Why Government Hiring Is So Inefficient

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1:17Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Weisenthal. And I'm Tracy Alloway. Tracy, remember that episode we did several weeks ago about waste and fraud and abuse in Medicare? I do. It was full of interesting facts and figures, such as the U.S. government spends 1 % of the federal budget on dialysis. And the thing about that episode, so we were talking to BU Professor Jetson Leader Louise, you know, the thing about that episode that's striking is if you look at government spending and probably a lot of all bureaucracies, even outside the government, but if you look at government spending or government waste or government fraud, etc., there are many things that everyone can point to and say, this is waste.

2:03This is bad. We should change this. But like that's clearly just being able to like identify some bad process or whether it's in how you you know how purchasing works or how hiring works or anything like clearly that's not enough to fix it. Like identification almost seems like the easy part. No I think this is actually endemic in a lot of large organizations although I am certain there are specific things about the government process that are unique to them. But it feels like at large organizations everyone kind of feels helpless right. Everyone can say we need to do this better or this is ridiculous or we should change this, but no one actually seems able to fix it.

2:43Yeah. Anyway, yes, this is my perception as well. But we are in an era, you know, the vibes have changed. We're in an era where once again, and probably because inflation remains high, people see the obvious failures of what people call state capacity. You know, there was a lot of stuff built under the Biden administration. There was a lot of stuff allocated. People are frustrated by the speed of things, whether you look at charging stations or rural broadband or the speed with which any project gets implemented, we're in a moment of frustration. And people want to see two things. They want to see waste and spending decline in many cases.

3:26And they also want to see that the spending that we actually do allocate turns into results. Good results. Right. We're in a period where setting aside what will happen, etc., like there is this public impulse that we want to see results for things that we do. Speaking of good results, can I just say the last time we spoke to this guest who we are about to speak to again, we were complaining about how clunky the Treasury Direct website is and how you had to click little buttons to get in instead of just typing your password. And I think shortly after that, someone sent me a screenshot and said that they had fixed it.

4:03Amazing. So, you know, this podcast can lead to real results. Maybe that's the answer. We just need to do podcast episodes on various things that aren't working and then someone hears it and stuff like that. But yes, we are in an era for people demanding results. Anyway, you mentioned that last episode we did with this guest. She really is the perfect guest to talk about now in this era of Doge and the sort of impulse to see government root out waste and fraud and abuse and become more efficient. We are going to be speaking with Jennifer Palka. She is the author of the book Recoding America, currently serving as a senior fellow at the Niskanen Center.

4:41She was the founder and former director of the Code for America initiative. She's been on the Defense Innovation Board. So has seen how government actually operates and spends and works and builds technology at a very granular level. Perfect guest to have back on. So, Jennifer, thank you so much for coming back on Outlots. Yeah, no, thanks for having me. You know, when it comes to government spending and waste, you know, I think there are sort of two things that people – or I think it's sort of useful to divide the conversation in two things. Because there are major things that the government spends money on, like various entitlements or having a large military, et cetera, that some might consider wasteful per se, right?

5:27And then there is the other aspect, which is just like within the realm of things that many people agree we need, is government getting the best bang for the buck within the sort of expectation that this is legitimate spending. And so some of these fights and conversations that are going to be held under the new administration are going to be in the first category where it's like big political questions about where we should be allocating our money. But from your perspective, even setting that aside, when you look at sort of the actual expenditure, like, do you see big dials that can be turned in terms of this can be done better?

6:04Yeah, it's funny you say like people get concerned about the bang for the buck. I think people get really concerned when they're like any amount of bucks is not getting a bang. Yeah, right. You know, we're it's less I understand the frustration and the the switch to a dialogue around government efficiency that Elon Musk is pushing. But I think we've gotten to that place because people are saying, you know, we're getting very little results. We would be tolerant of, you know, reasonably high spending if something were coming out of this. And, you know, you talk about the defense world, for instance.

6:40I mean, our spending keeps going up. And in theory, we're spending more so that we can be safer and have greater deterrence. And in reality, I think that that greater spending is actually keeping us from making the changes that we need to make such that the system is more effective and efficient. You know, people just still do these like big bang projects because they have the money for them. They have all the trappings around them that make them really slow, all the procedure, you know, instead of these fast procurements. you know, procurements, like we need a ton of drones, for instance, instead of these, you know, big, heavy weapons platforms.

7:23But we're still putting a lot of money into these things that don't get us any results for 20 years. By the time, you know, we get the results, the thing isn't actually needed anymore. What we need is drones instead of ships. And, you know, I really think that the dialogue is changing for like, hey, where's the bang at all? Right? Yeah, it feels like when organizations are sort of swimming in money and have large budgets, they don't actually have to think about how to best spend that money, right? And so I, well, I wanted to ask you more your position on the Defense Innovation Board. One thing I've been wondering is, why does the Pentagon to this point always seem to fail its audits?

8:10okay there's so many reasons for that one of them i think speaks to a core dysfunction that you see across government which is we do everything in this very very bespoke way so it used to be over 5 000 different back-end systems including accounting systems just within the dod i don't think that number has gone down that much how do you get so many different systems in, you know, it's obviously a huge institution, but like you would think there would be a standard way to start to do accounting. But what happens is that Congress, you know, puts some new requirement for reporting on this particular program or this particular department, and they go, okay, well, we need really bespoke software to handle these, you know, sort of arcane and in the weeds kinds of requests from Congress or someone else.

9:05Some of them are like real. Congress isn't backing off on them. And some of them are kind of imagined. But that's how we get this like very heavyweight requirements development process in government where like the job of a bunch of people for a long time is to go around to everybody and say, what are all the things that you're going to need for this system to work? Well, if you do that, they come up with a bunch of things that means you can't just buy an off-the-shelf commercial accounting software the way that even a really big enterprise would, because you've come up with all these bespoke things that need to happen.

9:44Some of them are real and some of them are invented. And one of the things we said on the Defense Innovation Board was, it's actually not about doing better software to accommodate all those requirements. It's about getting rid of those requirements so that you can just buy commodity software. But that's just really hard because it's sort of, you know, flow, the power is flowing the wrong direction. You don't have people who do software going, telling Congress to remove this requirement. It's just like, you know, the stream needs to be reversed. So one of the reasons is just that they literally have all these different systems that are supposed to feed into one big picture of what the Department of Defense is spending and what it's receiving, and it's just incredibly complicated.

10:32Now, there are other reasons as well, but I think that's one of the core dysfunctions that you see at play.

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11:50EasyCater, your business tool for food. To learn more, visit easycater.com slash podcast. Let's back up for a second. So you wrote your book, Recoding America, you have a great sub stack right now called Eating Policy. And I want to get into some, we'll get into some of the posts you wrote about fixing hiring practices and so forth. But I'm curious, like, did you have a moment in your life, like the sort of like founding trauma or whatever, where you're like, oh, wow, this really something that, you know, something that scandalized you such that you've now devoted your work to writing about and and elucidating the issues that come up with things like government hiring and spending?

12:33Yeah, that's a funny question. I think what happened was I started looking at this whole issue of government technology back right after Obama was elected, because we were working on this idea of Web 2.0, if anyone remembers that, and what would Gov.0 look like. And some colleagues and I were sort of going to D.C. and talking to people about how software got done in government. And I remember this story. This is not the traumatic part, but I remember the story from this guy who'd come from Silicon Valley and he was working with the Department of Labor. And he was like, let me explain to you how we do stuff here.

13:07it's like you have to get soldiers from New York to DC and you go out and like source the iron and like you know have engineers um spec out uh the the requirements for the engines because you're going to build an entire railway instead of just buying the soldiers some train tickets and that can't be right that's crazy but as I got into it actually that really is how this works often. There's just not this sense of like, it's just how to use what's out there because of this obsession with, you know, doing everything from the ground up. But before I worked in tech, my first job out of college, I worked in child welfare agency.

13:51And I saw how badly the operations were there. And you really see up close, what's at stake, these kids lives. And I thought, oh, oh my God, if we're doing software for the Department of Labor this bad, this is also affecting things like child welfare. And we really ought to be putting the best our country has to offer on the biggest problems, and it's kind of the opposite. And that's really what made me want to start Code for America. Say more about the process of building everything from the ground up. Because I remember the last time we spoke to you, one of the crazy numbers in that conversation was the amount of requirements for a specific software project.

14:40What is the exact process? Like walk us through the, I guess, the life cycle of putting out a government, you know, we can talk software in particular because you have a lot of experience with that, a government software project. Where does it start? What are the various like hoops that people have to jump through? And then where does it end up? Yeah, maybe I'll talk about the unemployment insurance system in California, which I worked on very briefly as the co-chair of the strike team in that first year of the pandemic when everyone was waiting for their checks. And it was really a disaster. When we came in, because there was this huge backlog of claims, in fact, just coincidentally, the team at the Employment Development Department had just finally gotten to the point where they were going to put a bid for sort of a modernization, they would say an upgrade, they call it business system modernization, you know, out to vendors.

15:41And I don't remember the exact number of requirements in it, but it was in the thousands. And they had been working on that for 11 years. Wow. So they started the requirements gathering 11 years ago, and they were just putting it out to bid. And I think we became extremely unpopular by telling the governor's office, you really should not bid that out. it is, even if it were one year old, it's now totally outdated, because now we understand the problems that need to be solved much better than you did a year ago, but certainly better than you did 11 years ago. And they did actually stop that and sort of revise it.

16:26But like, why are there those 1000s of requirements that take? I don't think that I should be clear, I don't think the requirements gathering was 11 years. It was a big chunk of that 11 years. Then you have sort of putting together the RFP and getting it approved for the legislature, et cetera. So why does it get so big? Well, I think UI, unemployment insurance, is a good example of this. So unemployment insurance started in the 1935 Social Security Act. So we are, well, now it's 2025. So now we are 90 years of accumulation of policy and process and regulatory cruft, essentially. So think about like, like stuff, you know, requirements and rules and guidance from both executive, legislative and judicial branches just sort of falling like garbage on to something like unemployment insurance for 90 years.

17:29Like a rule of thumb is we always add, we never subtract. And this is a fault of our legislatures, primarily, not the people who run the unemployment insurance system. They kind of feel like they can't do anything about this accumulation. What they do then is try to accommodate all of these changes over time while never actually fixing the underlying system. So like one of the metaphors someone else used for me is like layers of paint just get put on. Well, you know, especially if you've lived in like an apartment in New York that's been painted like 90 ,000 times, eventually it cracks. That's sort of what's happening.

18:09Or my other metaphor was just like archaeological layers. But they only ever appropriate money to just like make the fixes, not to go back and say, how would we actually design this system if we were designing it today, not just from a technological perspective, but how would we go back and say, oh, that requirement from the 40s that's been overwritten by these other things, why is there still code in the system that's dealing with that requirement from the 40s? And why is there still memos pointing to that, confusing people about what the current state of the rules are? But like really what we need to do is do a full kind of regulatory simplification, policy and process simplification alongside our modernizations.

18:57And we just don't do that. Do government officials who are designing these projects, how much do they ever work in tandem with vendors? Like, will they go out and say, hey, we're thinking about upgrading this system? What do you think we should do? Or does it always start with the requirement process and then that just gets sent out? No, they do often work with vendors. The problem is that the sort of way the vendor game is played, and I'd say this is changing to some degree, it's like the vendors benefit from all that complexity. So the vendors never say, hey, why don't you go to your legislature and ask for like, you know, can we get can we, you know, collaborate on a project where we sort of rationalize all of this policy craft?

19:43And then we can make you a system that it's going to be, you know, a lot more elegant, a lot more stable, a lot more scalable. Right. Scalability is really, really degraded by this complexity because like it's they're huge projects. I mean, I think even after we asked California to boot out the old business system modernization and start again, they still went out with something that I believe was almost$2 billion. Might have been$1 billion. So forgive me if I'm getting it wrong. But that's still in the same range of like, that's a lot of money to like, quote unquote, like do some upgrades on a system because they really don't have that relationship between the executive and legislative branch.

20:31And also let's throw in the judicial to say what this needs is a real reboot. I mean, unemployment insurance is not that complicated in its basics, right? We're giving people a certain amount of money for a certain amount of time under certain conditions. But it's gotten wildly complicated in and that like the vendors don't seem to most of the vendors aren't really incented to be part of that conversation about the simplification, because then the projects are going to be smaller. Let's talk about government hiring and your experience. And you've written some sort of wild stuff on your sub stack just about how hard it is to get a talented person in the door.

21:14And this is even setting aside the fact that government pay scales aren't the same as private sector pay scales, et cetera. There's no like, you know, equity upside for a talented engineer. Just working through the government HR process. What do you see? The biggest problem with hiring to me, and there are many, isn't the pay, though I know that should be fixed. And a lot of people do talk about that. It's that we don't actually assess candidates for their skills. So if you leave apart the political appointees and the people who get appointed under things like Schedule A or Schedule C where you're using an exception and just talk about the regular open to the public competitive process, 90 % of those use only self-assessments of the person's own skill.

22:05They tell you what level they are and resume screen. So how it goes is as a hiring manager, you're like completely cut out of the process. The HR person is in control. And you say, okay, I need this job. There's all this sort of back and forth about what the job is. The job descriptions aren't often up to date. Maybe there isn't a job description or a classification for the kind of person you need, especially if it's technical. Leaving all that aside, you finally post a position and let's say 500 resumes come in. Well, your HR person has to give you a cert, a list of people that they deem qualified.

22:45And the way they get from 500 to, say, 10 on the cert is first they look for everybody who has cut and pasted from the job description into their resume and cover letter. Oh, by the way, that person had to have known to do a government resume, which is usually like seven pages long, as opposed to a private sector resume, which would be shorter. That's all another story. So anyone who has exact matches between the language in the job description and their resume can go through to the next step. Of those, the people who rate themselves as a master on all levels then can go through to the next step.

23:23and from there they apply veterans preference. Now, I am a fan of giving veterans preference, but when you have down selected out all the people who didn't want to cut and paste or didn't want to basically lie and just say that they were a master on every competency, the good veterans probably haven't ended up on that cert. And so as a hiring manager, you're given a cert of people who just knew how to play the game but don't necessarily have the skills. And half of the time, the hiring manager just rejects the cert. So like an example of how this works with that, you know, looking for exact matches was this guy that we found when we were working on the Defense Innovation Board who had literally won the Hack the Pentagon contest.

24:13Like the top security researchers in the country came together and this one guy, he happened to be 19 years old, won that thing. He's like incredibly talented. And the people there recognize this is the kind of guy that we need in the Pentagon, making our systems more secure. So they try to hire him. But his resume, like just details, you know, all the programming languages and frameworks that he knows how to use, because that's what you would, you know, you would talk about your experience with specific frameworks and languages if you were applying for a private sector job. and the you know hr people look at that and they go we have no idea what that means that doesn't match at all our language and he gets kicked out literally you know in the first the first down select but it doesn't stop there like the people at the pentagon continue to try to get this guy hired and pretty high level people kept intervening as they tried again and again to get jack cable hired and it took months for him to like finally get through the process in in between one of the HR people told him why don't you go work for Best Buy selling TVs for a year because then you'll be qualified that is nuts so just to be clear because he said on his CV specific programming languages like I can use like Babbel and I'm an expert in I don't know NPM or whatever the HR manager didn't recognize it and they're like, this is not what we're looking for.

25:45That's exactly right. And they explained to the Defense Innovation Board, they pulled up the language in the job description, which was like, you know, X years of experience doing a very generic language about like the completion of IT tech, you know, projects or something, which is like doesn't mean anything. And they were like, we don't see this. And that was justification. This might be a cultural question, but why does HR not listen to the expertise of these specific hiring managers? Okay, that is a fantastic question. And I've actually done some research on, like, legally, is that required?

26:25And I'll give you the answer in a second. But I think the real answer is that they're extremely risk averse. And one of the principles that they're supposed to uphold is a principle of fairness. And I like fairness. I think that's great. But the way that it gets applied is that essentially saying, we have all these very, very specific rules designed to keep bias out of this process. And we are experts in those processes and those rules. And so only we can ensure that this process occurs without the introduction of bias and or, you know, some perceived or real deviation from the rules. and so they call them subject matter experts.

27:22Like in other words, if you're hiring for a programmer, like you would kind of want a programmer to evaluate that person, but programmers are not allowed to evaluate the person, again, in 90 % of these cases because they might introduce bias. And it's a perfect example for me of like, if you read the merit system principles that came out of the Civil Service Reform Act of 1978, thank you, President Carter, That was, you know, an important thing that he did. They sound really great. And they talk about, you know, hiring on the basis of merit and fairness is in there as well. And if you read them, you would say, these are fantastic.

27:58Federal hiring is great, no problem. But what happens is as they get operationalized, they go through what I call the cascade of rigidity, where each step down from sort of a law or policy into like the way HR managers actually work on a daily basis just gets incredibly rigid. And the rigidity means that you get kind of the opposite outcome of what the law intended. The law intended merit, we're really not hiring on the basis of merit because it's gotten so rigid as it's been operationalized. And I asked one of our researchers to go look into this, like, is it in the law? Is it in the regulations?

28:40Is it in the guidance? Like, who wrote in that HR managers control this process and hiring managers don't have a say? And it turns out it just sort of appears in this thing called the Delegated Examiner's Operations Handbook, which means somebody wrote this operational handbook and said, you know, this is the HR manager's job, like, you know, and so that's what people do. But like, the law never said that and neither does the regulation. You know, I just, you know, okay, so 500 people apply for a job, you get 10, the hiring manager sees 10 names, they sort of might have a feeling that these can't be the best of the 500.

29:21Can you say, look, just give me the 500, let me scan through, click on some of them because a good hiring manager probably has some intuitions about what a good candidate might look like. Like, will they let you see that 500 person list? Well, I maintain that there is nothing legally that keeps them from doing that. But on a practical basis, no, they're not allowed to. So you touched on this earlier, but part of the reasons all these requirements have been codified is for reasons of fairness. And the U.S. presumably doesn't want to go back to a system of patronage or nepotism or people hiring their friends and stuff like that.