April 21, 2004

Testimony on the Fiscal Year 2005 Budget Request and NIH Management before the House Committee

Witness appearing before the House Appropriations Subcommittee on Labor, HHS, Education, and Related Agencies

Elias A. Zerhouni, M.D.
Director, National Institutes of Health

Day 2: NIH Management

Good morning, Mr. Chairman, and members of the Committee. Let me begin by thanking you for the opportunity to be here this morning to talk about how we are transforming the management of NIH. By taking a separate day for this presentation, you have shown how seriously you take the efficient management of science and business practices at the NIH. Let me assure you that I, along with all the leadership of the NIH, share that commitment with you.

As any organization grows, it is imperative that it review its effectiveness. Since I became Director, my colleagues and I have not only focused on our scientific strategies (which we discussed yesterday), but have also made bold innovations in the management of NIH. We have continually sought new opportunities to improve our management, and find efficiencies in our organization, infrastructure and information technology, consistent with the President's Management Agenda, which includes Strategic Management of Human Capital, Competitive Sourcing, Improved Financial Performance, Expanded E-Government, and Budget and Performance Integration.

We have structured this presentation around three areas: 1) managing our corporate responsibilities by streamlining and rationalizing our decision-making processes; 2) transforming our business practices; and 3) managing the science within NIH's Institutes and Centers (ICs). I will begin by giving you some examples of how we are improving the management of our corporate responsibilities, and then describe some of our efforts to re-engineer our business practices. I will then introduce Dr. Allen Spiegel and Dr. Story Landis, who will be representing the ICs and will describe how they manage the science within their Institutes.

Managing Our Corporate Responsibilities

As the NIH has grown in size and complexity in recent years, there has been an increased need to streamline modes of trans-NIH coordination and decision-making. Leading the NIH requires a team approach that advances our mission efficiently and effectively across all the Institutes and Centers, while preserving the necessary autonomy and innovative drive of those ICs. In July 2003, after a nine-month period of study and consultation with all the Institute and Center Directors, we established a new governance and management philosophy by first forming the NIH Steering Committee. This Committee, which I chair, includes nine Institute Directors, with the three largest Institutes (NCI, NHLBI and NIAID) having permanent seats. The remaining six positions rotate in three-year terms among the Directors of the other Institutes. Five Working Groups feed into the Steering Committee: Management and Budget, Extramural Programs, Intramural Programs, Facilities, and Information Technology. Members of some of these Working Groups are here with me this morning: Drs. Duane Alexander, Jeremy Berg, Richard Hodes, Story Landis, Ting- Kai Li, and Allen Spiegel.

The Steering Committee and its Working Groups are greatly improving NIH's corporate decision-making, streamlining and simplifying our management processes. The IC Directors continue to formulate their specific scientific directions and priorities, as well as maintain operational oversight of their respective Institutes and Centers, while the Steering Committee and its Working Groups focus on NIH-wide policies and necessary operational decisions, including budgeting for common campus services, FTE allocation, etc. This has led to greater clarity regarding NIH policy and its development, and more efficient use of our time and resources.

Last year, I also created an Administrative Restructuring Advisory Committee (ARAC) to review and make recommendations regarding several NIH administrative functions, including Acquisition, Finance, Budget, Grants Management, Facilities, Equal Employment Opportunity, Information Technology (IT) and Human Resources. NIH is now implementing the ARAC report recommendations, which will improve the efficiency of the affected NIH administrative operations.

Consistent with the President's Management Agenda's Strategic Management of Human Capital goals, organization realignment is underway in several of these areas. Consolidation of the separate Equal Employment Opportunity Offices in each Institute and Center, under the leadership of the NIH Office of Equal Opportunity and Diversity Management (OEODM), will allow NIH to achieve greater consistency and efficiency in meeting legally mandated requirements, making a more effective impact on diversifying the workforce and research environment. Research and development contracting will be significantly improved through the use of new business systems that will streamline processes and standardize operations. Additionally, consolidating key IT functions across the NIH will achieve greater economies of scale, eliminate unnecessary duplication, enhance security, and deliver better administrative services.

By embracing innovative new technologies and streamlining governance structures, we will continue to enhance the agency's management and administrative functions. Remarkably, because of improvements in productivity over the past ten years, while NIH funding has grown by 141 percent, our FTEs have increased by only 16 percent.

As a further testament to the progress we have made, we have received numerous management awards. In October 2003 the NIH received a CEO Leadership Award from Diversity Best Practices, in recognition of our efforts to ensure a diverse medical research workforce. NIH was the only Federal Government agency to receive one of these awards. Also, the NIH Information Technology Acquisition and Assessment Center program received the Government Solutions Center, E-Gov, Pioneer Award in 2002 for demonstrating innovative strategies and technologies required to deliver IT services in the digital world. NIH's environmental efforts have been recognized with three awards: the 2002 Significant Achievement Award for a Government Facility from Businesses for the Bay, and two Arbor awards in 2003 from Montgomery County for our Tree Preservation Program. NIH's activity-based management approach to charging Institutes and Centers for space received a 2003 GSA Achievement Award for Real Property Innovation.

Our corporate responsibilities also include such topics as the real and perceived conflicts of interest among NIH's researchers and Institute Directors. I want to assure you that we take this matter with the utmost seriousness, and are addressing it aggressively. I have put together a Blue Ribbon Panel as a working group of NIH's Advisory Committee to the Director (ACD). The charge of the Panel is to review and make recommendations for improving the existing rules and procedures under which NIH currently operates regarding real and apparent financial conflict of interest of NIH staff and requirements and policies for the reporting of NIH staff's financial interests. The panel is co-chaired by Bruce Alberts, Ph.D., President of the National Academy of Sciences, and Norman R. Augustine, Chairman of the Executive Committee of the Lockheed Martin Corporation. The ACD will be receiving its report on May 6, and I will inform you of the conclusions of the ACD as well as mine, next month.

In managing our corporate responsibilities, we have a record of being proactive wherever we can be. When information and issues come to us, we are active in managing the situations transparently and aggressively, as with the issue of conflicts of interest.

Managing Our Busines Practices

NIH is investing in initiatives to re-engineer our business practices and, in many cases, electronic government helps us to do so. Such initiatives are designed to use technology to its fullest to provide services and information to our many stakeholders, both external and internal to NIH. For example, the Electronic Research Administration (eRA) initiative aims to implement end-to-end electronic grants administration for a wide range of NIH research mechanisms. eRA's internet-assisted review was implemented in the spring of 2003. For grantees, NIH, and other agencies, the benefits are huge and the process could reduce the waiting period from submission of an application to a grant by 20 to 30 percent. Starting in February of 2005, eRA will accept a major portion of its individual investigator-initiated grant (R01) applications electronically. This will facilitate getting grant funds to the successful applicants more quickly, and will allow us to harvest public health information more effectively. The eRA is tightly integrated with the President's Management Agenda and the Federal Enterprise Architecture and the eRA is the DHHS lead project for e-Grants. NIH contributes to the One-HHS initiative by hosting other operating divisions' (CDC, AHRQ, HRSA) use of NIH electronic grants administration systems. As part of the President's Management Agenda to Improve Financial Performance, a new agency-wide electronic business system, known as the NIH Business System (NBS), reduces the complexity of doing business, increases service levels, and improves management controls by integrating processes such as acquisitions, travel, property, and financial management. The NBS serves as a proof-of-concept for, and a major element of, the HHS Unified Financial Management System (UFMS). The NBS was launched October 1, 2003. These initiatives and others will increase efficiency and effectiveness, and provide a solid foundation for making progress in biomedical discovery and innovation.

In addition to these initiatives that are underway or nearing completion, we are continuing to look for opportunities to transform our management and administrative functions. We are continuing to develop and apply modern management tools, to increase trans-NIH planning structures, to rationalize a complex disease funding tracking system through the application of advanced data mining management technologies, and to strengthen our most powerful asset, our human resources and leadership. We are acutely aware of the need to recruit and retain the best researchers and administrators to accomplish our mission, and have begun to develop strategies for succession planning for our scientific and administrative leadership positions.

As we undergo these transformations, we are happy to look outside the NIH community for fresh perspectives. Recently, the Institute of Medicine (IOM) completed a study of the NIH organization, and several of the initiatives I have discussed today follow its recommendations. The National Academy of Public Administration is also assisting us to implement the NIH ARAC recommendations.

As we have transformed the NIH administrative structure to support world-class scientific research, we have also managed the transformation of the NIH physical infrastructure that supports this research. This investment in the physical infrastructure needed to support the NIH's on-campus research is exemplified by the new Mark O. Hatfield Clinical Research Center (CRC), which will make its transformation from construction project to open-for-business status in December this year, when the facility becomes home to new inpatient units, outpatient facilities and research labs. The CRC combines state-of-the-art laboratories with patient care and procedure areas in one tightly integrated facility — the NIH Clinical Center created this successful model for translational research 50 years ago. The new CRC will be the largest hospital in the world totally dedicated to clinical research. The CRC will be the working environment for an unparalleled confluence of laboratory research and hospital care professionals with a breadth of expertise that spans many disciplines and diseases, and its physical and intellectual resources and environment are unique in the Nation. The distance from the bench to the bedside is, literally, just a few steps down the hall. The resulting combination of intellectual and physical resources fosters quick and formidable responses to new research opportunities and to emerging public health problems. I would like to invite all of you to come and tour the facility at your convenience, and see for yourselves the result of the years of planning and funding the Federal Government has made in the construction of this twenty-first century, state-of-the-art research facility. This facility, the culmination of years of transforming clinical research, will also foster interactive collaboration among clinicians and other researchers, and will benefit our nation for years to come.

Managing Science

Yesterday, I outlined our trans-NIH work on the NIH Roadmap for Biomedical Research, but I also want to emphasize that NIH research is fostered through many other trans-NIH groupings, which bring together researchers from many ICs. Some are coordinating committees, which focus their attention on common research interests, such as the NIH Obesity Task Force, or the Parkinson's Disease Coordinating Committee. Others are trans-NIH coordinating groups which focus on the management of NIH research resources, such as the Trans-NIH Coordinating Committee for Non-Mammalian Models.

These committees and task forces, of which I have mentioned but a few from among numerous possible examples, are a vital component of our ongoing active efforts to coordinate research programs and resources. Through these combined efforts, we are able to work together across NIH's Institutes and Centers to maximize our resources and accelerate research progress, spurring the translation of research findings into interventions for the prevention, diagnosis and treatment of disease.

One exciting tool we have developed to help manage the complexity of the scientific and disease challenges is a matrix that we have begun to use to categorize research efforts on the basis of their relative risk (in terms of payoff) and whether these efforts will be in the short- or long-term. We have successfully applied this matrix to diseases such as Autism and Parkinson's disease (about which Dr. Landis will speak), to our Roadmap planning, and to the development of our Government Performance and Results Act research outcome goals.

Our next speakers, Drs. Allen Spiegel and Story Landis, will talk about some of these trans-NIH collaborations in which they are engaged, after they spend a few moments talking to you about how they put the funding you entrust to them to good use within their institutes. At NIH, our Institutes and Centers work hard to effectively manage our scientific portfolios, weighing emergent scientific opportunities for quality, depth and breadth of public health impact, and stage of research — all to benefit the health of the society we serve. We hope that their testimony will give you additional insights into how we accomplish management in relation to our scientific mission. Once they have completed their testimony, we would all be pleased to answer any questions that you may have.

As science is entering its next revolutionary period, we are keenly aware of the need to transform NIH's management in parallel with the progress being made in science, so that we can successfully meet the challenges raised by the inherent complexity of an agency that is now considerably larger than it was even a few years ago. Thank you again for the opportunity to testify on NIH's management initiatives.

William R. Beldon, Acting Deputy Assistant Secretary for Budget, HHS

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