Reports that the year-old ‘FERC First’ effort is in disarray dueto clashes between contracted consulting firms over how to revampthe agency are completely unfounded, said Chairman James J. Hoeckerlast week.

Critics contend that Andersen Consulting and James Martin &ampCo., the two consulting firms contracted to carry out the effort,have been at odds with each other over how to restructure andredesign the Commission’s operations, as well as with the internalFERC staff teams that have been assigned to assist them. This notonly has caused disruptions to the overall project, but hasaggravated staff anxiety and dissension beyond that which wouldnormally attend such a sweeping restructuring, some sources said.

Hoecker flatly dismissed reports of discord between theconsulting firms. “I’m finding that James Martin and Anderson canagree for the most part. And the fact that you have two firms likethis working on the same project is very common…I think that ifanybody thinks there’s a battle going on, they just don’tunderstand.” Anderson was the sole consultant on the initial phaseof the project. However, sources said James Martin &amp Co. ofFairfax, VA, entered the picture when it significantly underbidAnderson for the following phase of the restructuring effort. Bothcompanies are now at FERC, focusing on different areas of theproject.

Hoecker noted that Andersen and James Martin have their”strengths and weaknesses” like most companies, which necessitatedthe use of the two firms. Andersen has a “very strong” projectmanagement capability that is critical to the Phase IIimplementation aspect of the FERC First program now taking place.On the other hand, James Martin’s strength is in “informationtechnology,” he said, adding that it’s doing a “terrific job” inthis area. About $4 million of the $7 million earmarked for FERCrestructuring has been budgeted for IT.

“I’m real pleased with the way it’s going. To some people this[use of two consultants] may look like a lack of confidence in theprocess or a lack of confidence in the consultants, but I canassure you that’s not the case,” Hoecker said. “We are mostconcerned about meeting our deadline and getting the [FERC staffinvolved] in FERC First back to their regular jobs and keeping ourcosts contained. We think that this is a good move and we’re on theway to doing all of those things.”

Hoecker is hoping to have the agency completely revamped byMarch 2000. Phase I of the FERC First project, which entailedmapping out the general strategy for restructuring the agency,wascompleted at the end of last June, he said. The Commission is nowinto the final Phase II implementation, which includes processdesigns and developing organizational structures for new offices.

The FERC chairman defended the cost-benefit aspect of thereorganization “This is, as these things go, not veryexpensive…The return to the regulated industries and Americantaxpayers will be enormous in terms of benefits. Believe me, if Ithought this were a waste of money, I wouldn’t be spending it,” hetold NGI in an interview.

He further disagreed with critics who insist the restructuringof the agency should have been handled internally. This is “a verydifficult process and you need experts to help you do it. There area lot of administrators who think that they can simply wave theirhand and the bureaucracy will change as a result of their wishes.Well it’s a lot more complicated than that,” Hoecker said.

“What we’re trying to do is something that is successfulscientifically in terms of how offices are going to operate andsomething that will be permanent in terms of changing the way FERCoperates” in the future, he said.

As part of the FERC First effort, the Commission so far hasannounced the start-up of three new offices – the Office ofStrategy and Organizational Management, Office of Finance,Accounting and Operations, and the FERC First Project Office. Theinitial two offices contain parts of what was formerly the Officeof Executive Director and Chief Financial Officer as well as otherfunctions. FERC also is expected to announce, among other things,the creation of the Office of Administrative Litigation during thefirst half of this year. This office would house the attorneys andtechnical staff who are involved in trials before administrativelaw judges.

The Office of Strategy focuses on strategic planning performanceassessment and is responsible for human resources and leadershipdevelopment. The Office of Finance’s functions include budgetfunding, internal accounting operations, internal and externalaccounting policy and other finance-related activities. The FERCFirst Office is in charge of phasing in the agency’s restructuringand will be disbanded when the process is completed in early 2000.

Susan Parker

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