the world has seen in the private sector in this country as a result of the implementation of a broad range of productivity measures.

In this particular instance, a lot of what we're doing centers around the changes brought about by the information age. And another aspect of it is that not only do we want to try to bring these information age tools in, but we want to do it in a way that's nonclassical, nontraditional.

For those of you who have been covering the Pentagon for a long time, you know how we normally do things, right? We create organizations, we create bureaucratic means, we establish processes. Several years later, we actually start doing something.

Our view is that the world is changing too fast. We can no longer rely on these prototypical bureaucratic means to effect change and to bring in productivity. Or to put it differently, by the time we've created the organization, established the processes, the kinds of changes we would be attempting to bring in would already be passe. So what we're doing in this instance is not building government-owned infrastructure. What we are doing in this instance is not demanding that all solutions be created inside the walls of the Pentagon and then distributed outside. What we are doing instead is attempting to partner with the private sector and gain as much as possible the energy, the innovation that the private sector is already exhibiting, that the private sector is already making capital investments in achieving, and therefore getting as quickly as possible and as inexpensively as possible these changes that we believe are essential for enhanced productivity.

The Gardner Group has stipulated -- and they're sort of a, I guess, the gurus in the IT environment -- that by 2003, 70 percent of all business relationships will be non-traditional. Another assumption is that these non-traditional relationships will create their own e-business infrastructure to maintain itself. So, taking those basic concepts to heart, that's what we're attempting to do: not create infrastructure, but actually take advantage of it.

The things we're doing in the information age, of course, are broad and interrelated. You all know about the Navy-Marine Corps Intranet contract we just awarded -- a major step in attempting to connect all elements of the Department of the Navy, its shore structure, to enhance productivity, yes, but also to make the work place for our people one that allows them to, with greater facility, do their job. We have four pilots in inner resource -- enterprise resources plans at our major commands looking at discreet areas like maintenance and supply and the like, again, looking at bringing into the department concepts that have been worked out in the private sector, seeing how we can apply them internally to improve our efficiency.

The third one is the one that we have just started. It's the creation of an e-business operations office. The reason we wanted to take the opportunity to share it with you is because one, it is an extraordinary example of the fundamental cultural change that's going on in the department. We actually started talking about that office less than six months ago. We chartered it in October. And we are just in receipt of the first products, because one of the key things that that e-business office was intended to do was serve as a clearinghouse of new, fresh ideas to put in the e-commerce environment.

Admiral Bird will give you a little bit more detail, but we're extraordinarily happy that the first result from our request for ideas for pilot projects to the Navy and Marine Corps field resulted in 300-some suggestions that we will now be going through.

The other piece of it besides being happy is we wanted to use this medium to get the word out that we're doing this. A big piece of this is in fact partnering with the private sector. And it's important to us that the private sector understand that we really mean what we say that we are changing the culture, that we are not attempting to arrive at Pentagon-central-headquarters-designed activity, and then impose it on the world, but rather we want to gather the best ideas that are available in there. The world -- the business world is changing so fast that we do not have the time that we have traditionally taken to make advances and to implement ideas.

The other aspect of the e-business office, in addition to gathering new ideas, is to place at an operational command those things that we have already done dealing with electronic commerce: travel cards, purchase cards, ATMs and the like. What we did early on in trying to bring these ideas to the fore is the policy offices that were responsible for establishing the policy for whatever, my office, for example, the comptroller's office, for things like travel cards, OPNAV for other things, were not suited to day-to-day operations.

And what we found was we were bogging down in our own underwear, if you will, trying to, on the one hand, establish policy and on the other hand deal with day-to-day operations.

What we have done is we have taken all of that out of the offices here in the Pentagon. We have put it in an operational command where it rightly belongs, dealing with day-to-day support of the fleet. So it's those two aspects that we have created. We have asked the supply corps -- and why we have placed it in NAVSOP -- to run this operational environment because they are, frankly, our most capable and most knowledgeable individuals in business operations. And so it seemed to be the right kind of thing to place in that environment.

And finally, as a small example of how quickly -- and this is a fundamental, a fundamental change for us -- how quickly we are moving to bring ideas in. Linda -- what, in less than a month of the chartering of the office, the office had put up on a website an icon for a private sector concern called "e-Federal," which allowed our consumers in the field going through the Internet to do purchases at the most effective, most efficient price that they could find. It's an extraordinary difference for us. Normally when we do this kind of thing, we want to have absolute controls, make sure that there are people checking and then people checking the checkers. This is an approach that says, no, we have to rely on our people to do the right thing. What we need to do is to give them the tools to facilitate that.

And with that, Linda, if you would describe a little bit?

Bird: Thank you, Mr. Nemfakos, and good afternoon.

Q: Admiral, could you give us your name, please?

Bird: Oh. Okay, it's Rear Admiral Linda Bird, B-i-r-d.

Q: (Off mike.)

Bird: Yes, sir.

Okay, as Mr. Nemfakos stated, the Department of the Navy e-Business Operations Office was created at the Naval Supply Assistance Command in Mechanicsburg, Pennsylvania, to capitalize on our e-business technologies for the department. Our office is going to focus on two key areas; first, we're going to function as the department's center of electronic business innovation, and second, we're going to oversee existing credit card programs and the electronic transaction systems.

In the first area, as the center for e-business innovations we'll be a change agent and a clearinghouse for bringing the best business practices into the Navy. We see this as a two-way street. We'll go out and we'll look for industry and government's best practices and bring them back into the department, and at the same time, we'll act on proposals identified and submitted by Navy and Marine Corps activities.

Secondly, we'll provide hands-on management of the various Navy credit card programs. As Mr. Nemfakos stated, we have a number of card programs -- our Travel Card, our Smart Card, our Purchase Card, PowerTrack and ATMs at Sea, just to name a few of them. We believe that a lack of expertise and inconsistency of approach has led to some common problems among these programs, and so our goal is to provide centralized standards and to be a single problem-solver for all these card programs.

So where are we now in the standup of the office? As he said, our office was established in October, and right now we're in the process of hiring our staff. It will be a lean government structure with only four active-duty military members, including myself, and nine civil service employees. We plan to supplement this staff with needed contractor and private sector expertise.

And as Mr. Nemfakos just pointed out, we've just completed a survey of Navy and Marine Corps activities for their suggestions on how we can improve Navy and Marine Corps operations using e-business solutions. Through our new web site [ http://www.don-ebusiness.navsup.navy.mil/ ] we asked these activities and commands to send us their pilot project proposals. We're doing this to take a critical look at the latest technologies that are being used in the public and private sectors, and to demonstrate their viability and usefulness within the department. We'll evaluate and prioritize these proposals using broad-base criteria.

First, we're looking for proposals that have far-reaching impact across the Navy and Marine Corps. Second, they should be able to be completed quickly. We're using a 90-120 days as our benchmark. And then finally, they should be fairly low budget.

We're looking for $1 million or less as our benchmark on cost.

So far, we've received over 300 pilot proposals from across the Navy and Marine Corps. Right now we have about $20 million available to fund these pilots this first fiscal year. Proposals have come from various activities, including our Navy post-graduate school, Marine Corps activities, hospitals, ships and shipyards, and many more. They cover the fields of training, personnel, logistics, and quality of life.

For example, we're looking at a pilot proposal that's called Smart Web Move. As most of you know, moving numerous times to locations throughout the world is a way of life for our sailors and Marines. This project would allow them to arrange for the movement of their household goods online 24 hours a day, seven days a week, anywhere that a PC can be connected to the Internet. So they can make their household goods arrangements at home, while they're at sea or while they're at a shore command.

Finally, I can honestly say that we're very excited at this opportunity to immediately begin these projects that have the potential to improve both the quality of work and the quality of life for our people and at the same time save money and reduce our infrastructure.

So I thank you. And Mr. Nemfakos and I will now be happy to address any questions that you might have.

Q: I'm with Federal Computer Week. My name is Colleen O'Hara. I had a question about who can apply, who can send in a proposal for a pilot project. Is it just Navy and Marine Corps, or is it any agency that does business with the Navy?

Nemfakos: The -- and Linda's going to hate me for doing this, but that's okay; I'm used to being hated. The data call that we put out went to Navy and Marine Corps activities, so obviously, the responses are from Navy and Marine Corps activities. One of the reasons we wanted an opportunity to tell you about the success so far was my hope is that private-sector providers, private-sector innovators, knowing that we are actively searching for solutions -- we're not interested in is the cat white or brown; all we want it to do is catch mice -- they will come in to us with our (sic) ideas.

Now, perforce the easier way for Linda to deal with it is if these people communicate, these businesses communicate with people they normally do business with and give them the ideas and have those ideas bubble up.

But if there is a view that they can't get good, fresh, innovative ideas through the system rapidly enough, Admiral Bird in NAVSUP will take the ideas.

Q: All right, so this --

Nemfakos: They are intended to be a clearinghouse.

Q: But in other words, if I am at Department of Commerce and I have a great pilot project idea, can I apply to the e-business office to get funding for my pilot project, or do I have to be a Navy office?

Nemfakos: No, I think when we're talking about the pilot is the implementation of the pilot. So you wouldn't come to us to get money to run something in the Department of Commerce. If you had something that you were interested in us participating in, you could come to us and, to the extent the idea was attractive, we would also put money into it.

Q: I guess I was confused about the $20 million; what that's going for, exactly.

Nemfakos: It's to finance the conduct of the pilot projects before we put them into general application.

Q: Can you provide some other examples of what you're looking for besides the moving services? What are some of the things you want?

Bird: I can give you just some examples. I'd like to preface that none of these have been approved yet, so these are just some examples of some pilot proposals that we've received. But one of them is putting radio frequency technology into our storerooms, ships and shores, where we would have -- our parts would be coded and so instead of sailors having to manually track material that was coming in and out of the storeroom, receiving material, issuing material, we could use radio frequency that would actually automate that process, so reduce the workload there.

Another proposal is to do medical appointments on a website, so instead of a service member or a retiree or a service member's family having to call through a medical facility, they could go on line, onto the web, make their medical appointment and then, even with the appropriate security, maybe even having a dialogue between the patient and the physician. So they could do it at home, they could do it at their convenience. The doctor could then respond at their convenience, and that.

Another one might be child care applications, where if you are stationed in Norfolk and you're being transferred to San Diego, you could apply online at the military child care facilities in the new location. Even before you leave, you could get all your information forward and then find out where you fell into the waiting list and get that information. So it crosses the broad spectrum.

Nemfakos: But as I mentioned, using the Gardner group as the guru, my expectation very frankly is that even while we are in the process of picking pilots and in financing those pilots and see how they work, the enterprises themselves, as they become established, will create new ideas on their own, so that we'll get the benefit of synergies that we can't even imagine right now.

Q: How many pilots do you anticipate selecting?

Nemfakos: Well, Linda's got 20 million, so I would say that in all probability, in the first year, an expectation of more than 50 or so would not be a reasonable expectation, because we're trying to learn from our lessons in the past. And our lesson from the past has been that if we are unwilling to make the investment up front to bring in new ideas, it'll never get here. And the world, the business world is changing too fast for us to take that same continuing approach.

So if we're going to do it, we're going to do it right. We're going to provide the resources that are needed, and we are limited. Even the 20 million is an extraordinary expression of the value Secretary Danzig, the chief of naval operations and the commandant of the Marine Corps view this cultural change, because it's extraordinary for us commit that kind of money into essentially an unknown.

Q: How do you assess the success or failure of these pilots?

Nemfakos: Let me give my philosophical answer and then Linda, if you -- my philosophical answer is if at the end of the day, our people in the field feel that we've given them tools that make their work easier to accomplish and make them feel that they are better connected with where the business world as a general proposition appears to be going, for me that would be success.

Bird: Okay, I would take just a little bit different approach from the standpoint of the failure of a specific pilot is not necessarily a failure overall. It may generate an additional idea, may give avenue for new technology. So we're not anticipating that every pilot is going to be a success as it was originally submitted, but I think that it could spawn new ideas, get industry interested and maybe provide us with new technology that would then lead to something else. Maybe not exactly as it was originally submitted, but take us down the road further.

Nemfakos: Okay, well thank you very much.

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