Interview transcript

Terry Gerton We’re a few weeks past the longest lapse in federal appropriations and maybe looking at another one in the end of January. So I want to work with you to put October and November into context. You’ve seen many shutdowns in your time on the Hill and now at Deloitte. How would you say this one differs from previous episodes, especially when it comes to your area of expertise, tax policy?

Anna Taylor Well, I do think it was different than what we’ve seen in years past. And part of that starts with just the way folks on the hill operated in it. I was really shocked that — my first sign that something was different was — I was shocked when I heard reporting that … the members and the staff that work in the Capitol building had left before we even hit midnight the night that we entered the shutdown. That’s not normal. In years past in shutdowns, you have frantic work happening behind the scenes where they’re trying to see if there’s any way to find a deal. And it was just obviously clear to all of them that they were so far away from a deal at that point that there was nothing to do. And so they left the building. And that was my first sign that this one was not normal and we were in for a longer shutdown. You know, in terms of the impact it has on tax administration and tax policy, it’s significant. You know, the fact that you had so many furloughed workers in the federal workforce and specifically at IRS and in Treasury, during that extended period definitely has an effect on customer service. It has an effect on their ability to move forward with their reg writing and guidance plans, which is in this moment, you know, where we’re just getting through a big piece of legislation, the One Big Beautiful Bill Act that was signed into law back in the summer, and they’re in a very significant guidance process to go along with that bill right now. There’s a lot of work that needs to get done … I know that you know, the treasury and the IRS said much of that work went on during the shutdown. So I do think that there was some of that that didn’t stop, which is a good thing for taxpayers, but had to slow it down in some capacity. And when you think about just customer service for taxpayers and not being able to call and find somebody on the phone to talk to, certainly there were challenges there as well. So I do think there was that, you know, kind of tangible direct effect. Now, in terms of effect on tax policy, I think it’s jury still out. Obviously there wasn’t any sort of deal that ended the shutdown with additional legislation. So we didn’t have some big tax package coming out of the — sometimes you do see some sort of legislative deal come out of a — well, not often with a shutdown. Normally nobody wins in a shutdown. But when you’re reaching appropriations deals that don’t end in shutdown, sometimes you’ll see tax legislation attached to those kinds of deals. And, you know, we didn’t have that … There were not regular hearings and regular markups happening in the tax writing committees while we were in shutdown. And so there was probably a slowdown in some bills that are maybe under consideration because they weren’t being considered during the shutdown. And so I do think that probably it definitely had a direct effect on taxpayers who may have had an impact on customer service, but there’s also that effect of maybe slowing down policymaking as well.

Terry Gerton I’m speaking with Anna Taylor. She’s managing principal of the Tax Policy Group at Deloitte. Well, let’s talk about the specific impact on taxpayers. I mean, filing season is going to open in just a few weeks. Is there a reasonable expectation that the IRS and all of the companies that support tax filing will have written in the rules for the One Big Beautiful Bill Act provisions and anything else that might come up before the year end? Are tax filers going to have the systems ready to go?

Anna Taylor Well, I think that the Treasury and IRS have done a — they’ve made a real effort to try to get to the things from that bill first that were going to need to be implemented for taxpayers at the beginning of 2026. So I think in most cases, you have … already seen guidance come out on those things that are affecting individual taxpayers, like … the tipped income deduction and overtime pay, things like that. So they have already put out quite a bit of guidance in those spaces that will have a direct effect on individual taxpayers. There’s still a lot to go though. And, you know, you have business taxpayers who maybe aren’t filing on the same timeline as individuals. Some of that important guidance is still yet to come. But I do think that because of the thinking about the kind of end year for individuals, the administration has tried to prioritize those things that are going to need to be known on day one of the new year.

Terry Gerton That’s good to hear. You also mentioned the congressional tax writing committees and certainly as Congress has come back, the committees have quite a backlog. Can you give us any insight as to what they may be talking about in those committees?

Anna Taylor Well, they do have a full agenda. I mean, I think the first thing that you’re hearing a lot about if you turn on any news outlet right now is of course the thing that landed them in the shutdown to begin with, finding some sort of path forward on those Affordable Care Act premium tax credit — the enhancements for those credits. They didn’t reach any deal before they came out of the shutdown, but they did agree to keep working on it. So there was an agreement as part of coming out of that shutdown where Majority Leader Thune in the Senate said he will hold another round of votes on those credit extensions by the middle of December. So I do think that there’s conversations happening, both bipartisan and partisan, to see if there’s a path forward on figuring out a way to deal with health care costs and insurance premium costs. So that’s taking up a lot of time right now. In addition to that, there is interest from the committees to try to move some things that they’ve been working on for a while on a bipartisan basis. These are things that have been in works for years, honestly, and have pretty broad consensus support. Things like, you know, there’s a tax treaty with Taiwan that has moved through regular order in both the House and the Senate that I think people would like to see get over the finish line. There is, the chairman and ranking member of the Senate Finance Committee have worked on — they haven’t actually processed legislation, but they’ve put out a joint white paper on tax administration. So just some changes to make the system work better for taxpayers. I think that’s something they’re interested in trying to see if there’s opportunities to move together. And then there are a few expiring tax provisions on the business side of the ledger that haven’t been dealt with this year. You know, a lot of the expiring provisions on the individual side were included in that one big beautiful bill act back in the summer. But there are a couple of provisions like the Work Opportunity Tax Credit. That’s an important one that does have an effect on people’s ability to get a job and on business’s ability to hire. And so that’s one that is set to expire at the end of this year that I do think there’s probably bipartisan interest in extending. So those are all things I think on the near-term agenda, if they’re in an environment to be able to move some bipartisan legislation. And we all know right now that’s a big no.

Terry Gerton Well, speaking of that environment, 2026 is an election year for many members of Congress. Do you think in that environment they really will be able to move some of these big pieces of tax legislation or will they maybe just nibble around the edges?

Anna Taylor It’s a really good question. And … when I look in my crystal ball, it’s cloudy, you know. I think that, even in the most political of times, you can sometimes get smaller packages of bipartisan consensus product through. So, you know, I’m still hopeful that they can — they’re going to have to do something on appropriations again when they get to the end of January. That’s when that next government funding deadline will be reached. And so there is potentially a bipartisan vehicle that will be heading our way come late January, assuming we’re not headed towards another shutdown at that point. And so I really do think there’s a possibility that if they reach some sort of funding deal, you know, as they’re working through it in December and into January, that there’s the potential that you could see some tax legislation move along with it, possibly. The later — and I think this goes without saying — the later you get into an election year, the harder it is to do bipartisan things. So when we get into, you know, maybe late summer, early fall, I’ll stop being as optimistic. But until then, I think that there’s still a chance they could move some of the smaller consensus items.

The post What can individuals and businesses expect when the tax filing window opens in just a few weeks? first appeared on Federal News Network.

Interview transcript

Terry Gerton You’ve got an interesting story about a protest this morning from a company who actually won the bid. Tell us about that.

Zach Prince Sure. So this involved a Department of Homeland Security procurement from ICE for detention services for folks detained for immigration law violations. So the protester here is a company, Active Deployment Systems. They’re a Texas-based company that markets itself as specializing in rapidly deploying and operating temporary facilities — so, exactly what ICE is looking for for this procurement. So ICE said that they were going to be issuing five or more IDIQ contracts, and then task orders would be competed for particular tasks. Each of the offerers would bid on only those types of tasks that they want to be considered for going forward. ADS, Active Deployment Systems — they received an award, but they were one of 42 offerers that received the award. And you get the sense reading the protest that they don’t like the fact they’re competing now with fewer, slightly fewer than they were competing with for the IDIQ award, but not many. So it’s still gonna be big, big competitions going forward. Maybe they’re trying to level or eliminate some of those competitors.

Terry Gerton So this was an IDIQ contract, right? Does this what does this tell us about the structure of these? Was ADS’s expectation reasonable in terms of the number of winners that they would have?

Zach Prince No, and in fact this is happening pretty commonly where agencies have these very large IDIQ awards that they might issue 50, 100+ individual IDIQs that, it does narrow the playing field a little bit going forward, but what it really does for the agency is speed along the competition for that next stage when they actually have the identifiable requirements that they’re going to have bids on.

Terry Gerton And you can kind of understand ADS’s perspective. I guess the fewer the competitors on — or the fewer the awardees — on the actual contract, the more likelihood they have of winning those orders and the higher their revenue might be. So their projections might have been off a little.

Zach Prince Yeah, that’s right. And you know, I think the better arguments that they had here, and maybe their real concern was about the price structure of this IDIQ. But the problem was that they raised these challenges while also submitting a bid for a contract they received, right. So to tell you a little bit more about that, for each of the objectives that you could bid on for this IDIQ, there was a set pricing volume that contained the government’s independent government estimate for what prices should be to be fair and reasonable. Among those estimates was a hard cap, essentially a hard cap on prices per bed per detainee. ADS argue that this harms them if they’re stuck with this because it might put them in a losing position going forward for the actual task orders.

Terry Gerton So the court kind of said that, well, the time to challenge that is not after you’ve won, but before you’ve won, right?

Zach Prince Yeah, that’s right. And they did try, to give ADS credit. They challenged this at the agency level and an agency level protest. But agency level protests don’t actually stop anything. They just tell the agency, hey, we think this is unworkable. You’re hoping the agency looks at it and says, Oh, yeah, you’re right. But here they didn’t. So, you know, ADS took a contract based on this price structure that they think isn’t proper. And as the court noted, they don’t have to bid on any task orders. So if they really think that this is a losing proposition for them, first of all, they shouldn’t have bid on the contract. And the same thing is true for the 50 something other offerors. But now they don’t have to take losing contracts. They can do the analysis on a task order basis and say, we don’t want to be part of this. Whether it’s good business for the agency, well, maybe not, but I think the agency was moving quickly and just wants to get this thing done for urgent needs to be fulfilled.

Terry Gerton I’m speaking with Zach Prince. He’s a partner at Haynes Boone. So we talked a little bit about ICE’s strategy and you’re seeing this more often in these IDIQs, where agencies will bring on a lot of winners and then use this as a means to simplify later competition.

Zach Prince Yeah, we are seeing quite a lot of this. And I think there are a couple reasons for it. One is perhaps strategically, from a protest perspective, that this — if you just issue contracts essentially to everyone who submitted a reasonably responsive offer, then you’re limiting the IDIQ level protests, which generally can be heard at various forums, Court of Federal Claims, GAO. Maybe then you could have protests of the task order competitions, but those are limited only to GAO and only when they’re above certain dollar values. So the protest possibility becomes much more limited. You also can only have protests for whoever bid on the initial IDIQ or from whoever bid on the initial IDIQ. So it might be a management of protest strategy. It might just be because if you can get a framework in place from the agency that has the pricing mechanisms and the ordering mechanisms, it makes it a lot faster to buy what you need later on.

Terry Gerton So do you take any lessons from this particular protest resolution on how the court views these kind of arguments?

Zach Prince Yeah, I think in general, even if you haven’t waived an argument because you didn’t bring it up before, which it usually is the case. That is, if you submit a proposal and you have arguments that the solicitation was ambiguous or otherwise flawed, you can’t then complain later. That’s not always the case if you’ve launched agency level protests like ADS did here or there’s some other exception. But you really can’t have your cake and eat it too in this regard. And contractors are in a tough position, because you don’t want to be kicked out of competition for choosing not to bid. You don’t want to annoy the customer by protesting, perhaps unnecessarily, in advance. But if you don’t have clarity on terms or you’re gonna have to accept terms you don’t like, the protest mechanism is what’s there for you.

Terry Gerton Then should contractors change the way they approach these large IDIQs? Is there a different competition strategy that they should be employing to be more competitive going forward?

Zach Prince I don’t think there really is, unfortunately. I think — I have this conversation with clients all the time where there is a very ambiguous RFP, RFQ. I don’t know what it means. The agency won’t respond to questions and it makes a significant difference for the business on how they put their proposal together. But if they don’t bid, then they’re totally out of the game. If they bid making assumptions that prove to be unwarranted because the agency thinks it means something else, they might take a loss. So they could protest and annoy the customer and potentially delay the procurement. They can’t always protest because the protest rights are not so sweeping. And it also costs a lot of money. Or they just proceed and hope for the best.

Terry Gerton Or as the court told ADS, don’t take an order.

Zach Prince Yeah, that’s right. And I think ADS is likely going to take orders. I mean that was what they told the court. They want to keep this contract.

Terry Gerton This is an interesting case, Zach. Thanks for sharing it with us today.

Zach Prince Sure. Thanks for having me, Terry.

The post A protest from a winner? A recent case shows why timing matters when challenging solicitation terms first appeared on Federal News Network.

• More moves to reorganize the Army take effect today. The new Army Western Hemisphere Command will officially come into being with its headquarters at Fort Bragg, North Carolina. The new organization combines the existing U.S. Army North, U.S. Army South and Army Forces Command under one umbrella before those organizations are formally disestablished next October. The new command will also absorb the Army’s 18th Airborne Corps, Air Traffic Services Command and the 1st Army.
  (More moves to reorganize the Army take effect today - U.S. Army)
• Workforce reductions have become a top challenge at the Office of Personnel Management, according to an agency watchdog. OPM’s inspector general said the agency’s rapid staffing losses this year have created gaps in its ability to operate effectively. According to OPM, the reductions are meant to enhance efficiency. But a new IG report warns that the staffing losses could lead to significant challenges and disruptions in the agency’s work. OPM is on track to lose more than one-third of its entire workforce by the end of the year.
  (Top management challenges for fiscal year 2026 - Office of Personnel Management, Office of Inspector General)
• Close to two-thirds of Americans believe management of the federal government has been heading in the wrong direction. A majority also says the government is operating worse now than it was a year ago. The new findings from the Partnership for Public Service indicate that much of the public is pessimistic about the impacts of the Trump administration’s federal workforce cuts. In a recent survey from the Partnership, one-quarter of respondents said they believe the government is moving in the right direction.
  (Survey of Americans on management of federal government - Partnership for Public Service)
• Professional services contractors get ready: OASIS+ Phase 2 is here. The General Services Administration is adding five new domains to the existing multiple award contract and opening all new and existing functional areas for bids from new companies in January. GSA said the five new domains under OASIS+ Phase 2 will include business administration, financial services, human capital, marketing and public relations, and social services. Vendors should be on the look out for a pre-amendment notice on SAM.gov around December 16, which will detail the draft scorecards for all domains.
  (OASIS+ phase 2 is here - General Services Administration)
• The Department of Health and Human Services is setting new restrictions on telework as a reasonable accommodation for employees with disabilities. A new HHS-wide reasonable accommodation policy says all requests for telework, remote work or reassignment must be reviewed and approved by an assistant secretary or a higher-level official. Frontline supervisors no longer have the authority to make those decisions. A memo from the Centers for Disease Control and Prevention says all telework related to reasonable accommodations will be repealed.
  (CDC tells staff telework reasonable accommodations ‘will be repealed,’ as HHS sets stricter rules - Federal News Network)
• Unions are asking a federal court to reverse more layoffs than agencies have allowed so far. An amendment to an ongoing lawsuit asks a federal judge in San Francisco to reverse more reductions in force under a spending deal that ended the recent government shutdown. The continuing resolution states agencies can’t use federal funds to carry out RIFs between mid-November and the end of January. But agencies have only reinstated federal employees who received RIF notices between October 1 and November 12. The amended lawsuit seeks to force the departments of State, Education and Defense, as well as the Small Business Administration and the General Services Administration to rescind more RIFs.
  (Unions file emergency request with court to block State Dept layoffs, reverse RIFs at other agencies - Federal News Network)
• The Pentagon inspector general’s long-awaited report on Defense Secretary Pete Hegseth’s use of the Signal app to discuss operational details concluded that Hegseth “sent sensitive, nonpublic, operational information” from his personal cell phone, which violates Defense Department rules that prohibit the use of personal devices and nonapproved apps for official business. The IG also determined that Hegseth’s use of a personal device for official work “risks potential compromise of sensitive DoD information, which could cause harm to DoD personnel and mission objectives.” The Pentagon only provided a partial copy of messages from Hegseth’s personal cell phone. The IG relied on the transcript of the public chat posted by The Atlantic for this investigation. The IG said Hegseth declined to be interviewed for this evaluation. Meanwhile, the Pentagon said the report is a “total exoneration” of Hegseth and that “the case is closed.”
  (Hegseth's use of Signal violated information sharing rules, risked troops' safety, DoD IG finds - Department of Defense)
• The Cybersecurity and Infrastructure Security Agency is urging agencies and industry to take action against a new cyber threat from China. At least eight organizations, including federal agencies, IT companies and critical infrastructure providers, have fallen victim to a new and sophisticated malware attack. CISA is telling all organizations to take action to protect their systems from BRICKSTORM. Nick Andersen, the executive assistant director for cybersecurity at CISA, said the malware could enable long term access, disruption and potential sabotage. "BRICKSTORM is a sophisticated malware," he said. "It has advanced functionality to conceal communications, move laterally and tunnel into victim networks. It can also automatically reinstall or restart the malware if disrupted." CISA issued a new analysis and recommendations yesterday for how organizations can protect themselves from BRICKSTORM.
  (Agencies, IT companies impacted by latest malware from China - Federal News Network)

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Interview transcript

Terry Gerton CFPB recently issued a new rule regarding the Fair Credit Reporting Act and it’s pretty important. Can you walk us through the core of that rule and why you at the Consumer Data Industry Association think it’s important?

Dan Smith Sure, happy to. So the Fair Credit Reporting Act has been in existence since 1970. The leading privacy legislation in the country has specific requirements that lay out how credit reporting should take place, the protections for consumers, and a clear process. And one of the core functions of the Fair Credit Reporting Act is to have a national standard and clearly discusses preemption. Throughout the years, it’s been amended several times. But in the end, Congress is the one who makes decisions on the law. They write the law, and it’s up to judges to interpret the law. In 2022, the CFPB, under the previous administration, put out a document called the Interpretive Rule on Preemption, where they decided what the statute meant. So the first problem was that CFPB actually doesn’t have the authority to do that. They’re not the judge. They implement regulations. They don’t interpret law. That’s up to the courts to decide. They clearly decided to go against the congressional intent of the FCRA. And the current administration believes that that is not their role; that is up to Congress to decide the law. And they were attempting to state that fact, right? So they basically went back to what was common knowledge of the interpretation on preemption to what it was prior to 2022. And they acknowledge in their current interpretive rule that this is not binding, just like the 2022 rule was not binding. It was an interpretation, right? It didn’t go through the APA process, right? We couldn’t sue in 2022 because they didn’t write an actual rule. They just said, this is what we believe. So the current administration is saying you don’t have the right to say, this is what we believe. That is up to Congress. You probably remember the Loper Bright case, which basically said Congress writes the laws, right? If they’re ambiguous, the the regulators actually don’t have the flexibility to interpret it. It’s up to Congress. So I believe the current administration is trying to get the market back to where Congress intended years ago.

Terry Gerton What does this all mean for both consumers and lenders who have to use this kind of data?

Dan Smith The credit reporting ecosystem is critical to every consumer in this country. It provides access to credit. It provides the lender with the ability to mitigate their risks, to analyze the consumer and their ability to repay the loan. It helps facilitate the buying of a car. You could walk into an auto dealer and walk out with a $50,000 car today. And a good reason is because of the credit reporting system. It allows the lender to evaluate the consumer with data. They’re not making judgments. They’re not looking at the person. They are making a decision based on data that talks about their ability to repay the loan. So every day consumers benefit from a robust, complete, accurate credit report. The good, the bad and the not so good. And if you have a system that doesn’t intake the completeness of a consumer’s credit, then you’re going to have decisions that are not accurate. And a lender has two basic choices at that point. They can cut back on their lending, lend to less, or they can charge people more because they’re taking on more risk. Those are their two levers. So the more complete and more accurate a credit report is, the better the lender’s going to be able to manage their risk and lend to more people.

Terry Gerton I’m speaking with Dan Smith. He’s the CEO of the Consumer Data Industry Association. So in the interim between the previous administration’s interpretive rule and this one, some states tried to create their own standards on credit reporting. Were there any particular state actions that raised a red flag for you at CDIA?

Dan Smith Yes. The reason CDIA is so current concerned about the state action is that Congress is the decider of what can and can’t be on a credit report. And it is critical that we have a national standard, that the same data, same types of data appear across the country, so that there is a system that a lender can rely upon if they’re lending in California or they’re lending in Nevada or they’re lending in New Jersey. The credit score that’s based off that information is consistent across the country. If you had data in California that’s different than data in New Jersey, that means the score would act differently. A 750 in California that doesn’t have medical debt would perform different than a 750 in New Jersey that does have medical debt. And I don’t know how a lender can manage a network of 50 different credit reports, 50 different credit scores — and there aren’t just two credit scores, FICO and Vantage score. There’s 50 or 60 different forms of credit scores based on the lender. It’s a complex weave and it’s important to have a national standard so a lender can evaluate the consumer on a level playing field. And if you allow someone other than Congress to determine what can or can’t be on a credit report, you’re bringing politics into the decision making, not sound underwriting decisions. So today’s medical debt, tomorrow’s student loans. Next week is homes damaged by a natural disaster. And before you know it, that credit report is less valuable to the lender and they stop buying the credit report and using it as a tool to lend more.

Terry Gerton You mentioned medical debt along with some of the others. There was a recent decision in the Eastern District of Texas having to do with medical debt that vacated a C F P B rule. Was that in line with the new rule or was that related to the old rule?

Dan Smith So we actually filed that case, CDIA along with Cornerstone Credit Union League out of the Texas area. So you had you have two things. You have the current interpretive rule, which they talked about preemption and what a state can and can’t do. That’s what happened last week. Back in January of 25, the previous administration, as they were leaving, finalized the prohibition on medical debt from being included in credit reports, right? We and others sued saying you don’t have the legal authority to determine that, only Congress does. So back in … 1996, Congress actually prohibited medical debt from being on credit reports, right? People don’t realize, in ’96, they said no medical debt. We don’t think that’s correct. In 2003, they came back and said, oops, that was a mistake. When somebody has $50,000 in any kind of debt, a lender needs to know that so they can make the right choice and not put that consumer in a position that they’ll fail. You don’t want to give people more credit than they can actually afford. So Congress in 2003 passed a law saying both medical debt can be included as long as you can de-identify the medical institution. So if you are a patient at Sloan Kettering, this was an actual example by Congress. You’re a patient at Sloan Kettering and your credit report says. Medical debt, $5,000 Sloan Kettering, the assumption can be made very easily that you have a medical cancer. They don’t think that was fair. And they made the decision that you could put the medical debt, but you have to quote code it or block the identity of that company, the Sloan Kettering. But it says you can definitely put the information on there. So they completely reversed their opinion and said it’s important. So what happened was in ’25 in January, the administration and the CFPB said, we don’t agree with Congress. We’re going to take it off. And they used some data and some analysis and a lot of hyperbole and said, this isn’t fair to the consumer, so we’re gonna take it off. Well, they don’t have the authority to actually do that. So the lawsuit in Texas was to say the authority the Bureau has is to implement regulations, not make law. And the court agreed with us completely.

The post A new CFPB rule strengthens credit data standards, helping lenders and borrowers first appeared on Federal News Network.

Terry Gerton Timely payments, rescinding stop work orders, and monitoring long-term impacts are top priorities as agencies restart operations. We’ll also look at key takeaways from PSC’s Vision Conference with CEO Jim Carroll. Jim, thanks for joining me.

Jim Carroll Terry, thank you so much for having me on.

Terry Gerton You are coming off two days of the PSC Vision Conference. Let’s start there. What were the biggest insights that you heard over those two days of discussions?

Jim Carroll Well, I’ll say three insights. One was it was a brutal way to start the Monday after Thanksgiving holiday … But, we had to accommodate the really great speakers on — including really some wonderful keynote speakers. Next year it will not be the Monday after Thanksgiving. So for all of our members, you know, for this event, we’re thankfully able to get a better date. But more importantly, as I mentioned, really was hearing from some of the leadership in the administration about, what is their projections for 2026 and how the money, as being appropriated by Congress, as the budget request and where they expect it to go. And so, one was just the amount of money, which is something worth talking about. The other thing and is really the use of AI and how the embrace of AI by the federal government is rapid, but it’s also a bit unknown. We’re moving forward in this space of the government using AI without everyone necessarily understanding all the implications. So I think so far those are the two big takeaways that we’ve been able to summarize. And, it’s a great event for our members and a few guests.

Terry Gerton What did you hear about this administration’s take on industry partnerships?

Jim Carroll You know, I think we have to sort of look back at DoD. I think DoD with Secretary Hegseth is a good example of that. As you recall, in November, Secretary of War Pete Hegseth met with our members and the folks that do defense contracting and said that they really do want to do a radical revolutionary overhaul of the FAR, and especially, in the sense of producing deliverables and measuring outcomes based on performance and getting this done right and how the military, how the branches within DoD have been tasked with coming up with orders … by mid-January, 60 days, in terms of how they think we can best streamline the process. And our hope is that this proposal really has legs. And we think it does. There’s support in Capitol Hill. There’s support in the administration. And of course, we — the leading trade association for companies that do business with the federal government — we’re completely supportive of most of these changes. There are things that we’ve been asking for for years that would really expedite the awards. Hopefully, with the grace of God, cut down on the number of appeals following an award, which seems to be a bit of an epidemic of companies now just expect there to be an appeal. And so we’re really very hopeful that this will stick and we’re optimistic that it will. And so that’s one of the major things, and then of course, as I mentioned, the amount of money in government services. And there was discussion about that … this week from the assistant secretary of war, that you know, there really is going to be an extraordinary amount of money, $850 billion at DOD with at least $180 billion toward services. And that’s what our very, and I’m proud to say, patriotic, companies that want to do the right thing for the war fighter and the taxpayer are eager to jump on board.

Terry Gerton Speaking with Jim Carroll, CEO of the Professional Services Council. Jim, tell us more about what you heard about the deployment of AI from the government agencies and within the contractor community.

Jim Carroll Yeah, so within the government we had speakers from across the government. As I said, Assistant Secretary of War, Michael Cadenazzi, who handles the industrial base policy, talked about an initial $180 billion, $200 billion in services, and how the use of AI and services can change and how there needs to be flexibility because of AI, that when some of these contracts call for a hundred seats to be filled, that there is enough flexibility that contractors can come back to the government and say, hey, we’re gonna use some, you know, AI, some other advanced technology. We can reduce the number of personnel from a hundred to eighty people. And in the past there’s been some resistance. Both the Department of War and some of the other departments, you know, really stressed that they want flexibility because of AI. I’ll say one thing that was interesting, and we’ve seen and heard this from members, is that there are a fair number of new companies who have never put in bids for government work that are using AI to not only write their proposals, but as I mentioned, also the use of AI to appeal. I mean, it just seems like it’s a press of the AI button, if you will, and an appeal is generated. And we need to get away from that, you know, for valid, justifiable awards, let’s move forward and deliver good results. And so we’re very optimistic. The recognition that AI has some limitations to it, but that it can deliver fast results is something that will be very interesting to see in 2026.

Terry Gerton Jim, one of the things that you and I have talked about, we’ve talked about it with a lot of contracting folks on the show is the uncertainty about the federal government workload for contractors. I’m wondering what you heard from your members over the course of this conference, especially as we’re sitting right now just post-shutdown and possibly pre-shutdown in January. What what are you hearing and what is PSC’s advice?

Jim Carroll Terry, don’t jinx us. No more government shutdowns. No, we’re tracking January 30th very closely. We had very senior meetings in the White House in the West Wing with a couple different meetings because of the shutdown to talk about the impact that it is having on results and the impact it is having on protecting the homeland. And so, what we told them in addition to the impacts is when the government gets up and running, because shutdowns end. This was a record-breaking one, but shutdowns do end. And as soon as they end, you know, it’s to tell the individuals in the departments, immediately start processing these invoices, get these payments out the door. You know, there are a fair number of companies, especially in the small to mid-size, that really did not have stable cash flow. They really were hurting. We saw some layoffs or at least, you know, sidelining of key employees, and it really presented a huge financial strain on the companies, which flows down to the employees, which flows down to the communities. And so that’s what we asked for. We asked, in addition, that the momentum on getting contracts, new contracts out the door, be, you know, jump-started as fast as possible. Historically, it takes quite a while after a shutdown for things to resume sort of a normalcy. And, we don’t have time for that. In addition to the financial impact, truly the impact on national security. The world is facing new and dangerous threats that seem to be magnifying every day. And our contractors are able to deliver world-class results and protection. And unless they get up and running immediately, you know, those threats are very real.

Terry Gerton Are you seeing that kind of activity coming out of the government agencies now a couple of weeks on from shutdown?

Jim Carroll You know, we’re actually pleasantly surprised. And I hate to say that word surprised, but in the past, it does seem to be a bit of a lag. Our message seems to be delivered. We’re getting payments out quickly. Maybe not all and not every department, but it seems to be beating historic records in in terms of getting payments out. Obviously, some companies are still hurting, you know, waiting to get paid for work that they performed. But we’re happy so far. But Terry, I can’t believe you brought up January 30th of next year. You know, is this a lull between shutdowns? I hope not. I hope that they’re able to resolve, you know, some of the significant issues, healthcare, things like that. But as we’ve talked about, there’s not a lot of workdays up on Capitol Hill, and we just cannot have another shutdown.

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Interview transcript

Terry Gerton The Securities Industry and Financial Markets Association has recently written to the SEC asking to modernize its communication and record keeping rules. Help us understand what the big issue is here.

Robert Cruz Well, I think the fundamental issue that SIFMA is calling out is a mismatch between the technology that firms use today and the rules, which were written a long time ago — and in some cases, you know, the Securities and Exchange Act from 1940. So essentially we’re all struggling trying to find a way to fit the way that we interact today into rules that are very old, written when we were doing things with typewriters and, you know, over written communication. So it’s trying to minimize the gap between those two things, between the technology and what the rule requires firms to do.

Terry Gerton So instead of all of those hard copy letters that we get from investment firms and those sorts of things, we also get emails, text messages. That’s where the disconnect is happening?

Robert Cruz Yes. It’s the fact that individuals can collaborate and communicate with their customers over a variety of mechanisms. And some of these may be casual. They may be not related to business. And that’s the fundamental problem is that SIFMA is looking for the rules to be clarified so it pertains only to the things that matter to the firm, that create value or risk to their business or to the investor.

Terry Gerton And what would those kinds of communications look like?

Robert Cruz I think what they’ll look like is external communication. So, right now the rule doesn’t distinguish between internal — you and I as colleagues talking versus things that pertain to, you know, communications with the public or with a potential investor. So it’s trying to carve out those things that really do relate to the business’s products or services and exclude some of the things that may be more just conversational, as you and I might pass each other in the hallway, we can chat on a chat board someplace. It’s trying to remove those kind of just transitory communications from the record keeping obligations.

Terry Gerton Right. The letter even mentions things like emojis and messages like “I’m running late.”

Robert Cruz Exactly. And you know, it’s a fundamental problem that firms have is the fact that if you say you’re going to be able to use a tool, even if it’s as simple as email, that means that our firm has an obligation to capture it. And when it captures it, it captures everything, everything that is delivered through that communication channel. So that creates some of that problem of like, somebody left their lunch in the refrigerator. We need to clean it up. it’s trying to remove all of that noise from the things that really do matter to the business.

Terry Gerton Not only does that kind of record keeping impose a cost on the organization, the reporting organization, but it also would create quite a burden on the regulators trying to sort out the meaningful communication in that electronic file cabinet, so to speak.

Robert Cruz Absolutely. Well, the firm clearly has the obligation to sift through all of this data to find the things that matter. If you have a regulatory inquiry, you’ve got to find everything that relates to it. Even if it’s, you know, I talked to an investor and there was an emoji in that conversation. I still need to account for that. So the burden is both on the firm as well as on the regulator to try to parse through these very large sets of data that are very, you know, heterogeneous with a lot of different activities that are captured in today’s tools.

Terry Gerton Relative to the question about the tools, you’ve said that SEC rules should be agnostic to technology. Unpack that for me. What exactly does that mean?

Robert Cruz Sure. This kind of goes back a few years where there was a revision to the rule 17A-4 from the SEC, which is the fundamental record keeping obligation. It says you need to have complete and accurate records. What they tried to do at that time was remove references to old technologies and spinning disks and things we used to do long ago. And so the objective was to be more independent of technology. Your obligation is your obligation. If it matters to the business, that’s the principle that should govern, not the particular tool that you use. So technology being agnostic — or rules being agnostic; technology means it doesn’t matter whether it’s delivered via email, via text, via emojis, carrier pigeons or anything else. If it matters to the business, it matters to the business.

Terry Gerton How do today’s variety of technologies complicate a business’ compliance requirements?

Robert Cruz The challenge is very complex, period. It’s always going to be with us because there’s always going to be a new way that your your client wants to engage. There may be a new tool that you’re not familiar with that they want to interact on. Or you may get pull from your employees internally because they’re familiar with tools from their personal lives. So that encroachment of new tools, it doesn’t go away. It’s always been with us. And so it’s things that we have to anticipate. Again, be agnostic because there’s going to be something that comes right along behind it that potentially makes you know an explicit regulation irrelevant from the outset.

Terry Gerton I’m speaking with Robert Cruz. He’s the Vice President for Regulatory and Information Governance at SMARSH. All right, let’s follow along with that because you’ve got a proposal that includes a compliance safe harbor. So along with these compliance questions, what would that change for firms and how does it address the challenges of enforcement?

Robert Cruz Well, it’s an interesting concept because the rules today are meant to be principles-based. They’re not prescriptive. In other words, they don’t tell you, you must do the following. And that’s one of the challenges the industry has is that, what is good enough? What is the SEC specifically looking for? So this is like trying to give people a safe spot to which then you can say, well, SEC, if you really care about, you know, particular areas of these communications, they can tune their programs to do that. So it feels like it’s just giving some latitude so that we can define best practices. We can get a clearer sense of what the regulators are looking for. It’ll guide our governance processes by just having a clearer picture of where enforcement’s going to be focused.

Terry Gerton The regulatory process that would apply here is notoriously slow and complicated. What’s at stake for firms and investors if we don’t get this modernized?

Robert Cruz Well, I think you’re going to continue to see just a lot of individual practices that will vary. Some firms will interpret things differently and we’ll need to wait for enforcement to determine which is the best way. So, case in point, generative AI — if you’re using these technologies inside of the tools that you currently support, are these going to be considered issues for the SEC or not? We we have to wait until we get some interpretation from the regulators to say, yes, we need to have stronger controls around this, or yes, we need to block these tools. You know, you need to make that adjustment based upon the way that the SEC responds to it.

Terry Gerton And what is your sense of how the SEC might respond to this?

Robert Cruz My gut tells me that just given where we are right now, you know, the SEC has a reduction in headcount it’s dealing with. It’s stating its mission very clearly and its focus is on crypto, is on capital formation, is on reducing regulatory burden. I just don’t know if this makes the list. So it clearly is being abdicated strongly from SIFMA, but, whether this makes page one of the SEC priorities list with the 20% reduction in headcount, it really seems like an outside chance that it gets onto their agenda.

Terry Gerton Could it inform some of the other regulation issues that they’re addressing, such as crypto and and capital formation?

Robert Cruz Absolutely. And that’s a great comment — the notion of using an unapproved communication tool, it didn’t go away. We may not see the big fines anymore, but I think the regulators are going to be saying if there’s an issue related to crypto, related to investor harm or what have you, if you’re using a tool that is not approved for use, you don’t have the artifact, you don’t have the historical record. They’re not going to view that you know favorably if you’re not able to defend your business. And so it’ll come up in context of other examinations that they’re carrying out. So maybe not a means to an end as it’s been for the last two years, but it will impact their ability to do their jobs ultimately.

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Interview transcript: 

Terry Gerton Virginia Tech has just launched a generative AI training program. Tell us about what the program is and why you decided to start it now.

Jamie Cogbill Okay, great. Well, this partnership between Virginia Tech and Amazon Web Services is really about preparing the next generation of national security leaders for an AI-driven world. As one of our nation’s six senior military colleges, Virginia Tech has had the chance to pilot AWS’s new generative AI training, which is the first of its kind, before it’s rolled out to nationwide, or at least to the other senior military colleges. It directly supports the recent White House call to make senior military colleges hubs of AI research and talent development. And our cadets are already finding it incredibly valuable training as they prepare to lead in a defense environment that’s rapidly being transformed by artificial intelligence.

Terry Gerton There’s a lot of AI courses out there. What sets this collaboration apart? What’s unique in terms of content or focus or tools?

Jamie Cogbill Okay. Well, this is the first generative AI training program of its kind offered specifically at senior military colleges. And it directly supports the recent White House AI Action Plan, which was released last July, which calls on senior military colleges to become hubs of AI talent and innovation. And our cadets are getting hands-on experience with the same AI tools and problem solving approaches that are being used in real defense and intelligence missions.

Terry Gerton You mentioned cadets a couple of times here. For folks who may not know that Virginia Tech has a Corps of Cadets, tell us a little bit about that and how many cadets are actually taking the course.

Jamie Cogbill Okay. So yes, Virginia Tech is, as I mentioned, is one of six senior military colleges, which means that they have a Corps of Cadets, just like Virginia Military Institute or the Citadel, or our closest comparison is Texas A&M. There’s currently close to 1,400 cadets in the Corps of Cadets at Virginia Tech. But for this first pilot, it was offered to a total of about 75 students, and the intent was that at least half of them be cadets. And in this case, it was. We had about 38 total cadets that participated in the program.

Terry Gerton And who filled the other seats?

Jamie Cogbill The other seats were mostly people who are affiliated with Virginia Tech’s National Security Institute, which is a hub for defense-related research, but also for preparing future national security leaders here at Virginia Tech. And so the advertisement went out to both cadets and to the students who are affiliated with the Virginia Tech’s National Security Institute.

Terry Gerton It sounds like you didn’t have any trouble filling the seats. What does that tell you about the interest in this topic from future military and civilian defense leaders?

Jamie Cogbill There’s definitely a huge interest and our cadets who I talked to after the training just found it to be very valuable for them with just learning about AI in general, because they know it’s going to be an important part of their future careers, but also learning how to use it more effectively through effective prompt engineering and other methods that they learned throughout the training.

Terry Gerton Talk to us about some of the specific defense AI applications that you’re covering in this course. We all think about Chat GPT and Copilot, but how are those topics specifically coming across in defense-related issues?

Jamie Cogbill That’s a great question. And I don’t know the exact answer to that, but I can say that it’s teaching the core Amazon Gen AI services, which is something they call Amazon Bedrock, which Department of Defense has partnered with Amazon Web Services in a lot of ways, so it’s likely already using some of these AWS services. And so some of the people who are participating in the training will likely go into defense- or national security-related careers and already be expected to use or quickly learn how to use AWS software and AI tools. But I think the big takeaway is just learning AI in general, which is clearly going to be part of their future in national security and defense.

Terry Gerton I’m speaking with Jamie Cogbill. He’s the deputy director of the Defense Civilian Training Corps at Virginia Tech’s National Security Institute. Well, we talk a lot about AI on this program and all of its different applications. One thing we do know about it is it’s powerful but it’s also risky. So in this kind of training, how are you preparing students not just to use the tools, but to really lead responsibly with AI when the risks could be pretty high?

Jamie Cogbill I don’t have specifics about how this training addressed those kind of risks. I haven’t taken the course myself. It was Amazon Web Services who provided it. Talking to my cadets, I think it was a pretty intense curriculum. They did have two different instructor-led sessions, both four hour sessions, and each session was about three hours of content and an hour lab. And then they had a final competitive kind of gamified lab at the end. It was another four hour session where they practiced with real world challenges and in using AI. So I would assume that some of the training in the instructor-led portions was related to the risks of using AI, how to avoid hallucinations that AI can provide. And but also, in the Department of Defense, a key thing is ensuring the use of responsible AI, or RAI as they call it. And so I imagine that was also covered in the curriculum.

Terry Gerton This is cohort one this fall, first time you’ve rolled out the course. What do you think happens next? Where does it go from here?

Jamie Cogbill So we’re hoping that, and this is partially up to Amazon Web Services, but AWS is actively exploring how to scale the program for our spring semester here at Virginia Tech, potentially bringing it back in the spring, but also for 2026 in general. AWS originally intended to expand this training to all six senior military colleges across the country. And I think the success here at Virginia Tech with the pilot proved that our cadets and probably other cadets across the nation are eager to learn and ready to lead in the AI space. And we’re hoping that it set the standard for what other programs could look like.

Terry Gerton Well, always in a pilot there are lots of lessons learned in the process. What do you at Virginia Tech and Amazon take away in terms of needing to improve or broaden the program as you tried it out?

Jamie Cogbill Well, I think as you mentioned earlier, I think the demand is there. So if we can scale it up even here at Virginia Tech and and offer it to more than just 75 cadets and students. But I think that the big takeaway is really that partnerships like this are essential. And AI is changing the nature of national security. And we need to ensure our future military and civilian leaders can lead confidently in that environment. And I think this program shows how academia, industry and government can come together to make that happen.

Terry Gerton AI is such a fast changing space. How do you imagine that the curriculum might have to adjust even from one semester to the next just to stay current?

Jamie Cogbill Absolutely. And I’m sure the folks at AWS are right there on the cusp of all that change. And so my guess is that they are constantly updating their curriculum to keep pace with that.

Terry Gerton Are you hearing from senior leaders in the Department of Defense about how they view the program and what their hopes for it are?

Jamie Cogbill So far, no, not directly. My guess is at the senior levels at AWS, they are talking to senior leaders in the Department of Defense and potentially at the most senior levels of our government, since it was a key goal of the White House AI Action Plan to offer this type of training.

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Interview transcript:

 

Terry Gerton We’re sitting here after weeks of uncertainty and missed paychecks during the government shutdown and a lot of people are probably feeling kind of anxious about their finances. How does that stress from just day-to-day situations spill over into how people make decisions about investments?

Art Stein Well, stress and emotion make a big difference in how people make their investments. And with the TSP, it makes a big difference in how much people are putting in the stock funds, which are the C and the S and the I funds, and then how much they’re putting in, well, especially the G fund, which is a short-term bond fund, really, it’s more of a cash account. And you know, what I’ve seen time and again for 30 years is that when the stock market crashes, federal employees and retirees tend to get disgusted and move money into the G fund. And the problem with that is, there’s never a good time to take it out of the G fund and reinvest. Usually they’ve made that move after the market has declined and frequently don’t get back in until it’s gone back a lot. So really what we caution our clients to do is to set an investment plan. And part of the investment plan is to know what you’re going to do when the stock market does crash. Because inevitably it’s going to. We don’t know when. Stock market crashes average about one every four years or one every seven years, depending upon the time period, or somewhere in between. But they are a regular part of the market cycle. And what we mean by a stock market crash is that a particular stock market like the S&P 500, which is the basis for the C fund, goes down 20% or more from a previous high. And that’s also called a bear market. A bull market is when, let’s say, the S&P 500 increases more than 20% from a previous high. And people really avoid investing in stocks or putting too much money in stocks because they fear the bear markets, they fear the crashes, they don’t like the volatility. But we’re always having volatility in any market except a bank account or the G fund. Volatility is just a fluctuation in value. Now stocks are more volatile than bonds, that’s clear. But what investors should do is trying to determine appropriate allocation between stock investments and bond investments and bank accounts. And the TSP, that means what percentage of your investments do you want in the G and the F funds, which are bonds and cash accounts, and what percentage do you want in stocks, which are C, S and I? And once you choose that percent, stick with it unless there’s a good reason to change. And the stock market crash is not really a good reason to change. And if the stock market crashes, especially for employees, that’s an opportunity. They’re investing money every two weeks. And of course they’d rather buy shares in the C and the S and the I funds when those are down and cheap than when they’re high and expensive. So just being able to stick to it really makes a difference.

Terry Gerton It’s really hard to imagine that the market is going to crash anytime soon. It’s been on such a steady upward climb for so many months. And yet you talk about when that correction, which is impossible to predict exactly, but pretty possible to predict generally happens, people do the opposite of standard recommendation. They sell low and then try to buy again high instead of buying low and selling high. Talk to us again about what kind of planning can help people avoid the emotional response to that sort of occurrence.

Art Stein Well, I think it’s very important to one, know and admit to yourself and take into account that the market’s going to crash. I mean, it’s going to happen. And it’s not unusual. It’s typical. And two, especially for employees, don’t change your investment allocation if the stock markets crash, unless you’re increasing your percentage allocation of your biweekly investments into the TSP fund. If you’re increasing the percentage going into the stock funds, that would make sense. And, you know Terry, when we speak to TSP millionaires, one consistent theme is that they had most of their investments going to the stock funds. And they did not change that when the stock markets crashed. They just kept investing. They accepted that. It was a long-term investment. And they just stuck with it.

Terry Gerton I’m speaking with certified financial planner Art Stein of Arthur Stein Financial. Art, we’re talking about a disciplined, non-emotional approach to investment here, but we’ve just come out of the longest government shutdown in history. And the current continuing resolution only goes through the 30th of January, about two and a half months from now. So how should feds think not just about their investments, about building up or building back their emergency savings if they had to dip into it during the shutdown?

Art Stein Well, this shutdown was horrible, as we know. People were living on credit card debt in many cases. It shows how important it is to have an emergency fund, three to six months of expenses in a bank account, or maybe the G fund. And what we sometimes have to recommend to people, we don’t like doing it, is to reduce your contributions to the TSP to 5%. Because in many cases, Terry, we’re speaking to people who are maxing out their contributions. But no, if you don’t have an emergency fund, that’s a mistake. Reduce it to 5%. Don’t go below that because you want to get the full 5% match from the federal government. Take that extra money that you were investing and use it to build up a bank account, three to six months of expenses. And especially, you know, this is so crazy. We’ve gone through this long shutdown, and then they had this big victory. But when you look at the victory, it only funded the government for two and a half months. I mean, how short term is that? So now is a good time. Just get on the TSP website and reduce your contributions to 5% and build up some cash. I mean, I’m praying and hoping that they won’t do another shutdown on you know, January 30th, but as we all know, things are not good with these negotiations.

The post An objective, unemotional investment strategy for your TSP, easy to say but hard to do in uncertain times first appeared on Federal News Network.

Interview transcript:

 

Terry Gerton I know you have studied how workers of different skill levels choose to use generative AI and the concept of AI exposure. Can you talk to us a little bit about what you’re finding there? Are there certain roles more likely to embrace AI, or certain roles that are more likely to be replaced?

Ramayya Krishnan AI exposure, to understand that, I think we have to think about how occupations are structured. So the Bureau of Labor Statistics has something, a taxonomy called O*NET. And O*NET describes all the occupations in the U.S. economy, there are 873 or so. And each of those occupations is viewed as consisting of tasks and tasks requiring certain sets of skills. AI exposure is a measure of how many of those tasks are potentially doable by AI. And thereby that becomes, then, a measure of ways in which AI could have an impact on people who are in that particular occupation. So, however, AI exposure should not be assumed to mean that that’s tantamount to AI substitution, because I think we should be thinking about how AI is deployed. And so there are capabilities that AI has. For instance, this conversation that we’re having could be automatically transcribed by AI. This this conversation we are having could be automatically translated from English to Spanish by AI, for instance. Those are capabilities, right? So when you take capabilities and actually deploy them in organizational contexts, the question of how it’s deployed will determine whether AI is going to augment the human worker, or is it going to automate and replace a particular task that a human worker does? Remember, this happens at the task level, not at the occupation level. So some tasks within an occupation may get modified or adapted. So if you look at how software developers today use co-pilots to build software, that’s augmentation, where it’s been demonstrated that software developers with lower skills usually get between 20% to 25% productivity improvement. Call center employees, again, a similar type of augmentation is happening. In other cases, you could imagine, for instance, if you were my physician and I was speaking to you, today we have things called ambient AIs that will automatically transcribe the conversation that I’m having with you, the physician. That’s an example of an AI that could potentially substitute for a human transcriber. So I gave you two examples: software developer and customer service where you’re seeing augmentation; the transcription task, I’m giving you an example of substitution. So depending on how AI is deployed, you might have some tasks being augmented, some being substituted. When you take a step back, you have to take AI exposure as a measure of capability and then ask the question, how does that then get deployed? Which then has impact on how workers are going to actually have to think about, what does this then mean for them? And if it’s complementing, how do they become fluent in AI and be able to use AI well? And if there’s a particular task where it’s being used in a substitutive manner, what does that then mean longer term for them, in terms of having to acquire new skills to maybe transition to other occupations where there might be even more demand? So I think it’s we have to unpack what AI exposure then means for workers by thinking about augmentation versus automation.

Terry Gerton There’s a lot of nuance in that. And your writings also make the point that Gen AI adoption narrows when the cost of failure is high. So how do organizations think both about augmentation versus replacement and the risk of failure as they deploy AI?

Ramayya Krishnan If you take the example of using AI in an automated fashion, its error rate has to be so low because you don’t have human oversight. And therefore, if the error rates are not sufficiently appropriate, then you need to pair the human with the AI. In some cases you might say the AI is just not ready. So we’re not going to use the AI at all. We’ll just keep human as is. In other cases, if AI can be used with the human, where there is benefits to productivity but the error rates are such you still need the human to ensure and sign off, either because the error rates are high or from an ethical standpoint or from a governance standpoint, you need the human in the loop to sign off, you’re going to see complementing the human with the AI. And then there are going to be tasks for which the AI quality is so high, that its error rates are so low, that you could actually deploy it. So when we talk about the cost of failure, you want to think about consequential tasks where failure is not an option. And so either the error rates have to be really low, and therefore I can deploy the AI in an automated fashion, or you have to ensure there is a human in the loop. And this is why I think AI measurement and evaluation prior to deployment is so essential because things like error rates, costs, all of these have to be measured and inform the decisions to deploy AI and deploy AI in what fashion? Is it in augmentation fashion or not, or is it going to be used independently?

Terry Gerton I’m speaking with Dr. Ramayya Krishnan. He’s the director of the Center for AI Measurement Science and Engineering at Carnegie Mellon University. So we’re talking there about how AI gets deployed in different organizations. How do you see this applying in the public sector? Are there certain kinds of government work where AI is more suitable for augmentation versus automation and that error rate then becomes a really important consideration?

Ramayya Krishnan I think there are going to be a number of opportunities for AI to be deployed. So you remember we talked about call centers and customer service types of centers. I mean, public sector, one aspect of what they do is they engage with citizens in a variety of ways, where they have to deliver and provide good information. Some of those are time sensitive and very consequential, like 911 emergency calls. Now, there you absolutely want the human in the loop because we want to make sure that those are dealt with in a way that we believe we need humans in the loop, which could be augmented by AI, but you know, you want humans in the loop. On the other hand, you could imagine questions about, you know, what kind of permit or what kind of form, you know, administrative kinds of questions, where there’s triage, if you will, of having better response time to those kinds of questions. The alternative to calling and speaking to somebody might be just like you could go to a website and look it up. Imagine a question-answering system that actually allows for you to ask and get these questions answered. I expect that, and in fact you’re already seeing this in local government and in state government, the deployment of these kinds of administrative kinds of question-answering systems. I’d say that’s one example. Within the organizations, there is the use of AI, not customer-facing or citizen-facing, but within the organizations, the use of these kinds of co-pilots that are being used within the organization to try and improve productivity. I think as AI gets more robust and more reliable, I expect that you will see greater use of AI in both trying to improve efficiency and effectiveness, but to do so in a responsible way, in such a way that you take into account the importance of providing service to citizens of all different abilities. One of the important things with the public sector is … maybe there’s multilingual support that is needed, you might need to help citizens who are disabled. How might we support different kinds of citizens with different ability levels? I think these are things where AI could potentially play an important role.

Terry Gerton AI is certainly already having a disruptive impact on the American workforce, particularly. What recommendations do you have for policymakers and employers to mitigate the disruption and think long-term about upskilling and reskilling so that folks can be successful in this new space?

Ramayya Krishnan I think this is actually one of the most important questions that we need to address. And you know, I served on the National AI Advisory Committee to the President and the White House Office of AI Initiatives, and this was very much a key question that was addressed by colleagues. And I think a recent op-ed that we have written with Patrick Harker at the University of Pennsylvania and Mark Hagerott at the University of South Dakota, really we make the case that this is an inflection point which requires a response pretty much on the scale of what President Lincoln did in 1862 with the Morrill Act in establishing land grant universities. Much like land grant universities were designed to democratize access to agricultural technology, really it enabled Americans from everywhere in the nation to harness this technology for economic prosperity both for themselves and for the nation. I think if you’re going to see AI be deployed and not have the kind of inequality that might arise from people having access to the technology and not having access to the technology, we need something like this. And we call this the Digital Land Grant Initiative that would connect our universities, the community colleges, with various ways of providing citizens, both in rural areas and urban areas, everywhere in the country, access to AI education and skilling appropriate to their context. So if I’m a farmer, how can I do precision agriculture? If I’m a mine worker, or if I’m somebody who wants to work in in banking — from the whole range of occupations and professions, you could imagine AI having a transformative effect on these different occupations. And there may be new occupations that are going to emerge that you and I are not thinking about right now. So, how do we best position our citizens so that they can equip themselves with the right sets of skills that are going to be required and demanded? I think that’s the big public policy question with regard to workforce upskilling and reskilling.

The post Gen AI adoption is reshaping roles and raising tough questions about workforce strategy first appeared on Federal News Network.

Interview transcript:

 

Terry Gerton As we look back, the shutdown’s over now, but it lasted over a month and it really froze critical functions across every federal agency. From your vantage point, what were the most immediate and severe impacts on lenders and small businesses?

Dave Bohrman Well, Terry, I think that’s obviously a big question because there’s some latency in what those impacts will be. So some of that will come out in the days and weeks and months ahead. But looking at it very specifically, you also have to kind of consider what was the situation going into the government shutdown, and that kind of governs what actually those impacts will were or are going to be. So you have a highly volatile economy from a lot of uncertainty, whether that be from the tariffs or whether that be from tax policy, or whether that be from any of the agencies’ policies internally with respect to workforce. All of that kind of created a perfect storm with the political situation of the landscape in Washington; really made a real recipe for the government shutdown to happen. My question always was, once a government shutdown happens, how do we get out of it? And that what we witnessed. So as far as the impact, any small businesses that were looking to do any government-guaranteed lending, 7(a), 504 program within the SBA, that was frozen if their loan wasn’t already into some kind of post approval process. IRS, if you work for the IRS, you obviously know the story. The IRS is a completely different scenario. They went from 100,000 employees to 25% haircut to 75,000 employees and to about half of that were still in operation during the government shutdown this time. I’ve been around long enough, the first shutdown I was part of was 2013. That was pretty small, 13 days. But the last one was the historic one, 35 days. And at that point in time, the IRS was completely shut down. If you were doing anything with any kind of, you know, and “tax” is very broad … so whether you were a tax preparer or you were trying to get tax data or you were dealing with information reporting, there was zero access. This time you had a hybrid of access. So I would say the impact of anybody trying to get information or deal with the IRS, it was marginalized and confusing at best, but there was something happening. If you were looking for anything with the SBA, you were pretty much put on standstill, whether you were a lender or a small business trying to get a loan.

Terry Gerton Well let’s go back to the IRS for a minute, because you say there were folks working and there was some access but it was confusing and perhaps fragmented. Why is IRS data so critical to the lending process, and what impact did it have with a reduction in access to that data?

Dave Bohrman Well, that’s somewhat part of what we do as a business, is get taxpayer data over to commercial lenders or financial institutions that are using it to make a business decision. When it comes to the SBA, because it’s government-guaranteed and there is a taxpayer component to it, the government has very strict guidelines on how to underwrite a 7(a) or 504 loan, it’s governed by their SOP, their standard operating procedures. In that it actually requires tax data, one from the borrower, the borrower has to provide a tax return, and two — directly from, at an arm’s length — from the IRS in a tax return transcript to reconcile that information. And the reason that has to be reconciled is because it can sniff out fraud. If somebody misreports their income, we go to the IRS and we say, your income doesn’t match. Or it can shine a very big light on cash flow. A small business that’s making payroll tax deposits on average twice a week — that payment behavior is very indicative of their financial help. So being able to sniff out whether a business is paying their taxes on time or not is really a key data point for lenders to make a credit decision, whether it be yes or no. The SBA requires it, commercial lenders, some have it part of their credit policy, some do not. But it’s a real problem that we’re trying to solve or at least help lenders make better credit decisions.

Terry Gerton I’m speaking with Dave Bohrman. He’s the co-founder and vice president of marketing at Tax Guard. Let’s follow the thread then. The SBA was basically closed. So for 40-plus days, no one was getting an application submitted, no one was getting a loan approved. And you also mentioned the latency impact of that. Talk us through that. What’s going to happen now that SBA’s doors are back open?

Dave Bohrman Well, there’s the business side. Because it is a public-private partnership, the private end of it is basically most banks in America have an SBA lending program. That is the upstream pipeline of applications. So when we talk to commercial lenders, they were continuing to accept applications, process them internally and get them ready and packaged for SBA delivery. So what you expect to happen, what we’re seeing happen, is the SBA just said, “we’re open.” So now they have this backlog that they’re processing. So in the next couple of days to weeks, it’ll be interesting to see how that goes through the system so that the small businesses that are looking to be funded get funded as soon as they can.

Terry Gerton As you think about this funding lapse, would you say that it exposed any sort of systematic weaknesses both, for banks and borrowers? Was there anything because of the duration here that maybe needs to be specifically addressed?

Dave Bohrman Well, that’s an interesting question because you because history will tell you something. In the past 25 years, since 2000, there’s really been three meaningful government shutdowns. So from a systemic planning process on the agency side and the federal government side, it’s probably a little bit out of bounds to kind of truly build anything into the system to account for a government shutdown. Similarly, on a business side, it’s hard to build a business process around something that happens so infrequently. So if you kind of look at the X and Y axes, it’s very damaging when it happens, but it happens very infrequently. So to answer the question, what systemic things will be changed, I can’t imagine much.

Terry Gerton As you look forward as the government gets back up to speed in these areas, are there ripple effects that you think lenders and small businesses should be looking out for? Do you expect any change in credit standards or compliance risks?

Dave Bohrman Absolutely. Kind of going back to the point of the hyper-dynamic nature and the hyper-volatile nature of the economy as it stands today, everything in the simplest form would be there’s the demand side, so small businesses that are looking for loans, and the supply side, which is the lenders that are giving the loans. So what we’ve seen since the beginning of this current administration, especially, because of the uncertainty and planning, the desire to take capital has been diminished. So the demand side has come down. And some of that — what are the interest rates going to be? Should I wait for a better interest rate? Some of that is, there’s tariffs that are impacting my business, I don’t know where that’s going to land. There are supply chain issues, I’m not sure what to do with those. So we’ve seen the demand side go down. And I think that … if you take the theme of certainty versus uncertainty and certainty driving small-business decisions, we’re still in an uncertain environment. The ripple effects of a government shutdown on top of all of those things add more uncertainty to the equation. I think we have some more, should we say, pain to work through before we get to a place of stability where we would see the credit markets kind of operate in some kind of normal fashion. But it is kind of hard to say what is normal. And on the credit side, creditors — their credit boxes have been getting tighter. The SBA underwriting requirements have increased since the Biden administration. So on the supply side, lenders are getting a little bit more frugal by which who they give money to. And on the demand side, small businesses are looking for credit less, which is impacting the overall economy.

Terry Gerton With the uncertain availability of government data, whether it’s tax data or economic data, do you see a trend for lenders especially to be looking for alternative sources of data as they consider what they’re going to do?

Dave Bohrman Absolutely. And we’ve been doing this since 2007, 2008. The general premise of tax data really isn’t about taxes. It’s really just about a database of small business or business or taxpayer information that is very rich. So when you think about the consumer, you or I, Terry, when we go get a car or we get a credit card, there’s a rich database, whether that’s the credit bureaus or all these kinds of reporting structures, that tells a lot of information about you or I as individuals. Businesses are under a completely different data regime and reporting regime, and they are governed by more usury laws, and that’s kind of based on the premise that small businesses or business in general — they should be left alone. So what that means is there are very little data requirements in the credit-data world for small businesses. So tax data, as we call it, or what we’re talking about payroll data or income data, all the things that live in an IRS database are very rich. It’s a very rich data pool by which lenders can look through. So we’re not the only ones doing this, there are people doing this. So to the point of tax data on any small business or even an individual can be very helpful in understanding who to give money to or who the good bets are, or maybe somebody that didn’t have enough data on them. Tax data tells the story that this is a compliant business and you should be able to give them funding. On the economic data, that that’s a little bit more broad. I know that during the shutdown, there was not a lot of data released. So that will be interesting to see how that plays out. And let’s just say we have a bad job report or gross domestic product, all the economic indicator reports that are going to come out over the coming weeks, that will be interesting to see how that rattles or ripples the credit markets.

The post The shutdown may be over, but its ripple effects on lending and tax compliance are just beginning first appeared on Federal News Network.

Interview transcript:

Terry Gerton: Well, I want to start by congratulating you on your election as a NAPA fellow, a group that’s near and dear to my heart.

Katy Kale: Yes, I know it is very near and dear to your heart. I am thrilled to be part of this organization, one that I have really looked up to for many years.

Terry Gerton: It’s always interesting to look back at the history of folks who get elected. You’ve spent years in key operational roles across government, Capitol Hill to GSA. Tell us what first drew you into public administration and why you stuck with it for so long.

Katy Kale: Thank you for asking that question. I really have always believed that public service is more than a job. It’s truly a calling, which is something that we heard a lot at the NAPA conference last week. For me, it’s also part of my family legacy. So I am a third-generation public servant. My mother, my uncle, my grandfather, all public servants before me. And I actually got my first government job in the federal government as a page in the U.S. House of Representatives when I was in high school.

Terry Gerton: Wow.

Katy Kale: And from there, I just knew that this is what I wanted to do. So I grew up in Massachusetts, but came down to Virginia, went to George Mason University, majored in government and politics, worked for a civic education group before I then went back to the Hill. And as you said, I worked for four different senators. I was a senior leader at the White House. And then most recently, I was the deputy administrator at a wonderful agency, which is the U.S. General Services Administration. I also was, during that time, during the last administration, I was chair of the U.S. Access Board as well, which is a very small, sometimes unknown agency that makes sure that all people, and especially people with disabilities, have access to their federal buildings, to their federal websites. And I had the honor of expanding my own experiences by taking on that job as well.

Terry Gerton: Katy, as you look back at all of those years of service, all of those diverse organizations that you worked in, is there a moment or a project or an initiative that really stands out as especially meaningful to you? Something that makes you think, ‘That is why I do this work?’

Katy Kale: So Terry, I think that you know this more than most, like the thing about being a public administrator is that so much of what we do is behind the scenes. And most people out in the public often only notice something when it goes wrong or goes sideways. But every day, public servants are creating this really efficient and effective government that works and makes life easier for people. And so we really plan for our good days, but we also are always watching out and figuring out what we have to do on bad days and making sure that we can create contingency plans and make sure that the public really doesn’t know what could have happened. And because of that, I think that a lot of public administrators and public servants in general measure their careers in maybe these like small wins that add up as opposed to one big visible accomplishment. Now, that said, I am very proud of the work that I’ve done, especially the teams that I’ve been part of and what we’ve been able to achieve together. And I’ll give you two quick ones. One is back in like 2008-2009, I was the director of operations for the Obama-Biden presidential transition team. And during that time, I worked closely with not only GSA, but also the outgoing team from President Bush’s administration. And I think that what I’ve been seeing a lot lately, and especially anytime transitions come up, is that this group of people were really able to execute one of the most successful transition of presidential powers. And I’m very proud of that. At the same time, figuring out what it was going to look like on Inauguration Day and really just kind of overseeing that daily operations, facilities, technology, human resources, security, all those little things again that are behind the scenes, but really add up over time. The second one is much more recent. It is back in 2021 when I returned to GSA. And at that point, I was both the deputy administrator, but I was also the acting administrator. And it was at the height of the pandemic and the agency and the people were really facing this kind of uncertainty and low engagement, low morale. And really, we realized that we needed to reimagine how and where government work happened. I was tapped to co-chair a cross-government task force. It’s a mouthful, it’s the Safer Federal Workforce Task Force. But there, we developed policies and procedures that we made sure were consistent in messaging. Not only throughout the government but within an agency itself. And knowing that there were so many more unknowns than knowns, we wanted to make sure that we were able to iterate as the situation was changing. And then within GSA, I wanted to make sure that we were leading by example and we really took a look at every position and determine whether it was an on-site position or if it was eligible for remote work. We made sure that we were polling our workforce to see what additional equipment that they needed to do the people’s work either at home or at the office. We asked for feedback often and made sure that we were responding to that feedback. So that feedback loop and because of that, I’m very proud to say that GSA was one of the top five places to work in government during those years, which were really tough years for a lot of people.

Terry Gerton: That’s right. I’m speaking with Katy Kale. She’s a former deputy administrator of GSA and a newly-elected fellow of the National Academy of Public Administration. What would you say if you were speaking to someone just starting out now? What advice would you give them about building a career in public service?

Katy Kale: I love this question because I’ve received it so many times over my career. And I’ve gotten the question a couple of times lately, too. At first, I thought maybe it’s different than it was a year ago, almost a year ago when I left the administration. But I think it’s the same. And the first one is to say thank you, right? Thank you for choosing public service. And there is a lot of very important work that needs to be done at all levels of government: federal, state, local, and not only today, but well into the future. And we really need people who have talent and we need their passion and we need creativity, which often is overlooked. And I think to an individual, I would recommend that they do what they enjoy. There is a place for just about any career within public service. Often, people only think about the policymakers or the elected officials when they’re thinking about government and public service, but it really includes so many career choices and career paths. Just thinking about folks that I’ve worked for: statisticians to building managers to police and security officers to astronauts. There’s so many jobs from the private sector that translate into the public sector and connect you to a mission-driven organization. I think the other thing is really to succeed in public service, you need humility, you need to be authentic, you need a sense of humor certainly helps. And you really need to connect with a purpose that is greater than yourself. And a lot of it is not an individual work, it is really teamwork. I used to work for an organization and they would say that democracy is not a spectator sport. And I loved that. But I think over time, I’ve really realized that democracy, and especially public service, is a team sport. We all need to work together and I’m really looking at the next generation to join us and really step up and continue to make a difference.

The post From Capitol Hill to GSA, Katy Kale has spent decades behind the scenes making government work first appeared on Federal News Network.

Interview transcript:

Terry Gerton: It is GivingTuesday and so I’m delighted to start this story with Navy-Marine Corps Relief Society. But as we sit here today, coming off of the longest shutdown in government history, walk us through how military families are doing right now. How did that shutdown affect them?

Robert Ruark: That’s an absolutely great question. I think the way military families feel is it can certainly affect their confidence in basically in the support of their families. And that’s the big thing is that if their pay is uncertain, then it is absolutely necessary that they have to have a backstop for that. So one of the things that’s come up with a lot of the banks that cater to the military is the Payroll Protection Plan, the PPP. So the banks like USAA, Navy Federal Credit Union, PenFed, PenAir, a lot of them to cater to the military, they have those. And where you can virtually, you got to get signed up for that if you’re basically active duty service member because they can guarantee a great part of that payday. But if you’re not, you talk about stress. I mean, there’s enough stress in military life between inflation, global conflict potential, unplanned deployments that are going on quite a bit right now, housing and gas prices and basic life events that happen to your families, especially when you’re raising a young family with children at a military base and you’re forced to relocate, deploy all the time, your spouse is trying to find work and it’s really difficult to do that. So to not pay a service member, to a service member, in my opinion, is a sin because of what they do for this nation because they’re not necessarily doing it for themselves. They’re doing it because they want to be part of something much bigger and that’s the country and the country that they love. There’s a very mutual relationship there. So you want that confidence. You don’t ever want to lose that confidence. So I think pay has to be there. We were taught when I was a young Marine: pay, mail and food. Pay, mail and chow is what we call it, but you need those three things. Those are rights. And so I think every military service member views it as a right to be paid on time.

Terry Gerton: People who aren’t familiar or haven’t lived a military lifestyle may not understand all of the things that you just walked us through. And that’s, I think, what makes this GivingTuesday campaign so interesting. Navy-Marine Corps Relief Society has partnered for the fourth year in a row with the other military aid societies for GivingTuesday. Tell us about that partnership and what it means for military families who may be facing some of the stresses you just described.

Robert Ruark: I think the best part about the partnership is, as everyone knows in the country that follows the armed forces, we consider ourselves a joint force. And so that should also apply to the military nonprofits. Unfortunately, most of the our nonprofit peers outside the military aren’t really partnered with a lot of people. There’s maybe a few exceptions, of course, but the bottom line is we thought we would do something about four years ago that would be really new. And so we decided to partner to benefit all of us because we fight together, we train together in a joint environment. So we decided on GivingTuesday, the last few years, to the four military aid societies, the Army Emergency Relief, Air Force Aid Society, Coast Guard Mutual Assistance and Navy-Marine Corps Relief Society, we would join forces to raise important funds to support military families in need through a different campaign each year. This year’s campaign is ‘Make Giving Your Superpower.’

Terry Gerton: Tell us about that campaign theme and why you chose it.

Robert Ruark: So the campaign is being conducted today on social media with the one-day goal to provide active duty service members and family members with vital emergency relief, financial support and education assistance. Those are the three things that we all have in common that we do to support everybody.

Terry Gerton: And how do you hope folks resonate with that superpower theme?

Robert Ruark: Well, the theme is a challenge to Americans to step up, suit up and make giving your superpower for the heroes who serve this country every day. All the donors need to do is visit the website missiongive.us. We believe our service members are truly superhuman in many ways and this is one way to honor their service. And the money goes straight to those different ways that we all support them. Financial assistance, education assistance, disaster assistance. And it goes primarily to those junior service members, the E-5s and below, with probably about five years or less service and a lot of them are married, they don’t make a lot of money and they’re looking to really improve their lives.

Terry Gerton: I’m speaking with retired Marine Corps Lt. Gen. Bob Ruark. He’s the president and CEO of the Navy-Marine Corps Relief Society. So something that’s really interesting with your campaign this year, you have a major matching gift partner. Tell us about Lockheed Martin’s role in this year’s campaign.

Robert Ruark: Lockheed Martin is the, of course, the global aerospace defense company. About three years ago, they started the $1 million match for all contributions, doubling the impact. That made this not only a competition, but a wonderful thing that very few nonprofits have. And so last year, we raised $1.3 million, which clearly doubled the impact. And so visiting missiongive.us is really what we ask, but that money will go right back out to the troops and especially those that are deployed, the families that are behind and help them with a lot of their needs. For example, financial assistance is our biggest need. And right now, the Navy-Marine Corps Relief Society alone, we do $50 million of financial assistance a year, interest-rate loans and grants and we sit and we do budgets. We do financial education. We do everything we can to help them basically make the money or make the dollars go as far as they can.

Terry Gerton: But if someone wants to go beyond giving on GivingTuesday and get involved, what are the opportunities and how might someone become a volunteer with you?

Robert Ruark: Well, there’s enormous opportunities. They can visit one of our offices at one of those 52 major Navy and Marine Corps bases. They can go to nmcrs.org. They can call us. They can email us. We will always accept the volunteers. And the best part about that is the volunteers, in a lot of cases, get some great training. They become caseworkers in financial situations. They can get retail experience in our thrift shops. They can assist the visiting nurse program because it’s in such demand where we make 12,000 patient contacts each year, and they can learn budgeting and be able to do that financial education. So there’s enormous capabilities to grow and we know military spouse unemployment, I should say, is a huge issue. They can get some skills and then hopefully apply those to a real job.

Terry Gerton: Do your volunteers have to be connected to the military or can they be real-life civilians?

Robert Ruark: They can be real life civilians. It is so easy.

Terry Gerton: Well, give us the website one more time.

Robert Ruark: Ours is nmcrs.org and the GivingTuesday website to give to all of us to choose your favorite military aid society is missiongive.us and please thank Lockheed Martin in some way, shape or form because they’re making it happen with a billion-dollar match.

The post This GivingTuesday, one campaign aims to turn generosity into a lifeline for military families first appeared on Federal News Network.

Interview transcript:

Terry Gerton: You’ve recently laid out a mix of reforms and warnings and priorities for the 2026 National Defense Authorization Act, which is still moving through Congress. What’s the overall message before we dig into the specifics that POGO wants to send about this year’s recommendations?

Greg Williams: Sure. I think we all welcome all of the extraordinary work that Congress has done this year to produce two different versions of NDAA bills that work very hard to overhaul military acquisition. Now that said, they place an enormous emphasis on deregulating military acquisition, with the Senate’s version repealing no fewer than 86 distinct statutes that govern military acquisition. Now, Congress has its own research arm to help inform for these decisions, and that’s the Government Accountability Office. Now the Government Accountability Office maintains a database of suggestions. And last I checked, there were 750 recommendations they had for how the Defense Department is run and exactly none of them recommend repealing any statutes having to do with military acquisition. Now I think the unavoidable question is if Congress doesn’t seem to be listening to the GAO, its own investigative body, well, who is it listening to? I think it’s only logical to wonder to what extent these changes are being pushed by the defense industry, perhaps at the expense of the interests of the taxpayer.

Terry Gerton: Are you seeing any specifics in the NDAA that relate back to those 750 GAO suggestions?

Greg Williams: Frustratingly few. Two that I’ll call out that I think are really important are passages in both the House and Senate versions that secure greater right to repair the military’s own equipment. Just imagine you’re far from home, you have a piece of equipment that you rely on, perhaps for your safety or in order to be able to complete your mission, and it breaks. Right now, there are rules, laws, contracts that often get in the way of military personnel fixing those things. This year’s NDAA, whether the Senate or the House versions prevail in this context, will dramatically increase the military’s right to repair its own equipment. And I think it’s really important that those passages survive conference. The other one that I think is particularly important in terms of acquisition law are some reforms to what’s called the Nunn-McCurdy Act, which stipulates that Congress needs to be informed if weapons development or procurement programs breach certain cost thresholds and requires that the Secretary of Defense or Secretary of War recertify those programs and provide updated timetables and budgets for their completion. So the passages that amend that provide Congress more say in the recertification of those programs and they make it easier to call out cost overages, especially in the case of large programs like naval shipbuilding, where if you look at the overall program, you may not have breached overall cost thresholds. But you’ve already built two or three ships and you can tell that they’re way over budget. What this passage allows you to do is to treat them as distinct subprograms and apply those thresholds to them individually.

Terry Gerton: Well, you’re right. There’s certainly a lot of coverage in the NDAA, both versions, around acquisition reform. One of the other pieces that POGO has really called out is the use of military force. First, you recommend that the authorizations for the use of military force from 1991 and 2002 tied to operations in Iraq be repealed. Why is it so important to take those off the books now?

Greg Williams: Well, those AUMFs have been used very pervasively to authorize all kinds of use of violence around the world that seem to have very little to do with the original intentions of those two AUMFs. And one of the ways Congress can clarify the use of its power to decide when and where we go to war is by not leaving things like that lying around to be potentially misinterpreted or reinterpreted by the executive branch.

Terry Gerton: I’m speaking with Greg Williams. He’s the director of the Center for Defense Information at the Project on Government Oversight. Greg, let’s follow up on this a little bit because there are conversations happening between the president and his team and Congress right now about operations in Venezuela. So how do those AUMFs relate to those kinds of current conversations?

Greg Williams: Well, I’m going to emphasize that there are operations against Venezuelan nationals and Venezuelan boats, and they’re being treated by the administration as being very distinct from potential operations that might take place in Venezuela. And in fact, the administration is arguing that they don’t need to comply with the War Powers Act in the context of the Venezuelan boats because we’re not deploying troops in harm’s way. As you may know, these boat strikes are believed to be largely conducted by unmanned aerial vehicles and so arguably, American troops are never in any danger as we execute these strikes. Now if we were to invade Venezuela or if we were to fly crewed aircraft over Venezuela or even close to Venezuela and engage in a shooting war with them, that would more clearly trigger the requirements of the War Powers Act, or at least that would not be subject to the exclusion that the Trump administration has called out in the context of those boats.

Terry Gerton: One of the other concerns that you raise about military deployments is border enforcement and the use of military forces in that function. What’s the concern there?

Greg Williams: Well, the overall concern is that what we’re seeing is a steady erosion of what we thought were bright lines, protecting both American citizens and others against being arbitrarily seized or killed. And whether we see those lines blurred outside our borders, as in the context of these boats or inside of our borders, it just makes us all a lot less safe. It’s much harder to count on not being swept up in some raid and potentially deported to a foreign country without any meaningful opportunity to defend our rights.

Terry Gerton: Well, military deployments and acquisition reform are really big topics. I want to pull you down to something a little more wonky and talk cost accounting standards because you’ve got a recommendation in here and there’s been a lot of conversation about moving DoD from cost accounting standards to GAAP, Generally Accepted Accounting Principles. Why was that important enough to raise in your memo?

Greg Williams: I think it represents a fundamental misunderstanding of how accounting in general works. And it undermines a very basic control that any customer organization wants to have over vendors that are submitting things like expense reports. So at a high level, I would describe the generally accepted accounting principles as a set of tools that are created by an industry consortium to protect shareholders in private organizations from misrepresentation of the value of the enterprise. Cost accounting standards are like the expense report guidelines that any consultant or anyone who’s ever worked as a customer for a big business has to comply with. And different customers have different standards. Some say you can’t have any alcohol at all with your dinner, some say you can have one drink. Some say if you’ve traveled less than 50 miles, you can’t submit any meal-related expenses. It represents an agreement between the customer and their vendor about what is and is not an acceptable expense. And it’s a very basic structure that any business person should recognize.

Terry Gerton: How does that relate to DoD’s ability to pass an audit?

Greg Williams: I don’t think it is particularly related. As long as you follow whatever rules are articulated for you, you can pass an audit. I think use of cost accounting standards is more about making sure that the government gets a fair deal from its vendors when those vendors submit cost reports for reimbursement.

Terry Gerton: So POGO’s list is pretty specific in terms of things that you would hope Congress would consider. If they were to take up your list, what kinds of impact would you expect to see in terms of military readiness and operations?

Greg Williams: Well, I think it’s really interesting that over the last several weeks we’ve paid a lot of attention to the USS Gerald Ford Carrier Strike Group. There are two readiness issues that bear on it directly that have received some attention, I think, should probably receive more attention. One is that it was called out as a specific example of how service people are affected by the inability to repair their own equipment. And the example that was used was, I think, more than half of the ovens used to prepare meals for sailors embarked on the Ford were out of commission and had to wait an extended period of time for the vendor to repair them. Now that’s one thing when you know you can’t have muffins with your breakfast. But if similar principles apply to systems that allow the aircraft carrier to launch and recover aircraft or move weapons to the flight deck and things like that, just imagine being 6,000 miles away from the contractor who might repair those things and having one of them break and having to wait or redeploy back to the continental United States to have those things fixed. It’s just, I think, a fundamentally unreasonable expectation and puts our troops needlessly in danger.

The post POGO has new recommendations to improve the 2026 NDAA before it’s finalized first appeared on Federal News Network.

Interview transcript:

Terry Gerton: Well, I want to talk about your new book that talks about the U.S. campaign against the Sinaloa cartel and its Chinese chemical suppliers. This tells a story that a lot of people don’t know. So begin by filling us in on the background.

Jake Braun: Sure. So I initially got the idea to write this when I was sitting with some HSI, Homeland Security Investigations folks, at a retreat that we were doing in Crystal City, actually talking about fentanyl. And one of the guys there starts going into the takedown of El Chapo. And it’s just a fascinating story. And I had no idea how much HSI was involved in this. Obviously, the DEA was super involved as well. And he goes into all the wiretapping they were doing and working with the Mexican Marines and all this stuff to get them. And so he mentioned this group called the TCIUs, the Transnational Criminal Units that HSI pays. These are elite in Mexico’s case, Mexican law enforcement officials that are on the U.S. payroll and kick down doors for our brave men and women out there. So went down to meet some of them and we sat at the top of the Sofitel Hotel, which is right next to the U.S.-Mexico embassy. It’s where all the government people sit, and we’re sitting there with these agents and their HSI handlers and it’s like a rooftop thing. We’re drinking beers and by the end of the night, doing shots of tequila and everything. And these guys are showing me pictures in their phones of like them taking down these huge Sinaloa cartel groups, and they’ve got like guys with balaclavas all handcuffed next to these helicopters and so on. And talking about the shootouts they’re in and everything else and I was like, ‘Oh my God, somebody’s got to tell this story.’ And so I just kind of started writing down what we were doing every week and eventually it turned into this book. But really, there’s kind of three main pieces to it. One is really just an assessment of HSI and really just what they’ve become as an organization. And at least at that time, really just fascinating everything that they’ve done in the last 15 years or so since they were stood up. But then also that fentanyl is not a redux of the crack cocaine epidemic. Most people who are taking fentanyl don’t know they’re taking it. So it really is more like a mass poisoning than anything else. And then finally, as I came to find out when I was with HSI and their TCIUs and so on, just the complete transformation from a corporate perspective that the Sinaloa cartel has gone through over the last decade or so and how that is so responsible for what we’re facing with fentanyl today. So it was really a fascinating journey for me and hopefully, I’ve been able to pull back the curtain and for folks and add some interesting color to make it a cool kind of thriller type story while also going into some really kind of heavy topics.

Terry Gerton: Well, let’s take those three that you mentioned and sort them in order because this operation that you describe is really an unusual collaboration across agencies and across countries. What surprised you most about how that team was formed and how it operated?

Jake Braun: Well, it was really interesting in the sense that for most of history, law enforcement has looked at criminal organizations from kind of a kingpin strategy, right? It’s like in Chicago, where I’m from, they go in and they take down Al Capone and like help decapitates the mob here and everything else. Well, Sinaloa’s been around for over a century. They can outfight the government in parts of Mexico and they’re as big as a Fortune 50 company. We’ve taken out almost every head of the cartel they’ve ever had, and they’re stronger today than they’ve ever been. And so we started putting together a counter network approach, looking at it from a counterterrorism perspective, the way we took out ISIS or al-Qaida as a network, as opposed to trying to just take out bin Laden or one of the terrorist leaders, but trying to go after the network. And that really required a whole-of-government approach. So it wasn’t just HSI or DEA. I mean, they were in many ways the tip of the spear, but we had massive involvement from the intelligence community, the military from an intel perspective, obviously DEA, other parts of DOJ, and nearly every part of DHS, whether it be CBP, Coast Guard, Intel and Analysis, et cetera. And so the meetings we had on this, it was really a cast of everybody and anybody who had worked in the War on Terror because it was really kind of the same approach that we took to stand up this operation against Sinaloa. And by the way, in the first year after we launched the effort, which we launched in ’23, fentanyl fatalities went down by 37% in 2024. So we think it’s working and the current administration, I think, has picked up the many places where we left off and, hopefully, we’ll see the deaths further decline in coming years.

Terry Gerton: I’m speaking with Jake Braun. He’s the executive director of the Cyber Policy Initiative at the University of Chicago Harris School of Public Policy. Well, let’s come back to that for a minute, and that’s your second point. You mentioned fentanyl is really not so much a drug as it is a mass poisoning, but also the impact of this operation, reducing fentanyl deaths by about 40%. What are the key takeaways from those points? How should they impact what we’re thinking about in terms of national policy?

Jake Braun: Sure. So first off, people might view saying it’s a mass poisoning as somewhat hyperbolic, but I really don’t believe it is. And this is something else that I really did not know until I started working on this. Almost everybody, even drug users, avoids fentanyl like the plague. But the way they wind up dying from fentanyl almost always is that it is cut into something else that they’re taking. Now sometimes it’s cut into other drugs, which of course folks shouldn’t be doing, but they also don’t deserve to die for it. Oftentimes though, it’s cut into fake prescription pills that folks are given from a friend or there’s these horrible stories about a kid who’s studying for finals in college and they want to take an Adderall or a Xanax or something like that and they take one from a friend thinking it’s real. Oftentimes, the friend thought it was real, too. And it turns out it has fentanyl in it and they die from one dose. That’s where this is this again is not the crack cocaine epidemic. People are dying who don’t even know that they’re taking these drugs. And from a public policy perspective, I think that requires a very different approach for how we inform potential victims to not take the drug. It can’t just be like, ‘Hey, don’t take fentanyl.’ Nobody’s trying to take fentanyl. It’s you can’t really take anything that you don’t know exactly where it came from, even prescription pills. Not prescription pills you get from a pharmacy, but from a friend or a colleague or whatever. So that’s one major difference in how public policy needs to really think through how to address this. When it comes to the kind of counternetwork approach that we took and looking at Sinaloa, what again was so fascinating to me that I did not know going into this was that Sinaloa has completely changed its business model in the last decade. So it was an essentially a Fortune 50 company that had two main commodities that sold marijuana and cocaine. Well, marijuana, we’ve mostly legalized in the country and even in states where it’s not legal, they’re getting it from another state that is, generally not the Sinaloa cartel. And cocaine, which used to be incredibly popular back in the 80s, about 7% of the population reported doing it in any given month, it’s now down to 0.3% of the population is doing cocaine. So it’s like if you went to McDonald’s and said, ‘Oh, guess what? Nobody is going to buy your hamburgers and french fries anymore.’ I mean, what would they do? So what Sinaloa did is they’ve taken over the migration trade. I mean, you cannot cross the border in the United States or into the United States or Mexico unless you pay Sinaloa or their main rival, CJNG. That is a big shift. That is not the way migration worked years ago. And then separately, since cocaine and marijuana aren’t making money for them anymore, they figured out how to both cut fentanyl into the drugs they have to increase their margins. But also they got into this illicit prescription drug market and of course they did that right at the heels of us weaning the population off of oxycotton and other drugs that had plagued society for well over a decade. And they filled that void, which was something that a space they were not in before. And that’s made this so much more tragic is their entrance into the illicit prescription drug market.

Terry Gerton: What is the implication of Sinaloa’s realignment on U.S. operations in the Caribbean right now on our counter drug operations?

Jake Braun: Well, I think that they’ve largely moved, they and the other cartels have largely moved a lot of their operations out of the Caribbean because it’s easier for them to smuggle things across the border via tunnels, drones and so on and so forth. There’s still some, don’t get me wrong, but most of what they’re doing is not in the Caribbean. That being said, they have really dramatically stepped up their efforts to try and get fentanyl into the country from any vantage point, including the Caribbean. I think that what’s critically important with stopping what they’re doing is to really focus specifically on fentanyl, because no administration, Democrat, Republican, Libertarian, Green Party, no administration will ever end criminality. That has been around since humans have existed. It’s not going to stop. But we could end fentanyl and I think if we were able to turn up the heat so high and really just put our boot on the throat of Sinaloa the way we did on al-Qaida and ISIS, they would stop selling fentanyl because they could sell all the other stuff they do, and we’d relegate this back to normal cops and robbers the way we have before with all the other illicit things they do like racketeering and prostitution and other drugs and so on, things far less deadly than fentanyl. But without a real direct focus on fentanyl, I don’t see a world in which kind of a broader approach is really going to end this one issue. And the idea that we’re going to end the Sinaloa cartel in general, them or rivals will come in and take their place later. But again, if we focus narrowly on fentanyl, I think we could end this epidemic in the United States. And there and there’s a moment for this right now. I think the president has shut down the border and or at least shut down illegal crossings. He fulfilled his top campaign promise basically already. And so we’re in a moment now where they really could turn their attention to specifically stopping this horrible epidemic that’s killing so many people.

Terry Gerton: That sounds like a policy recommendation.

Jake Braun: I guess it is.

The post A new book reveals how a covert US campaign targeted the Sinaloa cartel first appeared on Federal News Network.

Interview transcript

Terry Gerton Last week Congress was in recess, but that didn’t mean it was a quiet news week. The White House floated a plan to address the health care subsidy problem that was part of the shutdown agreement. What are you hearing there and how’s it playing?

Mitchell Miller Well, when this trial balloon floated, it completely caught a lot of House Republicans, particularly, off guard. They were totally surprised by this and the fact that it was going to be a two-year extension. Now it would have potentially included some of the reforms that GOP lawmakers are looking for. They want limits on income that are now brought down a little bit more. They want some reforms that they say will take care of waste. But this definitely was quite an event here on the Hill, given the fact that the lawmakers are spread out all across the country in their districts, but they quickly made it clear that they did not like this proposal. And so while there was talk about it being rolled out last week, the White House quickly put the brakes on it and said, okay … Karoline Leavitt, the press secretary, is acknowledging there are some very intense discussions about what is going to happen with health care within the White House and within, among Republicans. But right now, everybody’s kind of scrambling. There are some bipartisan proposals that are coming out of the House. The Senate is trying to work with some things. What I think may happen in the coming weeks is, you’re going to have a vote in the Senate, maybe one or two, on these proposals. One of them is likely to just be a straight up extension of the ACA for a year to keep those insurance costs down. That will likely go down to defeat. And then Republicans, it’s still unclear exactly what they’re going to propose, but you can bet that there will be something brought to the floor by Senate Majority Leader John Thune. That I think will also be defeated because Democrats will filibuster it. And then I think what is really going to probably happen is, this is all gonna get pushed into January, and when people start seeing those eye popping insurance costs going up $100, $500, $1,000, $2,000 and more per month, that is going to put a lot of heat on lawmakers to try to come up with something.

Terry Gerton You make a good point that there aren’t that many working days in December before they get to having to deal with this in January. What else is on the congressional agenda for those few days?

Mitchell Miller Well, you know, that’s a big question because last week was just really a lost week. When the House came back after the shutdown, there was all this talk about they were gonna get right back to trying to get back to regular order and we were going to see a lot of action on appropriations bills. That really just did not happen. There were a few symbolic votes in the House, and so they’ve still got this set of nine appropriations bills that they have to deal with. And even though they keep talking a good game and saying that they’re going to address them, and there is some appropriations meetings going on back in behind the scenes, but that’s going to be the real big thing that they need to at least start getting some traction on, some type of a minibus, perhaps bringing together three, four, maybe five big legislative bills together. But right now that is still in a free form position, so we’ll have to see with the only those limited work days in December will will they actually get much done.

Terry Gerton It feels like we talk about the NDAA every time, but that was supposed to come up for a a vote in early December as well.

Mitchell Miller Right. And that looks like it’s being delayed as well. There’s as you know, many provisions in it that are getting a lot of discussion. Among them, of course, is one of them related to artificial intelligence, the AI provision in the NDAA. There’s so much agreement on the NDAA and we know that this always gets passed every year, but I think that’s the big sticking point right now is that, basically this push to put a hold on everything that would happen in the states with AI so that the federal government could try to get its arms around it. And there’s been a lot of pushback from state lawmakers as well as the house lawmakers that are involved with those people. So I think the NDAA is going to get pushed back a little bit more. Certainly they’re close — you have House and Senate negotiators just trying to bring all of this together. That’ll be a big one this month.

Terry Gerton I’m speaking with Mitchell Miller, he’s Capitol Hill correspondent for WTOP. Mitchell, one thing that’s got to be on lawmakers’ minds in December is the retirement of the comptroller general, the head of the government accountability office. Gene Dodaro’s term ends at the end of the month. What are you hearing in terms of the maneuvering and the nomination for his replacement?

Mitchell Miller Well, I think there’s actually a lot of nervousness right now about what is going to happen with him. He has been a steady hand on the rudder, as you know, for close to fifteen years now, and there’s really a lot of discussion about how they’re going to get a successor to him. And frankly, it’s not really clear what’s going to happen. You have this panel of lawmakers that are supposed to nominate the next person, but they’re also looking for some guidance from the White House because that will have a big role in the type of person that replaces him. And the fact that this is, you know, one of the most prominent unelected positions in the federal government, the fact that this person is really responsible for rooting out waste, which Republicans have said they want to do and that they tried to do with DOGE, how much of a leash is the new head of GAO going to have? Will the White House go along with Republicans? We’ve seen Republicans starting to assert their own voice a little bit more, saying that they want some independence here, or will the White House crush that and say, you know, President Trump says I want this person and we’re gonna put them in? So I think we’re going to see a lot of maneuvering here in the next few weeks because he will be gone, as you know, later in the month.

Terry Gerton Do you think it’s an opportunity for Congress to push back or take back some of its authority? GAO is their oversight body.

Mitchell Miller Right, exactly. I think there is because whether they’re Republican or Democrat, I think the institutionalists, at least, believe that this type of leadership is necessary. And there’s no question about it, whatever political stripe you’re from, this office does root out a substantial amount of waste. I mean, they talk about something along the lines of a $160 billion in the past year. And so also these lawmakers, let’s not forget, when they’re leading various committees or subcommittees, they rely on the GAO for investigations to try to find out what do we need to fix. Everybody’s talking about what needs to be done to make federal government better. Well, this is perfectly an example of where you find the areas where there are problems that the GAO identifies and then Congress can act and react and and create legislation.

Terry Gerton Mitchell, all of these things together, the healthcare proposal from the White House, the delay in the agenda, even this issue of replacing the the head of GAO, point to kind of a an a miasma in the air, if you will, that maybe the White House and the president are losing their grip on Republican policy. What is the feeling on the hill and what implications might this have going forward?

Mitchell Miller I think that this is a great point because there has really been no change among House and Senate Republicans from Trump 1.0 to 2.0 up to this point, however, you have definitely seen in just the past week the real first seismic changes happening within the GOP. And I think, you know, you look at Marjorie Taylor Green and you could say, oh, well, she’s only one of more than 430 lawmakers. But the fact that she decided to resign, that also caused a lot of House Republicans to say, you know what, we’re kind of fed up with being just treated like the little brother at the card table of the Thanksgiving dinner and patted on the head and we want to actually legislate, we wanna assert ourselves a little bit more. So I think you are going to see more of that, particularly on the House side. The House side, frankly, has been kind of quiet in part because they literally were not here for 43 days during the shutdown. But I think that is going to affect the policies of the White House and what they propose. Like as we just talked about, the health care proposal, like that would have been unthinkable a few months ago that Republicans would have rebelled that much. You do see it more so on the Senate side, a little bit more quietly, but I think that is going to have a pretty big impact on what we see moving forward legislatively in the coming year.

Terry Gerton And that’s going to lead right into the midterms in 2026, so much to watch.

Mitchell Miller Absolutely.

Terry Gerton Mitchell, thanks as always for joining me.

Mitchell Miller You bet

The post Congress faces a packed December agenda and big decisions on healthcare subsidies first appeared on Federal News Network.

Interview transcript:

 

Elizabeth Curda The disability exam process is an important component in the decisions that VA has to make about a veteran’s claim for disability. So for example, if a veteran was injured during their service in Iraq and they have ongoing hearing problems, but they don’t have medical records to substantiate that, they might be asked to do a medical disability exam to establish that they have that condition and it’s connected to their service.

Terry Gerton How much does the VA spend on this, and do they do it all in house?

Elizabeth Curda It’s a very costly program. It used to be done within the VHA hospital systems, Veterans Health Administration, but in recent years they have shifted most of the work to contractors. And VA spends about $5 billion, that was the expenditure in 2024, and the contractors do over 90% of all the disability exams.

Terry Gerton So as GAO got into this report, what motivated you to start it and what did you find?

Elizabeth Curda Well, we had a request from the chairman of the House VA Committee’s subcommittee on disability and memorial affairs, Chairman Luttrell, to look at the quality of these exams. When you have a contractor performing a function for the government, your toolbox in terms of keeping that contractor accountable — you have to be able to assure you have oversight over the quality of the work that they’re doing, in addition to things like timeliness. And so they wanted to know, what is VA doing to oversee the quality of these exams? We took a comprehensive look at all aspects of their oversight, and we found that overall they had a lot of processes in place for oversight in areas such as preventing errors, detecting errors that occur, and correcting them after the fact. So a lot going on, but we did find some areas for improvement and made recommendations.

Terry Gerton I can imagine that the distribution of contracted providers for this service is nationwide, so that oversight is especially critical in helping to ensure that a veteran in Indiana has a similar experience and quality as a veteran in Texas or California. What were the sorts of challenges that you discovered?

Elizabeth Curda Well, we made five recommendations that cut across three broad areas. And those broad areas were, as we found, breakdowns in some of their procedures for identifying and correcting the most frequent or complex issues with exams. We found issues with financial incentive payments that they make to the contractors. We found errors that resulted in overpayments. And we also saw a gap in an important source of feedback, which is the examiners themselves. VA gets feedback from all different parties: the contracting companies, the veterans, but they didn’t have any way to get direct feedback from examiners who are doing the day-to-day work.

Terry Gerton The part of VA that administers this is the Veterans Benefit Administration, not the health administration portion of VA, is that correct?

Elizabeth Curda Yes.

Terry Gerton And so VBA not only manages these exams but also the full disability determination requirement. They must be stretched pretty thin.

Elizabeth Curda That is correct. We have been reporting for years that they are in our high-risk list for managing their workloads. And that is basically the influx of claims and being able to handle those on a timely basis. So yes, they have been historically stretched pretty thin.

Terry Gerton I’m speaking with Elizabeth Curda. She’s a director in the education workforce and income security team at GAO. So Elizabeth, then tell us more about the recommendations that you made particularly.

Elizabeth Curda We made recommendations over two years. Our initial report on this was last September in a hearing, and we had a recommendation for a process that VBA conducts in which they feed to the contractors on a quarterly basis the most frequent errors. The contractors are required on a quarterly basis to write a report to VA on what they’re going to do to correct those errors. Now we found that VA did not have complete and effective practices for how to review these reports. So the quality review people would get these reports back from the contractors, and then everyone would write a little summary based on sort of what they thought they should be doing. But there wasn’t any procedure for, what should they be looking for in these reports? And the two things that we found that were missing were nobody checks to see if the contractors go back and actually do these actions. So there’s no checking to see if the contractors are fixing things. And there’s no effort to determine if those actions were effective or not. Are they seeing the errors go down? What’s the outcome of all this work? So that was one area.

Terry Gerton It sounds like that might be an opportunity to deploy AI. If you’re getting all of these reports in, maybe an AI reviewer could help streamline those and tell you about trends and where to follow up.

Elizabeth Curda Well that is another topic because that is very complex. And VA is really, I mean, we’ve discussed some of their efforts with AI and it’s really kind of at its very beginnings. But yes, potentially.

Terry Gerton And so what was the second recommendation?

Elizabeth Curda The second area also had to do with oversight of exams and it has to do with what they call “special focus reviews.” And these are three areas where they’re very complex and they tend to have a high error rate. It’s traumatic brain injury, military sexual trauma, and Gulf War illness. So they had a procedure to do these every two years. And they had done one round of the reviews, but they were late — over a year late — doing another round of reviews. And so we recommended that they basically do the second round of reviews on schedule. We subsequently, in the course of our work, learned that their staff have been cut by about 50% of the folks who were doing this particular function. And so they said in response to us that they will be switching to a three-year cycle, which in our view was, it’s better than no years. But we think the two-year cycle would be ultimately better because then you identify things that are working or not working and can take corrective action sooner. They also have begun negotiations on their new contracts for these contractors, which are long term, you know, they were multi-years, and things that they’re finding from these special focus reviews could be built into those contracts. But only if they’re done in a timely manner.

Terry Gerton Did you get any feedback from the providers themselves about how this process was working?

Elizabeth Curda We checked in with the people who do the disability exams, we call them the examiners, and we randomly selected examiners to talk to. And what we found is universally they felt they wanted opportunities to provide feedback about the exam process directly to VBA. Currently the process is, because they work for a contractor, all that feedback would go through the contractor up to VBA. And VBA basically told us, “we get all that feedback, the contractor gives us feedback.” But what we heard from the examiners is, you know, they don’t always feel they’re being listened to, they don’t always have their problems addressed, and they also sometimes get conflicting information if they work for more than one contractor. Different contractors will tell them to do things differently, and they don’t think that both can be right. But they have a hard time resolving these things themselves.

Terry Gerton So better communication, more checking. What else was on the list?

Elizabeth Curda The last area had to do with these financial incentive payments. The way VBA incentivizes good performance is they have these three areas: quality, timeliness, and customer satisfaction. And they measure, for each of the contractors, how well they do in those dimensions. And they feed that into a formula that will produce a bonus payment to contractors that score particularly well and penalties for those that are not meeting basic thresholds. And what we found was the way they calculate these is on a spreadsheet with a lot of manual data entry, and they were doing manual calculations as well. And there wasn’t a procedure in place to double-check the numbers, the data entry. They were doing some checking, but it wasn’t formalized. And so when we reviewed the numbers, we found that VBA had caught some of its errors on its own, but we found some that they hadn’t caught. And it was about $2.3 million worth of errors — bonuses that went out to contractors that did not earn them. And that really just sends … it’s the wrong message. You’re getting paid and you didn’t actually earn it.

Terry Gerton Exactly. How has VBA responded to your findings and recommendations?

Elizabeth Curda VBA agreed, or they use the term agree in principle when they sort of agreed, with all the recommendations. They actually have reported that they’re taking action on all of them, and some I think are very close to being implemented, such as the one on financial incentives. They told us there was a hearing on this last week, and they said that they actually have gotten the money back from the contractor and they are putting in place these new procedures. We just haven’t seen that documentation yet. But you know, when we do we’ll evaluate whether we can close that one or not. But all of them are sort of in the works, you know, in various stages of completion.

Terry Gerton So will you be following up with VBA to check how they’re doing?

Elizabeth Curda Oh, certainly. And we always follow up on our recommendations at least annually, but sometimes more than that, just depending on when they have updates for us.

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Interview transcript:

 

Bob Venero As we look at AI in in the federal government, but also in the companies that support the federal government — like the Northrop Grummans of the world, the Raytheons — AI is extremely important in helping them accomplish mission. Whether that mission is for the warfighter or whether that mission is for the Veterans Administration or any of the other areas within the government. And what we’re seeing is there’s a tremendous amount of pilots that are happening within those government agencies. At the end of the day, AI means something different to everybody, right? And really if you look at it, what is going to be the business outcome of some type of AI strategy or AI automation that you, as an agency or as a federal systems integrator, are trying to accomplish? That’s the key factor. I don’t want to say there’s no magic behind the curtain as it relates to what AI is — it’s things that are going to happen at speed and scale, tied to incredible technologies from companies like NVIDIA. I look at them as the grandfather of AI. And actually, I think next week is NVIDIA’s GTC event in DC, right? Really geared towards the government and you know what AI is doing for them. So as we look at different areas within the different government spaces, automation is key. Having the proper large language models to support what those agencies are trying to do, and then really protecting the security around what those AI models are going to do, and the guardrails that the government has to have, which is different than the bad actors around their AI testing processes and procedures.

Eric White That’s one thing I’ve been curious about as large language models and other AI tools start being implemented and the idea of contractors competing for different jobs. How are government officials going to judge who has the better large language model or who’s piggybacking off of who? Just getting your thoughts on what the future in that realm will look like.

Bob Venero Well, when you look at that … people are saying, hey, prove to me that you didn’t use an AI model to do that, right? And I look at it and say, if I’m smart enough to use that AI model, you should be looking at me because I’m going to be innovative and smart to help accomplish the goal. I don’t necessarily look at it as a bad thing. Who is going to leverage the proper tools that are out there to accomplish the job in the most efficient, effective and cost-based area? And I think that’s key for people to start to look at. You’ll see now when people actually do interviews, they’re asking them, are you doing this interview with AI or not with AI? And they have to attest to that. But to me, that goes counter to what AI is looking to do for everybody, right? It’s about speed, accuracy, and automation. And if someone knows how to leverage it better, that’s probably the person that you want, because those tools are going to be in your environment. It doesn’t necessarily mean that it’s a bad opportunity or they’re a bad contractor or there’s a bad comparative against large language models. It’s who’s using the technology to the best of its ability to accomplish the goals and the business outcomes? That’s the answer.

Eric White How much help will it provide on the bottom line, do you think, as far as budgets are getting tighter and tighter? How much more will this provide?

Bob Venero As we look at what AI can accomplish, automation is a lot of that AI conversation. Because when you can do automation, then you can take people out of the mundane tasks that are just labor-intensive and have them focus on better things to do, that are more thought-provoking, within their environment. So, it will make a difference as far as cost is concerned. Because if I have an individual that we’re paying $150,000 a year, and we had him doing tasks that were mundane because it was a part of his job description and now we can automate that and have him do more thought-provoking things? That’s better for the environment that we’re going to put him in, but it’s also better for the bottom line. Because now I can do things quicker, more efficient, and more effective. And now I can come in under budget potentially. So as budgets become more and more strained, AI becomes a much better tool. But you know, the big fear … am I going to lose my job to AI? That’s a very broad question. You shouldn’t lose your job to AI, and if you do lose your job to AI, then you weren’t focusing on really what your career was in your future. Because if AI can just take the job away, then you haven’t built value for yourself as an individual. It’s about how AI can help you do your job better, faster and right now the question is accuracy, right? Because there’s a lot of mistakes that happen within that model. Whether it’s Grok or ChatGPT, and you ask it a question that you know the answer to, and you know that the answer they gave you is wrong, and then you just say, are you sure? And you prompt that in, and they’re like, oh you’re right, actually, I did make a mistake. Now that I thought about it, here’s what it is. So it’s not even a question of oh, is that model 100% accurate? If you’re taking that as the rule of law, then you’re going to be in a situation where it’s going come back and bite you in the butt.

Eric White We’re speaking with Bob Venero, he’s the president and CEO of Future Tech Enterprise. That’s been the selling point of this technology, faulting whatever the doomsdayers say about loss of jobs, that you know it will help automate and free you up from those mundane tasks. Are we already seeing that or when is that going to kick in? Because I still find myself doing a lot of data entry here, Bob.

Bob Venero I think it’s definitely happening. Not as efficiently and effective as it should, and that’s because we haven’t been educated properly on prompt engineering. If you don’t know how to ask the AI model the question the right way, it’s going to take you longer sometimes to get to the end result. So there’s a whole education cycle that needs to happen on how to create the right prompting, to ask the right questions to get to your end result and goal. And I think that’s going to develop over time. So right now we’re in the infancies of it. I can tell you that it definitely helps in some of the mundane tasks that are tied to, hey, I want to write a brief about something, here is my topic. It gets you 80% there, and then you have to go in and adjust it. But that 80% has saved you a lot of time and effort, from starting it from the beginning to the end. But then you need to validate what it is, the end result, and make sure your answers are correct. So, we’re not quite there yet. I think in the next 12 to 18 months you’ll see a big difference as these models become more and more intelligent in supporting the businesses that they’re handling, the government agencies that they’re handling, whatever the area that it is, because it’s all about the data. And you know … [garbage] in, [garbage] out, right? And that is, from a data perspective, extremely important as these models become trained.

Eric White Let’s zero in on the defense side of things. Where, from a warfighter perspective, could this technology even work out for the Department of Defense? In the procurement contract world, could this technology be of assistance?

Bob Venero Oh, without a doubt. So a lot of times when the agencies like the DoD put out an RFQ for some type of solution, they’ve got criteria that they need to look at and vet each time the respondent is doing what they’re doing. And that criteria now can be handled by AI versus an individual having to compare hundreds or thousands of pages of response, going through it, pulling out the key areas in there, and then evaluating them across each other. And I think that’s very important. As you take a look at the speed of getting things done, what we’re seeing in the organizations, the systems integrators, speed is so important to them. Now to be able to respond to something accurately, efficiently, and be there first versus somebody else who maybe isn’t leveraging those tools is key. If the Department of Defense can use those same tools to evaluate and compare and contrast versus the human eye, it’s a game changer. It really, really is. And it can give you weighted results against each of the potential bidders on there and pick what it believes is the right solution based on your criteria. But then you still have that human intervention that says, okay, let’s really weigh the results here. Thank you for giving me the information. I see it this way, but Northrop Grumman performed better than BAE did on this, or vice versa, and there’s historics that you can take a look at from a DoD perspective. So I think the more and more it’s adopted within that space, the more efficient those agencies can become, the quicker they can give awards, and the better the cost base will be. They it’s going to reduce their costs as well.

Eric White And the bidders may be able to use it if they have to go through a lengthy RFQ, right?

Bob Venero Which without a doubt. Future Tech as a company, we do a lot of RFQs because we support a lot of the federal systems integrators. And we have an AI tool now — we’ve been in business 29 years, so 29 years of responses — and we fed it into the large language model. So now when something comes across the plate, I don’t have to have a team of seven: “Hey, pull from this, pull from that, pull from here, pull from that.” The AI goes in, it looks at the criteria, it then pulls it in and helps us write a draft of what the response is, the key things that we’ve had. And that’s been amazing from a time-reduction perspective and from a personnel and skill perspective.

Eric White Yeah, pointing it back at yourself, you gave that example. What are you having those seven folks do now that you don’t have to have them digging through all of that paperwork?

Bob Venero Here’s a perfect example. The person now who heads up our RFQ team, she wanted to expand and be a part of the onboarding and training for individuals that come into the company. And so now she has a dual role in the organization. That role wasn’t there before, but now we created this additional role, she’s got both of them, she has the time to do it based on the tools that are there. And now from an onboarding and training perspective, we’re going to bring in an AI module that’s going to help her with that as well. So if you’re embracing it properly, it is going to take you to places that are good. I always use this analogy. I’m a boater, right? And years ago, you had two sticks when you had two engines, right? You had sticks for left and right and back and forth, and then they came out with a joystick. And the joystick is just like we know, you turn the joystick left, it goes left, turn it right, back, forward. All intelligence built into it. The key and smart thing about what that has done — I used to get yelled at, “you’re a cheater, you’re a cheater, you know, you’re not learning the old way.” I’m like, no, I’m actually smart — it’s a lot easier to do it this way. I can get to my route quicker and I can park a lot more easy. It’s the same thing with these tools, right? Embrace them. Bring them into your environment, leverage them out there, and it’ll help you as an organization. But also any of the agencies that do it, it will help them be more efficient, effective, and that’s important right now, tied to costs and cost reduction.

The post What comes next for federal workers after AI takes over the mundane tasks first appeared on Federal News Network.

Interview transcript: 

Jared Serbu Mr. McDaniel, let’s talk a little bit about some of the underlying factors and reasons why you organized this letter in the first place. What has changed that concerns you enough to take this step in recent days, weeks, months?

Dustin McDaniel Well, we’ve seen a significant increase in threats on the judiciary both at the state and federal level for the last several years. We pointed out that threats have increased significantly as per the numbers from the U.S. Marshal Service, and that doesn’t even count state judicial officials. And honestly, we were aware of it, but earlier this year, a group of incumbent actively serving federal judges reached out to me and my co-chair of SAGE, the Society of AGs Emeritus in Nebraska, John Brunning, and they asked specifically for former attorneys general to use their voices as lawyers and as former chief law enforcement officials in our states to encourage Congress to focus on the issue. And that was a very unusual thing. We’ve never had federal judges ask us, honestly, for anything. And so it drew our attention to the fact that they must genuinely be afraid for themselves, their families, and the integrity of the judicial system. So that was the first thing that sparked it. I will also tell you that back in September, I was in New Jersey for a meeting of attorneys general and Federal Judge Esther Salas spoke to the group and she had the most tragic story which she has been telling across the nation. But as a federal judge, she was targeted for assassination. And the man came to her home and her son and husband made it to the front door before she did. And her husband was shot several times and survived, but her son was murdered. And she was the intended target. And since that time, she has been an evangelist around the country trying to raise awareness that these threats are not just against individual members of the judiciary, but against our judicial system as a whole, undermining the rights and liberties of every single American. So between the call this summer and hearing Judge Salas speak so personally about her own experience, we felt moved to try to do what we could.

Jared Serbu And judges generally don’t go out and hold a press conference every time they receive one of these threats and they probably don’t get the media or public attention that they probably otherwise would if they were to do something like that. I mean, what’s your sense of how commonplace these sorts of things are becoming that just sort of escape public attention, because the U.S. Marshal Service, the statistics keeping agency, is really the only one tracking it?

Dustin McDaniel Well, I know that when I was attorney general, we had a political assassination in Arkansas of a high ranking official, and that prompted me to do internal security reviews in our own office. And I had no idea how many threats that I as the AG was getting on a a rather frequent basis. And so we have seen attorneys general, at that time security for AGs was kind of the exception. Today it’s the norm. And you talk to attorneys general who never thought they would want or need to have part-time or even full-time security detail, and it’s because of the credibility and frequency of the threats against them and their families that they simply have no choice. We are hearing that at the same level in the judiciary. After Judge Salas’ son Daniel’s tragic and senseless murder, we have seen a significant increase in threats on judges in the form of pizza deliveries. Federal judges at their home will receive late at night an unordered pizza delivery, and the name on the pizza will be Daniel, which is Judge Salas’ dead son’s name. That only signal to a federal judge is, we know who you are, we know where you are, and that we are sending you a message, whoever they are. Even if that never results in violence, that clearly is intimidating and upsetting and undermining the independence and security of our judicial system, which again is about more than just the judges. It’s about the people.

Jared Serbu Have you seen any indications, and this is impossible to quantify, I realize, that this change in the threat environment is influencing either the ways or the actual content of judicial decisions? Do we have any indication that it’s playing a role in how the judiciary operates?

Dustin McDaniel Well, we have always known that jurors who are judicial officials, even though they’re ordinary citizens, when they are serving as a member of a jury, they are judicial officials critical. And we know that intimidation and bribery of jurors has long been a concern. And we do have specific cases of that. I don’t have any specific cases that I can cite where a federal judge folded under threat or pressure and ruled in a way that he or she would not have ruled otherwise, but they’re human beings. And of course they’re going to have to take some of that into consideration. And it certainly makes it harder. The federal judges that I talk to, most of whom, they’re all underpaid. Our federal judges are underpaid. They certainly could make more money in private practice if they didn’t commit themselves to a lifetime of service to the nation. And the ones I talk to do it because they believe it’s their duty, and their patriotic duty to the country to serve in that capacity. So what I’m seeing from judges is a strong resilience and a commitment that they’re not going to be intimidated and they are going to do their jobs despite these threats, which makes them all the more important for us to protect them. And certainly their families didn’t sign up for that that risk and duty. And so the fact that they continue to go to work and make tough decisions every day is, they’re used to it when they are sentencing mob bosses. They’re not used to it when just their ordinary daily duties lead to the crazy people in their community targeting them for violence, often for political reasons.

Jared Serbu And so part of the ask in the letter is increased funding, and more security kind of throughout the Article III World. What would that actually look like in practice? And are there obvious gaps that you see right now that’s kind of low-hanging fruit that needs to be taken care of right away?

Dustin McDaniel Well, we got forty, the former attorneys general of forty states and the District of Columbia and I think three territories to sign on to this letter because we recognize that the problem has to be addressed. That being said, we stopped short of trying to tell Congress how to do their job. The Congress can appropriate money, and I think everybody trusts the U.S. Marshal Service to know their jobs and know how to fill the gaps once they get adequate funding and resources. I know from my own experience that they have proactive means to where they are looking for threats, even those that have not made themselves known, and then they have a reactive function to react once a threat comes in or someone says or does something that gets on their radar. I trust the U.S. Marshal Service to do their job well as long as they’re given adequate resources and time and personnel to do it. And make no mistake, this is only at the federal level. It was not practical for us to send a similar letter to every state legislature in the country. However, this is a pressing issue in every state in America.

Jared Serbu What’s behind all that? Because that fact, the fact that this is happening both in federal cases that may receive a lot of media attention or are politically charged in some way, that it’s not isolated to those and that it’s also extending to state courts, kind of points to some sort of broader, I almost want to say cultural problem. I don’t know what it is. What’s your take on what’s behind all this? And, to the extent we can point to those things, are there things that can be done, again to take your point on proactive versus reactive, to tamp down those threats instead of just responding to them?

Dustin McDaniel Well, it’s a way bigger issue than any one person can really address, and my opinion on how it’s come to be is just like anyone else’s, but we’ve certainly seen in the last thirty years a rise in school shootings, mass casualty events, online hostility, people venting their tempers in ways that would have not been anticipated, much less considered acceptable, not that long ago. There are angry people in our society. Why they’re angry, everyone’s got their opinion on that. How they manifest their frustrations, regardless of whether they’re with the economy or their elected officials or the judicial system or things that are much more personal, there are outlets, but one outlet that is simply not acceptable and that we cannot tolerate is threatening those people that we as a society entrust to hold folks accountable, to enforce our rights, to keep us safe in our own homes. We can’t expect any of that of the judiciary if they themselves are under daily threat.

The post When federal judges fear for their families, the entire justice system is under attack first appeared on Federal News Network.

Interview transcript:

 

Stephanie Kostro It is the end of the calendar year, beginning of the government fiscal year. And this is the time of year when a lot of companies take a step back and evaluate their business strategy and their planning for the next few years. We see a lot folks having off-sites in December or in January to do some of this strategic planning and I’ll be frank with you, I think a lot people will be happy to see 2025 end. And they will celebrate the new year in all sorts of ways, just because of what they’ve been through this year. If your listeners can harken back to earlier this year, the efficiency initiatives really did a number on a lot of the business plans that had been developed among government contracting companies. Some of them had massive de-scoping of their contracts. Some of them had contract terminations. Some, particularly those who worked for agencies like U.S. Agency for International Development, and the Department of Education, some at Health and Human Services really saw a diminution of their planned objectives for throughout the year. And so as we go into the December and January planning cycle for these companies, what they’re really looking for are signs from the government that there is work coming as they start to think through what calendar ’26 looks like. And they start to do their resource planning for personnel and for bid teams to put together proposals. That’s really what they are looking for. And I will have to say, Terry, earlier this year. PSC, the Professional Services Council, we represent services and solutions providers. And typically every year we put together something called our business forecast, which looks at our scorecard, which looks at all of the web-based procurement forecasts put out by agencies. And we would look at tens of agencies and their forecasts and we would rate them based on 15 key attributes, which we developed in industry, about what is useful for those forecasts. This year in 2025, we made the decision that instead of putting out our seventh annual forecast, we skipped this year. The forecasts just weren’t there, and they’re still not there.

Terry Gerton So how is it that agencies put those forecasts out, and what do they base it on? And I guess the third part of that question is, why aren’t they there?

Stephanie Kostro This was a mandate from, among others, from the Office of Federal Procurement Policy, which is a White House office that said, hey, agencies, to the extent that you can, put out forecasts on your websites. And it was really to help drive new companies to join the federal marketplace and to keep those companies that are part of the GovCon community interested. If you could look at a website and say, okay, there is an opportunity coming up in Q1, Q2, Q3, and let’s build towards that opportunity. What happened earlier this year is a lot of those websites went dark. I think it was because as part of the efficiency initiative, it was no longer a useful tool because things were moving very, very quickly. What I find interesting though, is that those websites are still dark. They’re still not there. And so I’m not entirely sure how our government contracting community can put together a reliable business strategy for 2026 and beyond in the absence of that information.

Terry Gerton Well, some estimates are that the contracting workforce itself has been reduced by over 25%. Are we just missing the people who used to do this?

Stephanie Kostro I think that’s part of it, Terry. We’re missing some of the folks who took that deferred resignation or the “fork in the road” option. Some of them did the voluntary early retirement programs. I would also say in many agencies, and I’ll use the phrase “OSDBU”, but I’ll actually speak out the acronym here, the Office of Small and Disadvantaged Business Utilization. Those were usually the offices that had the lead on publishing these websites, and those offices have sort of been dismantled in some agencies. They are certainly de-emphasized in a lot of the agencies. And so it might be … they’re missing the people, that is true, but it’s also they’re also missing the offices that have the lead on putting together these forecasts. And it really is a shame because, you know, the business community uses these forecasts in so many different ways. It helps them do, I mentioned the business planning, but helps them figure out who they want to partner with, who’s going to be their subcontractors or their suppliers, their vendors, etc. This is a real gap in understanding of what the federal marketplace can offer companies. And I do think it will have effects on whether commercial companies want to get involved in government work. They just don’t know what the opportunities are.

Terry Gerton I’m speaking with Stephanie Kostro, president of the Professional Services Council. Stephanie, one more question on this. I mean, GSA has gone through a lot of work to centralize procurement and forecasting. Would you expect that GSA will take this over perhaps and share their forecast?

Stephanie Kostro I love that you asked this question, Terry, because as I mentioned the last time we put out our forecast, it was in 2024 and we had actually at PSC highlighted GSA as a model for putting out these forecasts. We mentioned that GSA has something called their Acquisition Gateway, which sets a high bar for government business forecasting and it encourages the migration to the GSA tool for other departments. So Department of Labor, Department of Justice, they were using the GSA Acquisitions Gateway. So I think this is a fantastic opportunity to go back to that gateway and have GSA take the lead.

Terry Gerton Speaking of forecasts, PSC’s got a big session coming up starting on December 1st. Your vision federal market forecast. Tell us about that.

Stephanie Kostro I love that our entire segment here is devoted to forecasting, because the procurement dork in me is celebrating here. So PSC has this conference and it’s actually run by our foundation, which is our 501c3 nonprofit affiliate dedicated to education. And so it is a year-long process where we have so many teams come together. There are 21 different study teams, they focus on things like Health and Human Services, or Customs and Border Protection as part of the Homeland Security team. And this year of agency discussions, they speak to think tank folks, they speak procurement officials within the government, and it culminates in this conference and it’s happening in person on December 1st. It’s a virtual day for December 2nd and 3rd. It is where these 21 different study teams present their findings. So it’s not just tied to a web-based procurement forecast, but rather these discussions that they’re having with officials. We had over 400 volunteers as part of this process, and I’m just very excited. It is a great opportunity to really hear what’s going on in the procurement world, not just for opportunities, but what the dynamics look like, what impact inflation is having, etc. And to be honest, what impact these efficiency initiatives have had on the federal marketplace. So I highly recommend this conference. Again, it’s December 1st through the 3rd, and December 1 is the only in-person day here in Arlington.

Terry Gerton It sounds like in the absence of the agency forecast that we were talking about at the beginning of our conversation, this may be a great opportunity for contractors, those who are considering government work, to find out from inside sources what’s going on.

Stephanie Kostro It’s a perfect opportunity to get some business intelligence. It’s also a great networking opportunity because we do have government folks come to this conference as well to hear about what other agencies are doing. And so I highly commend it to folks who are listening, but I’m certainly going to be there and soaking up all of the knowledge that I can. I’m particularly looking forward to the Defense Services presentation in light of the Secretary of War Hegseth and his arsenal of freedom speech that he gave about transforming the processes for requirements and acquisition. I’m really looking forward to that. And I always look forward sort of to the top-line and the IT modernization teams as well. So if I were going to recommend three sessions, those are the top three. But they’re all very, very interesting and I’m looking forward to it.

Terry Gerton So how do people who want to attend find out about it and register?

Stephanie Kostro They can go to PSCouncil.org, and you can also search for Vision Federal Market Forecast and the sessions will pop up. There is a fee, obviously, for this, but it is open to the public. It is a widely attended gathering which allows government folks to attend. That is how they can connect with this conference.

The post Federal agency business forecasts have gone dark, and companies are struggling to plan without them first appeared on Federal News Network.

Interview transcript:

 

Doug Criscitello Very excited to get underway at the Center for USA Lending. The idea has been building really in my mind, and on the part of others from this community, the federal lending community, for several decades really. The U.S. government runs more than 125 federal loan and loan guarantee programs, and that’s at agencies like the Federal Housing Administration, the Small Business Administration, the Department of Agriculture has a variety of loan programs, and various others. There’s about a dozen federal agencies that have loan programs. And today, the U.S. government has evolved to a point where it’s really the world’s largest financial institution. Its credit portfolio alone now totals about $5 trillion, a huge number. So given the relative complexity of making and servicing loans — and these instruments have terms that can last for decades — managing the government’s huge credit portfolio has always been a tremendous challenge. You know, particularly when you compare it with simply providing a one-time cash grant to an intended beneficiary, that’s pretty simple. You’re just cashing once. When we loan money, we’re entering into a long-term relationship with the borrower, technically, so the complexity is very significant.

Terry Gerton When you think about that massive portfolio, you’d said 125 different programs, 12 agencies, $5 trillion. Are there any specific programs that rise to the top of your visibility list in terms of desperately needing attention?

Doug Criscitello Let me answer that by talking about some of the good news, because huge strides have been made in recent decades. We’ve come a long way from the days when loan repayments were recorded on three-by-five index cards in pencil, right? So many of the systems that have been developed over the past few decades are huge advances relative to what we had prior to the sort of general use of computational power across the government. But notwithstanding those advancements, the systems that we have today are fragmented, outdated, they don’t communicate with each other. So, this creates a whole lot of administrative complexity. And borrower confusion. It drives up costs at the end of the day and it makes it difficult to manage risk or detect fraud. And it generally frustrates borrowers. I think if you did a man on the street interview, it wouldn’t be hard to find folks that have been frustrated in repaying a loan to the government.

Terry Gerton Well, your press release for the Center for USA Lending mentions modernization, technology, and integrity as core priorities. You just sort of glossed over them. But when I think about the financial industry, banking, and major corporations, they’re really at the front edge of technology, cybersecurity, identity management. How are you seeing the possibilities for bringing that kind of technology into how the government operates its loan portfolio?

Doug Criscitello Exactly right. So there are a lot of financial institutions that embrace modern technologies and are continuing to advance their use of cutting-edge tools. I think artificial intelligence is a terrific application here, right, to tailor the experience of borrowers, depending on their background, both in the application process and when it comes to servicing. Our hope is to really facilitate a dialog, not only across the government, but to bridge the gaps that exist between technology, private financial institutions and what they’re doing, and the U.S. government credit apparatus. Right now, there are huge opportunities to have really seamless systems from the time a borrower applies for a loan till the day they make the final payment. One agency that I’ve worked at and around for much of my career, the Small Business Administration, has made some amazing strides since the COVID pandemic, when it was forced to disperse nearly $1 trillion in paycheck protection program loans and economic injury disaster loans. They’re in the midst of just an incredible improvement in the borrower experience, the disaster loan program being a great example. And we want to encourage that type of improvement to occur at other agencies as well.

Terry Gerton I’m speaking with Doug Criscitello. He’s the new executive director at the Center for USA Lending. Doug, coordinated technology investment is a perennial problem for the federal government. But setting that aside, you just described a situation that calls out for centralized governance, that calls out for data standardization. Beyond tech investment, what are your policy priorities for the center?

Doug Criscitello You’ve touched on some of them, for sure. The notion of trying to at least have a coherent approach across agencies, where we have common data definitions and agreement in principle that having these end-to-end systems are the way forward here. We really need to automate workflows and integrate systems. I mean, that’s priority one, to ensure that can be done. So look, there’s a lot that the center can do. One thing we’re planning to do is to convene the community. Let’s get folks — we plan to have frequent gatherings of both folks in government, folks in industry — to come together to explore how best to move forward and to continually evolve. It’s not a one-time fix, you know. These systems can continually be strengthened. The government has shown no signs of reducing the size of its footprint here in the lending world. So, you know, we want to be a convener. We want to develop thought leadership. We want to pull together data from across the federal lending enterprise into a common shared platform to help all of the participants in this realm better understand how these programs are performing and what we might do differently going forward.

Terry Gerton You’ve laid out a pretty bold and expansive vision there. If you’re successful, five years from now, what looks different about federal lending?

Doug Criscitello The stakes are really high with a $5 trillion portfolio. I think if we’re successful, our work will help enhance taxpayer value, importantly, by reducing wasteful spending on duplicated systems. We hope to enhance program integrity, reduce hedge fraud faster, and streamline access to loans. Particularly when they’re needed most, right? There are times when the federal government — and the pandemic was a great example — times when funds need to be put on the street quickly and effectively and efficiently, and avoiding fraud. So our goal is really to make government lending more efficient. So whether you’re a borrower seeking faster service, a private lender who wants to have a harmonized relationship across all of their various federal loan guarantee programs in which they participate, or even just a taxpayer … importantly, a taxpayer who absolutely deserves efficient government operations. The center’s modernization efforts, I think, are poised to benefit you directly. So we’re really excited to get underway.

The post A new center aims to modernize federal lending at a scale few realize exists first appeared on Federal News Network.