Crisis Management

by Dwight Ink August 2008

One of a Series of Issue Papers on Presidential Management Capacity to Respond to 21st Century Challenges

Sponsored by NAPAs Standing Panel on Executive Organization and Management

This is one of a series of issue papers prepared under the auspices of The National Academy of Public Administrations Standing Panel on Executive Organization and Management. They are intended to inform Presidential candidates and Congress about the management capacity of the Executive Office of the President and the challenges facing it. A list of the papers that have been completed as of this date can be found after this title page. The papers represent the views of the author(s), not necessarily those of the Academy or any of its panels.

List of Issue Papers on Presidential Management Capacity to Respond to 21st Century Challenges
The Standing Panel on Executive Organization and Management undertook an effort in 2006 to examine the institutional management capacity of the Executive Office of the President. Following is a list of issue papers issued as of August 2008: Broad Governance Issues Principles, Values, and Assumptions Underlying Good Public Management by John Kamensky Governing with Foresight: Institutional Changes to Enhance Fact-Based Decision-Making in the Executive Office of the President, by John Kamensky

Institutional Management Capacity of the Executive Office of the President A Modernized Office of Executive Management: An Option for Making the M in OMB a Reality, by Dwight Ink The President Must Develop a Strong Capacity to Meet Executive Organization Requirements, by Dwight Ink and Herbert Jasper

Management Tools Used by the Executive Office of the President Strengthening the Governments Budgeting and Fiscal Management Capacity, by F. Stevens Redburn and Philip G. Joyce Crisis Management by Dwight Ink The Presidents Intergovernmental Management Agenda, by Bruce McDowell Government By Contract: The White House Needs Capacity to Review and Revise the Legacy of 20th Century Reform, by Dan Guttman Improving Collaboration by Federal Agencies: An Essential Priority for the Next Administration, by Thomas Stanton The Legislative Clearance Process, by Bernard Martin

Table of Contents Executive Summary .............................................................................................................................4 Introduction..........................................................................................................................................5 Initial Disaster Responses...................................................................................................................5 Disaster and Terrorism Recovery ......................................................................................................6 DHS Approach...................................................................................................................................7 Alaskan Approach ..............................................................................................................................8 Recommendations for Future Crises ..............................................................................................11 About the Author...............................................................................................................................12

Executive Summary
This paper focuses heavily on crises caused by major natural disasters, the area in which we have had the most experience in crisis management. The author believes the federal government has not yet given sufficient consideration to lessons learned from natural disasters to make good judgments as to what strategies may be most useful in the event of new disasters or terrorist attacks. There is considerable agreement on how to organize the federal role in responding to natural disasters during the initial emergency period of providing food, water, medicine and shelter, and helping to maintain law and order. Unfortunately, our federal government moved away from the successful principles of the past by integrating the Federal Emergency Management Agency (FEMA) into the new Department of Homeland Security (DHS), and saddling it with incompetent leadership and red tape. However, for future catastrophic terrorist attacks or natural disasters, such as the 1964 Alaskan earthquake and Hurricane Katrina, a more far-reaching federal entity than FEMA will be essential during the recovery phase. Following are the authors recommendations: Increase the flexibility of the National Response Plan by ensuring it is not encumbered by predetermined detailed structures and processes designed to cope with the last crisis. The White House should consider developing, for large-scale crises, a temporary policy commission and a professional operating staff that can quickly mobilize the resources of the whole government. Provide a high degree of public transparency to response and recovery efforts, combined with strong monitoring and independent oversight, in order to ensure the confidence of Congress and the public. Develop arrangements in advance that can be placed in effect during a crisis to modify or suspend existing agency procedures that jeopardize schedules needed to rebuild critical public facilities needed for public health and safety, such as water and sewer systems. Engage Congress by detailing several Congressional staff to the recovery group handling operations as well as special temporary communications linkages between the two branches at the policy level. FEMA must be professionally led, and have freedom to make the urgent decisions required to carry out its emergency response mission without any intervening organizational levels between the FEMA director and the President. There needs to be a legislative requirement that the head of FEMA, either a political appointee or a career member of the Senior Executive Service, have substantial government experience, preferably in the federal government. A central organization capacity is needed in the Executive Office of the President to help the president and agency heads strengthen their ability to execute their missions, especially in responding to crises.

Crisis Management
Introduction
Few events can change the positive or negative image of a president and his/her administration as quickly as the way in which the federal government responds to a major crisis. Success or failure is featured in every front page and national newscast. Yet most transition plans ignore the extent to which catastrophic crises pose management challenges. These require special structural and procedural arrangements that facilitate the ability to make decisions and take actions within days or hours. The typical weeks consumed by deliberations and clearances among various organizations for initiating significant operations should not be tolerated. Crises place a premium on combining innovation and flexibility with simplicity and clarity throughout the recovery plans and actions. To guard against abuse of these flexibilities, effective operational monitoring, independent oversight, and a high level of transparency need to be installed at the outset. Above all, the political leadership needs to use and empower the very highest skilled professional men and women for the operational positions, professionals who have the skill to exercise new authorities, and the experience to know what risks can be taken safely in streamlining or suspending usual processes. A crisis is no time for on-the-job-training. This paper will focus heavily on crises caused by major natural disasters, the area in which we have had the most experience in crisis management. The author believes the federal government has not yet given sufficient consideration to lessons learned from natural disasters to make good judgments as to what strategies may be most useful in the event of new disasters or terrorist attacks. These may be very different, and considerably more complex, than those used in the typical hurricanes that beset our Atlantic and Gulf coasts from time to time.

Initial Disaster Responses

There is considerable agreement on how to organize the federal role in responding to natural disasters during the initial emergency period of providing food, water, medicine, and shelter, and helping to maintain law and order. Over many years, the Executive Office of the President (EOP) included an organization, often called the Office of Emergency Preparedness (OEP) that was designed to coordinate the federal activities needed to help state and local governments during this emergency phase. In addition to its own staff and limited funding, this agency had varying capacity to draw upon other agencies in providing emergency assistance. There is broad agreement that the current version of this organization, FEMA, was very effective under the leadership of James Lee Witt during the 1990s. This emergency response agency had a somewhat uneven history, but in general it was regarded as successful. It was never designed to lead the federal recovery effort following a catastrophic disaster.

Unfortunately, our federal government moved away from the successful principles of the past when integrating the Federal Emergency Management Agency (FEMA) into the new Department of Homeland Security (DHS), and saddling it with incompetent leadership. As the result of this mistake, FEMA botched its Katrina response. Hurricane Katrina, in August 2005, exposed numerous ways in which the intergovernmental linkages have been permitted to deteriorate or are still not fully developed. Communication breakdowns revealed the lack of backup systems and interoperability of the different systems despite considerable funds having been devoted to this area. Training continues to be inadequate at all three levels of government in many cases. The author believes that the failure to address interagency and intergovernmental coordination issues seriously in the formation of DHS, and in its subsequent management, contributed significantly to its failure to carry out this role effectively during Katrina. Little attention was given to how the field offices were to coordinate their work with each other or with state and local governments, and there was a disconnect between those designing the headquarters organization and those designing the field operations. Several corrective steps have been taken in the wake of Katrina that may be of help in responding to a future catastrophic disaster or terrorist attack. How much is not at all clear.

Disaster and Terrorism Recovery

For future catastrophic terrorist attacks or natural disasters, such as the Alaskan earthquake and Katrina, a more far-reaching federal entity than FEMA will be essential during the recovery phase. And it will need to be operational much more quickly than DHS was in Katrina, where it is still stumbling more than two years later. But that over-arching structure should not be permitted to dilute FEMAs capacity to take whatever immediate initiatives are needed during the emergency phase even though the emergency and recovery phases overlap. FEMA must be able to act without clearing operational decisions with higher levels. In the case of the 1964 Alaskan earthquake, President Johnson gave a temporary Alaskan Commission the role of planning and directing the earthquake recovery. But instead of this constituting another organizational level through which OEP had to clear its emergency response actions, the Alaskan Commission encouraged the OEP to exercise initiative and strengthen its capacity to do its job. Sadly, the necessity of appointing highly qualified leadership for the federal response has not been recognized at times, as evidenced by Katrina. The fact that James Lee Witt had prior disaster management experience at the state level contributed greatly to his earlier outstanding performance as head of FEMA. President Johnson appointed the author, (a career official and Academy Fellow) to direct the rebuilding of Alaska under the policies established by Johnsons Commission. Johnson believed that someone thoroughly familiar with the government, and with extensive agency management experience, could move much more quickly and would better know the strengths and weaknesses of various agencies than most political appointees. 1 President Nixon followed a similar path in appointing an
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This position was designed more for the recovery than the response phase, but the incumbent was involved in both.

experienced federal official, Academy Fellow Frank Carlucci, to straighten out the Pennsylvania flood problems caused by hurricane Agnes. Whether career or political, the person directing the federal work must have had prior leadership experience in the federal government. Further, there is an increasing consensus that he or she should be appointed by the president and report directly to the president. Crises do not permit the time typically taken to clear operational decisions through intervening political layers. This reporting arrangement does not mean that the appointee will need frequent access to the president. In fact, a highly qualified director will seldom need to see the president, but the knowledge that he/she works for the president provides the director with the strength to make the quick decisions and to rapidly develop the coordination arrangements required for an effective recovery. Delays are not only costly to the taxpayers, they create severe burdens for stricken disaster victims, often leading to loss of homes and businesses that leave people destitute, as we continue to see in New Orleans. Further, as time passes, less public attention is paid to the recovery efforts, and it becomes harder to sustain the needed funding levels. Organizing for the recovery after a catastrophic disaster is more complex than organizing for the immediate emergency response immediately after the event. Many more governmental organizations are involved, and the non-profit and private organizations are asked to participate over a longer period of time and they find themselves investing more resources in the recovery phase. 2 Maintaining sustained interagency cooperation during the longer recovery phase becomes more difficult as other issues in their on-going responsibilities have to be addressed by the participating agencies, and competition for funds becomes far greater. The National Response Plan (NRP) of the DHS and the 1964 Alaskan recovery represent the two most contrasting organizational approaches to disasters that have been used over the years. They merit a brief review.

DHS Approach The basic philosophy behind the establishment of the DHS seemed to be based on the idea that when a catastrophic disaster or attack occurred, it is too late to organize structures and processes to respond and recover from the crisis. Therefore, for both the emergency response and the recovery phases, it was thought we should draw together under one roof a large portion of the people and disciplines needed to lead the federal agencies and to coordinate their work with state and local governments. Organizational roles were viewed as having to be assigned in advance, and operating processes predetermined in order to move quickly when a crisis struck At the time DHS was formed, there was almost no organization capacity in OMB to analyze the validity of this argument, and the organizers made no apparent effort to look at approaches that were effective in past catastrophic disasters. Many in the National Academy

The Alaskan recovery involved far fewer victims and less government funds than Katrina, yet virtually every federal agency played a role in Alaska, and did so under unbelievably difficult time constraints.

of Public Administration 3 and elsewhere believed this DHS approach to be a mistake, at least with the degree to which a large array of organizations were to be brought into the department. It was viewed, not in hindsight, as an expensive, bloated organization, too cumbersome to respond effectively to catastrophic disasters or terrorist attacks. Its focus on predetermined structure and process was thought to discourage creativity and innovation needed for handling situations much different from past events. It was feared that the complex procedures would emphasize process over action, as people devoted valuable time interpreting those procedures, and fitting unforeseen problems into predetermined assignments. Flexibility for innovative new arrangements might be a better avenue during a crisis. The weakened position of FEMA within DHS was of special concern. It was also thought that the Administration greatly underestimated the time it would take to make this complex department sufficiently effective to meet a major challenge, if ever it could. Katrina proved many of these apprehensions to be well founded. The House Select Bipartisan Committee described the response to Katrina as a litany of mistakes, misjudgments, lapses, and absurdities all cascading together, blinding us to what was coming and hobbling any collective effort to respond. 4 The failure was a combination of an over complicated plan and reliance on unqualified leadership.

Alaskan Approach President Johnsons approach to recovering from the devastating 1964 Alaskan earthquake moved in the opposite direction. It stressed innovation and the flexibility to adapt to unforeseen circumstances, as well as the need for unprecedented speed. This recovery would be the most complex, and the most urgent, of any disaster between the 1906 San Francisco earthquake and Katrina. The Alaskan weather made the challenge especially daunting. In fact, no engineer could be found during our first trip to Alaska who believed the relocation, redesign, and construction of critical public facilities could be sufficiently rebuilt during the short Alaskan construction season to avoid large-scale abandonment of Alaska as winter approached and its fragile pre-oil economy collapsed. Within five days of the sudden earthquake, Johnson had established a Cabinet Commission to develop recovery policies, equipped with a small Commission coordinating staff in the White House 5 . Most Commission appointees were members of the Cabinet, including the Secretary of Defense. Johnsons concept was to enable the recovery leadership to use the power of the President and his cabinet members to mobilize the whole government and to draw immediately on the resources of all agencies in addressing the recovery needs during the crisis. The Commission staff was comprised of only five full time professionals, but they could draw upon every agency in the government. They were supplemented by a number of part-time agency staff, including the BOB, that served largely as agency liaisons who devoted much of their time to helping their agency leadership in carrying out their role in the recovery. This concept of a cabinet level recovery organization was developed by the
3 This reflected the view of many in the Academys Standing Panel on the Organization and Executive Management, though no institutional view was taken by the Panel. 4 U.S. House Report, 2006 5 Executive Order 11150.

Bureau of the Budgets BOB Government Organization Branch (GOB) and quickly approved by President Johnson who firmly believed the federal role was so broad and diverse that no single agency, no matter how large, could adequately address the recovery challenge. 6 With an Executive Director who reported to both the President and the Cabinet Commission Chair, a powerful Senator, 7 the President envisaged an entirely different role from that of the later DHS. Instead of the Commission and its staff getting heavily involved in the operational details of the rebuilding, the federal departments had that part of the federal governments role. 8 The Commission was to use the White House clout to mobilize the resources of the whole government, energize the federal workforce, and assist department heads in coordinating their interagency and intergovernmental activities - a very powerful role, as it turned out. No one challenged its leadership role. Indeed, the departments saw the Commission as its own mechanism that enabled them to work together and to expedite their own share of the recovery. The Commission staff had flexibility in establishing temporary agency responsibilities for projects that were tailored to the special Alaskan circumstances. Federal interagency task forces, and an Alaskan Field Committee (comprised of the senior field official of each of the 17 federal agencies with offices in Alaska) were established. No authority was given any of these temporary coordinating entities, relying instead upon the authority each member brought to the table from his/her home agency. None were permitted to function as another level of government. The military emergency response began with an hour after the earthquake, followed closely by OEP, and two weeks later all the federal machinery for the recovery was in place and at least in partial operation ranging from the White House to the Alaskan disaster sites. The freedom to innovate was urgently needed. For example, our Economic Stabilization Task Force, chaired by Labor Department advised me that it would take some months to establish a wage and price control mechanism to monitor and enforce wage and price controls, I concluded that by then inflation would have gone out of control. Instead of utilizing customary approaches, I asked the Agricultural Experiment Station to provide leadership for a voluntary citizen-driven drive against inflation. That group had a surprisingly effective citizen communication system, which we augmented. Any report of price or wage increase resulted immediately in an embarrassing amount of media publicity and aggressive jawboning from me for the White House. Inflation was held in check. Another example of our freedom to innovate was the marvelous private sector response when we asked banks to do most of the processing of SBA low-interest loans when the agency fell behind in meeting the heavy demand.
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The GOB had responsibility for drafting and moving the Alaskan Statehood bill through Congress, and had already suggested a cabinet commission to help the economic development of pre-oil Alaska. GOB urged Johnson to adapt this concept to the disaster recovery, though having the Commission chaired by a senator was Johnsons idea. 7 The Commission was chaired by a close ally of the President, Clinton Anderson of New Mexico who had been Secretary of Agriculture and had chaired Senate hearings on Alaskan statehood. 8 The staff did get very quickly involved to help agencies solve problems and break bottlenecks. There was a target of 24 hours in which to solve any administrative problem in any level of federal, state, or local government, a target usually met. Clearly, this required an unusual level of intergovernmental teamwork.

There probably was no instance in which freedom to innovate saved more time than our approach to intergovernmental management. Instead of the customary series of planning meetings, interspersed with frequent referrals back to headquarters for approvals before actions could begin, in Alaska the author convened all three levels of government in planning and decision meetings that enabled agencies to act quickly. Business leaders and citizens, all of whom had opportunities to participate, attended these. At the first session, preliminary project assignments were made, and ballpark cost estimates and timetables established that initiated preliminary work. Gathering the participants again in two weeks, these preliminary plans were modified and commitments made regarding responsibilities, budgets, and timetables. Agencies and contractors moved ahead with every ounce of strength they could muster without waiting for clearance from Juneau or Washington. This unusual approach required significant increases in delegations of authority to agency field personnel. Decentralization saved an enormous amount of time and money. In contrast to the more complicated National Response Plan (NRP) we have today, virtually no administrative procedures were instituted by the Commission. Instead of adding to governmental processes, the Commission greatly simplified existing governmental operations. This philosophy was carried to such a point that the executive director, in consultation with agency leaders, could suspend any governmental procedure that jeopardized the tight reconstruction deadlines, an unprecedented level of operational streamlining. This great flexibility was granted the staff because of the unusual degree of openness 9 practiced by that staff, the rigorous monitoring and oversight that were established at the outset, and the unique executive-legislative arrangements that gave Congress great confidence in the professional approach being used in the recovery. These unprecedented management strategies paid off. The BOB management staff was not directly involved in the recovery operations, but nevertheless played an important support role. In addition to having recommended the Commission concept, it was of great help in identifying qualified agency personnel to head the various task forces and committees. It also helped agencies understand the highly unorthodox organization and responsibilities established by the Commission and the executive director that affected every significant agency in government. Despite the early predictions of failure, four months after the Alaskan earthquake an early critic, the Alaskan Daily News, ran an editorial lauding the performance of the Commission staff with the heading Government at its very best. The editorial said, The normal rules followed by federal agencies were sprung completely out of shape to fit the post-earthquake needs of Alaska. It was a rare day when a problem was posed without being accompanied by a solution. One year later, the paper concluded that The comeback from disaster was so dramatic there hardly seemed to be a gap between destruction and reconstruction. The recovery period was almost as dramatic and breathtaking as the earthquake.

For example, operational decisions were made in open meetings involving all three levels of government, the private sector, and the public. State officials participated in both Commission policy meetings and staff meetings of the executive director. All documents were available to the GAO, and the Congressional staff detailed to the executive director provided a constant flow of information to Congressional Committees.

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Without the unprecedented organization and management strategies employed in the Alaskan recovery, it would have failed, and the pre-oil economy of Alaska would have collapsed, as many thousands of families would have had to abandon the new state. Looking ahead, one can envisage a frightening range of potential crises requiring recovery strategies beyond those used to date. The proliferation of nuclear and biological weapons opens the door for multiple avenues of attack. What homeland security arrangements do we need for the future? .

Recommendations for Future Crises

The author does not believe that the Alaskan recovery offers a model for future disasters recoveries, but the management strategies that served Alaska so well merit consideration for adaptation in future crises: 1. Increase Flexibility of NRP. Because future crises may involve so many characteristics impossible to fully predict today, the flexibility in structures and procedures used in Alaska should be available for future crises. The current DHS and NRP arrangements should be reviewed to increase the capacity to innovate. The government needs to make sure it is not encumbered by detailed structures and processes designed to cope with the last crisis. 2. White House Role. In a catastrophic disaster or attack, consideration should be given to some adaptation of the Alaskan, cabinet-level temporary commission and staff that can quickly mobilize the resources of the whole government. No variation of a single department, such as DHS, can do this nearly so well. The operational leadership should, as in Alaska, be given to a political or career leader with extensive federal experience and proven ability to manage complex operations. 3. Openness. The steps taken by the Alaskan staff to provide an unusual degree of openness, combined with strong monitoring and independent oversight, earned them the confidence of the public and Congress. Equally important, it contributed to the unusual degree of flexibility the staff was given. 4. Simplification. Without freedom to streamline existing procedures that threatened critical projects, the Alaskan recovery would have failed. It is suggested that advance arrangements be in effect during a crisis to modify or suspend agency procedures that jeopardize schedules needed to rebuild critical public facilities needed for public health and safety, such as water and sewer systems. 5. Congressional Linkage. A future president will not likely place a senator in charge of a cabinet-level commission, as Johnson did, but other special crisis arrangements should be considered. For example, it might well be possible to detail several Congressional staff to the recovery group as was done successfully in Alaska. 6. Unleash FEMA. There is a need for FEMA to be a part of the DHS strategic planning, but in time of crisis, FEMA must have freedom to make the decisions required to carry

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out its emergency response mission without any intervening organizational levels between the FEMA director and the president. 7. Qualified FEMA Leadership. Katrina demonstrated the cost of appointing unqualified leader to head FEMA. There needs to be a legislative requirement that the head of FEMA, either political appointee or SES member have substantial government experience, preferably in the federal government. Crises are no time for on-thejob training. The lives and property of too many people are at stake. We place military operations in the hands of trained military officers. Why should homeland security operations be left in the hands of untrained political appointees? 8. EOP Management Arm. The management staff in BOB played an important role in Alaska by quickly providing the president with an innovative organization plan, and then to provide non-operational support to the Commission staff as the recovery proceeded. This central organization capacity no longer exists. Future presidents need to have some version of this earlier management leadership capacity restored in OMB or elsewhere in the Executive Office of the President. The role of this staff should not be operational, but rather it should help the president and agency heads strengthen their ability to execute their missions. With capable leadership, it could contribute most during catastrophic natural disasters or terrorist attacks. ***

About the Author

Dwight A. Ink served in policy positions under seven presidents. His responsibilities covered a variety of functions in both national security and domestic areas, as well as heading economic and technical assistance for Latin America and the Caribbean. He headed two independent agencies, was vice-president of two government corporations, and headed several presidential task forces. He was assistant director of BOB and OMB for management where he was responsible for presidential organization initiatives, including plans for establishing OMB and EPA. He designed much of President Nixons New Federalism and President Carters Civil Service Reform.

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