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'A Comprehensive Look'
ARAC Examines How NIH Operates, Promotes Efficiency

By Carla Garnett

On the Front Page...

For nearly 2 years, NIH has been taking a frank look in the mirror, and thinking about what it sees. Far from prompting merely cosmetic changes, the agency's self-examination has led to a number of ways to enhance efficiency and effectiveness over the next several years. In arguably the most complex planning phase for administration in NIH's recent history, NIH director Dr. Elias Zerhouni assembled the administrative restructuring advisory committee (ARAC), a 26-member team that compiled 18 pages of recommendations for how NIH operations can be improved. Implementation plans have been designed in many phases, with the goal to have all phases of the plan well under way within the next couple of months.


Composed of institute and center directors, senior executive staff from the Office of the Director and the ICs as well as members of the intramural and extramural programs, ARAC was established in early spring 2003 to advise the director and deputy director and to oversee all of NIH's administrative restructuring efforts.

"I don't think NIH has ever undertaken such a comprehensive look at its operations," says Colleen Barros, NIH deputy director for management, who recently shared the ARAC report with employees in an all-hands email. "We've always been a forward-thinking organization and we've always been mindful of making improvements, but I don't think we've ever had as concerted an effort to look across all areas of our business processes simultaneously."

ARAC members were divided into eight working groups, with each group assigned to examine a major function: acquisitions, budget, equal employment opportunity, finance, facilities, grants management, human resources and information technology.

Each function was reviewed using the same process: define its current status (How much is contracted out? How much is done by service centers? How much is centralized, decentralized?); propose ways to improve its efficiency, effectiveness; identify potential barriers or necessary support to make the improvements; devise staffing benchmarks (How many people does it take to do each activity well?); and find ways of evaluating the changes (How long is it taking to complete the function following the improvement?).

"The target is not one of numbers," Barros stresses. "The goal is to improve operations, to enhance efficiency without compromising our effectiveness. It's a target of intent, scope and mission, instead of some arbitrary numerical goal. Any savings we generate will, however, be shifted into our research enterprise."

There was, perhaps, no better time to undertake such a self-exam than the early part of last year.

NIH was entering a different phase. After the end of the 5-year budget-doubling era, NIH leaders knew, the rate of growth of the agency's resources would certainly decrease. Planning had already begun in other areas for what was being called a "soft landing" after the highs of double-digit appropriations ended.

Overall, NIH management had already put in place a few strategies to aid efficiency: ARAC acknowledges in its report that the NIH budget grew by 170 percent between fiscal years 1993 and 2004, while FTEs (full-time equivalencies, or employee positions) increased only 2.5 percent. NIH's hiring and promotion freeze, and a realignment of resources, helped control FTE levels, even while NIH's research portfolio continued to expand with such new institutes and centers as NCCAM, NIBIB and NCMHD.

"We were ending what was certainly a very flush period, for which we are very grateful," acknowledges Barros. "However, we were entering a belt-tightening era, a period in which we are going to be challenged. Frankly, we have a responsibility as leaders to do this self-assessment, to try to find improvements as well as maintain our high degree of effectiveness. We have to be able to try to do things in new and different ways, to constantly improve. It was incumbent upon us to maximize our resources, to in fact maximize the federal research dollar."

By June 2003, ARAC — working in partnership with reorganization experts at the National Academy of Public Administration — had formulated its package of proposals to present to Zerhouni. Among the recommendations were a number of cost- and effort-savings to be found in some functions by using service centers rather than having each IC replicate an activity and build a whole infrastructure to support it.

As an example, Barros mentions an early success story: merging the many IC computer help desks into one. "There was great worry about that initially," she recalls, "but the consolidation was pulled off relatively trouble-free and the design is working as intended. We hope that's an early harbinger of successes we want to have in other areas."

ARAC proposed changes to a number of business processes in broad functional areas as well as some organizational restructuring and application of standard IT software to support the entire business enterprise. Barros noted, business at NIH — as well as everywhere else — was increasingly dependent on IT systems. Adopting uniform standards for NIH's IT infrastructure only made sense, so that everybody was singing from the same sheet of music.

The ARAC draft report was completed and sent for a thorough review by Zerhouni, who then had the document vetted by agency leaders within NIH's newly established governance model — the steering committee (see NIH Record, May 25, 2004) — before forwarding the plan to HHS Secretary Tommy Thompson and other department officials. The ARAC report was presented as a successful blend of NIH's mission with goals expressed both in the department's strategic plan (see and the President's Management Agenda (see

Barros acknowledges that ARAC's recommendations introduce what may seem like a new world for employees and managers, and that adjustments in culture are difficult for any agency, particularly one as large and complex as NIH.

"Change is just hard," she admitted. "But the reality is that the business environment is changing, whether we change with it or not. It is incumbent upon us all to look for ways to improve our operational environment and modernize our business practices." Barros said NIH leaders are also aware that ARAC's efforts — with goals of doing more with less and other cost-savings measures — may be likened, unfavorably in some campus circles, to the A-76 process that many NIH'ers associate with workforce reduction and job displacement. Such a blanket comparison is incorrect, she stresses, drawing a critical distinction between competing with outside entities and challenging ourselves to improve outside a program of competition.

"So far the reception [to the ARAC recommendations] has been one of great expectations, mixed also with some worry and concern," Barros concludes. "Specific people may have to adjust to new reporting relationships, or they may have to be retrained or learn to use a new set of skills, but I hope employees will see the opportunities in this. It's an opportunity for all of us to be engaged, to provide feedback, to get involved with making our jobs and our work better. A great many people have been working on this for nearly 2 years now. This was not something done in isolation without our input, without us thinking of the labs affected, of the offices involved and especially of the research. We absolutely need to keep pace with the times and, as a federal agency, we need to remain mindful of administrative excellence in support of the agency's mission."

For complete information and updates on ARAC and the reorganization effort, visit

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