How to Transform a Massive Government Agency: Lessons From a Trump Appointee

Shortly after taking office as secretary of the U.S. Department of Housing and Urban Development, Dr. Ben Carson recruited a retired finance and strategy expert to become the agency’s chief financial officer.

Irving Dennis, appointed by President Donald Trump in late 2017, stepped into the job and quickly discovered the mess he inherited. Dennis spent 37 years at Ernst & Young, a major accounting firm. He would use that private-sector experience to fix HUD.

In a new book, “Transforming a Federal Agency: Management Lessons from HUD’s Financial Reconstruction,” Dennis recounts the roadblocks he faced at HUD and the bureaucratic barriers he overcame to set the agency on a better course. His story shows there’s an alternative to the financial mismanagement that plagues federal agencies—and how he fixed one of them.

Dennis spoke to The Daily Signal about his experience. Read a lightly edited transcript below or listen to the interview on “The Daily Signal Podcast.”

Rob Bluey: We are joined on “The Daily Signal Podcast” by Irving Dennis. He’s the former chief financial officer at the U.S. Department of Housing and Urban Development and the author of a new book, “Transforming a Federal Agency: Management Lessons From HUD’s Financial Reconstruction.” Irv, welcome to the show.

Irving Dennis: Thank you. Thank you for having me, and I look forward to our conversation.

Bluey: I’ve had the opportunity to interview Dr. Ben Carson, HUD’s former secretary, twice on this program, and I’ve heard stories from him and others about the reforms at HUD. Before we dive in, just take a moment to explain to us what HUD is, who it serves, and your role there.

Dennis: HUD is a Cabinet-level agency, as you know, and we primarily serve to make sure that there’s affordable housing to the underserved, if you will. It’s a very complex organization. There are, I guess, about 40 different programs, Rob, and it also includes [the Federal Housing Administration] and Ginnie Mae, which supports the housing markets for those in need.

It’s a complex agency. I was brought aboard to assist in the reconstructing of their financial infrastructure, if you will. They were without a CFO for a lot of years, and they had a lot of material weaknesses. I really appreciated the opportunity to work with Secretary Carson and helping transform the agency from a financial standpoint, as well as from a digital and IT modernization standpoint.

Bluey: Irv, let’s go back to 2018. What was the situation like there when you first arrived?

Dennis: When I arrived, they had not had a CFO, a serious consequence for about eight years. There was a person that the prior administration had nominated, unfortunately passed away in office, and they had not replaced this. It was basically without a CFO. And without a CFO, you saw a deterioration in their financial infrastructure.

They had nine material weaknesses. They had four disclaimers in the audits, and it’s not to bore the audience with the definition of material weaknesses and disclaimers, but think of it as 13 areas in the financial infrastructure that could not be audited and they did not have … controls in place to properly account for the flow of funds through the agency.

In addition, there are multiple financial reporting aspects that come out of the federal government between the GONE Act and the DATA Act and other financial reports that HUD was not in compliance with. Basically, think of it as all the financial reporting that’s required of a Cabinet-level agency, the HUD was not in compliance with any of them.

It’s interesting when you think about that compared to the private sector, and I spent 37 years with Ernst & Young … and I was an audit partner with Ernst & Young, so I had a strong sense of financial controls and financial discipline and what excellent looks like in that area.

HUD just wasn’t in compliance with any of it, so I knew we had a big hill to climb to transform the agency from getting the financial infrastructure in place that you would expect at a large agency.

Bluey: Well, Irv, I’m curious how it got so bad to the point that you just described, but also, how you were able to transform this massive government department in just a few short years?

Dennis: Yeah, it’s a good question. My book addresses a lot of that. My book does go through the complexity of HUD and my book talks about what qualified me for the position.

When you think about how it did get this bad, I do dedicate a chapter to that. I think of two broad things, the lack of leadership. Without a CFO at the helm driving financial excellence, you will see a deterioration in the infrastructure. That happens in the private sector as well, and that’s sort of what happened at HUD.

The other big difference is there’s really a sort of a lack of accountability. In the private sector, if you have material weaknesses and areas that you can’t audit and you have disclaimers in the audit, your shareholders and the other stakeholders of that private entity [do] not allow that to happen. You’ve got to get that fixed pretty quick, or else you lose the confidence of those folks, and they will not invest or support the entity.

… That dynamic is different in federal government. There’s plenty of oversight between the [Government Accountability Office], Congress, and [the Office of Management and Budget], but there’s really no teeth to force accountability. I think with the lack of leadership and the lack of accountability, the deterioration happened and was there.

Your question of how do you make that switch and how do you turn it around? It’s a good question. I spent a lot of time on that in the book. … I think of it as a 10-stage process. We had leadership. I brought the discipline of a vision and how to fix it and how to transform it.

We have leadership and … when I was in the private sector as an audit partner, I spent a lot of time evaluating governance, evaluating people, process, and technology. Within those four areas, if all of those are working well in a private company, they will work, the company works well. You’ve got a good discipline, you’ve got good financial infrastructure, you have good controls, and you have confidence that all of the wheels are turning properly.

I spent a lot of time studying governance, people, process, and technology while in my first 100 days. Quite frankly, all those areas needed homework. Once I spent some time learning the business, developing relationships, developing my own credibility, and working closely with our people within the CFO shop, we put a governance process in place.

Like I mentioned, HUD has about 40 different programs, FHA, and Ginnie Mae, and everyone was working in a bit of a silo. Most important thing I did initially was break down those silos and have everyone working together with one HUD in mind, versus everyone operating their own individual businesses.

We spent a lot of time on improving process. We spent a lot of time on the technology side. We introduced artificial intelligence, robotics, the digital analytics, digital analysis, and brought in some of the IT modernization that you see in the private sector. We brought that to bear at that HUD.

We spent a lot of time on the people side, trying to have people think differently about what head HUD can be by introducing these new processes and a new concept. It actually ended up being quite successful.

We spent a lot of time on the audit process. There was real disconnect between a working relationship between the auditors and HUD. I spent a lot of time making sure that relationship was improved. That was also a big part of our success.

We also spent a lot of time on enterprise fraud and risk management. That was an area that needed some homework. We had a great team in play, and putting that discipline throughout HUD was also very helpful to us.

Bluey: Irv, you mentioned your role, you spent 37 years at Ernst & Young, a major accounting firm. It seems that an important part of this transformation was your own background in the private sector. What did that experience teach you about out transforming HUD?

Dennis: Yeah, it’s a good question, Rob. I actually address this in my book. Before I took the role, my initial interview with the chief of staff and Secretary Carson—I had just retired. I was running 130 miles an hour for 37 years. I was actually scheduled to teach at [Ohio State University].

I live out in Columbus, Ohio, and I didn’t think I wanted to jump into something as full-time as a CFO of a complicated Cabinet-level agency, but they kept calling every few weeks—I talk about this in the book, the process of getting into the role—and I really did some soul-searching: Am I qualified to jump into this role and make a real difference?

At Ernst & Young, spending 37 years, I worked on large public companies. Some of my clients that I was coordinating partner on included McDonald’s and Abbott Labs and large global companies.

When you’re an audit partner, you do develop an awful lot of knowledge on business processes, on business technology, financial controls, internal controls, and corporate governance. I felt confidence after some reflection in that my experience at [Ernst & Young] prepared me to step into a CFO role and really make a difference and help turn the agency around.

Public accounting and the Big Four accounting firms, even the Big 10 accounting firms, really do prepare you for taking on bigger roles outside of the audit profession. My experience of understanding governance, understanding financial excellence, if you will, gave me the confidence to do this.

Bluey: You mentioned how you were not necessarily eager to jump into a complicated situation like this, and yet Dr. Carson must have persuaded you to come out of retirement to take this job. Was there a particular motivation, public service serving noble individual and HUD secretary like him that, ultimately, you decided that it was worth your time and investment?

Dennis: Yeah, it’s a great question. I also discuss that in the book, too. My goal in retirement was to do meaningful work and give back. I grew up a very humble beginnings and I really enjoyed my career. It provided myself and my family a lot through the last 37 years. I really wanted to give back and do meaningful work. That’s what teaching was going to be at Ohio State.

But meeting with Secretary Carson and his vision and his calm demeanor, and his very intellectual way, he said, “We have an opportunity here to make a difference in the American lives.” He came out of retirement to do this as well. That was very inspirational to me.

Every time he called, the juices flowed a little bit, and my wife said, “Every time they call, I see the excitement in your eyes, so let’s just make this happen.” She gave me the permission to come out of retirement.

In working with the team, it was a great team. Just being around him is very inspirational and he gave me the courage. He said, “You’ll bring a lot of great experience here, and we’re all work together and make a big difference,” and that’s sort of what happened.

Bluey: He’s a great man. I had the opportunity to see him just a couple of weeks ago on “The Armstrong Williams Show.” I still look up to him as somebody who is a great public servant and has really done an enormous amount of good for Americans and our country as a result of not only his service under President [Donald] Trump, but prior to that as a brain surgeon.

Irv, let me ask you this, because others have said that these problems that you were trying to address just couldn’t be fixed. I’m curious, when you arrived at HUD, what was the culture like there, maybe among the civil servants or some of the other political appointees you were serving with?

Dennis: Yeah, I think the culture was such of everyone kind of doing their own thing in their own silos and each program operated on its own.

I would say the morale in the CFO office was low. I mean, they felt like they were getting beat up on for several years. I said to our team, I said, “Look … the CFO’s taking all the heat, but a lot of these issues stem from the program’s controls and processes,” and the programs were doing their own thing without any real oversight from the CFO office.

Part of the transformation that I talk about in the book is having strong governance and strong oversight. I said to our CFO team, “We need to have a controllership function, like you would in the private sector, that oversees each of the programs, [the Federal Housing Administration] and Ginnie Mae. We need to be working together. If they’re making changes within their business processes or the controls, the CFO shop needs to be aware of that and almost approve it and make sure that the numbers are being rolled up properly with proper accounting.”

It was really the governance and giving the CFO team the confidence to go out and have that oversight and be able to make those decisions and provide that working relationship was a big part of the success.

Also, getting everyone to think differently about IT modernization and bringing in RPA robotic process programs and doing the IT modernization that goes on in the private sector was very helpful to us.

We started small, we had an RPA process that we took an accrual or accounting process that took 2,200 hours, we applied some robotics to it, and it brought that down to 65 hours. We had 2,100 hours that we could devote to improving other processes versus just moving numbers around.

Once we planted that seed within our team, you could see the energy start, and you can see people’s minds start to explode with ideas of how we can make this more efficient and better and effective. That created a lot of energy within the CFO office. That was exciting to see. The morale was low at first, and we got that turned around in three and a half years.

Bluey: You write in the book, which is called “Transforming a Federal Agency,” about some of the roadblocks you faced at HUD. It clearly wasn’t easy to overcome some of the bureaucratic barriers, as you’ve just explained to us. Looking back now, what are you most proud of accomplishing?

Dennis: I think a couple of things. I’m probably most proud of changing the culture in a way that people were energized to work.

We took our employee survey scores, which the government monitors pretty closely, and the CFO shop was really low. It was the lower quadrant of the federal agencies at large. It was last at HUD. By the time we finished in my final year, we were leading at HUD and we were also in the upper quadrant of the measures that the federal government monitor. That change in morale was really, really something I was very proud of and proud of our team.

I think we also changed the mindset of people thinking differently and knowing what can be. And getting a clean audit opinion for the first time in eight years was something I was also very proud of. The reason that is because it just gives people within the CFO shop and HUD at large a feeling of pride that their work mattered. We were able to make changes, and you just feel better about your work when you get a good scorecard at the end of the day.

Bluey: You bet. Yeah, absolutely. Now, several years ago … I covered the EPA’s creation of an Office of Continuous Improvement—that’s the Environmental Protection Agency. I’m just curious, was there any competition among federal agencies during the Trump administration when it came to improving their performance and doing the things you were able to do at HUD?

Dennis: It’s a good question. I don’t know the answer to that and from a standpoint of, I was so laser-focused on what we were doing at HUD.

We were starting at the very bottom of the ladder and we needed to get us to, one, an even keel with other agencies and then if/when we did the IT modernization, maybe that … became a leading or best practice in many of processes and procedures. I don’t know that I felt necessarily competitive, but I was really focused on improving HUD and getting us to where I knew where they could be.

Bluey: Now, you were recognized for your accomplishments, winning awards—now, writing this book about where you were able to go and improve things. But my question is, will the changes you made stick? So often we hear about the good work that was done only to have the next administration come in and undo it. What’s the outlook today?

Dennis: I actually did dedicate a chapter to the book on what makes it sustainable and every time you reach your goal, you’ve got to think about the next thing and keep moving and keep improving.

Making a sustainable start, in my view—and like I had mentioned, I do address this in the book—keeping the government structure in place, that can be difficult in government because unlike the private sector where the executive team and the leadership team doesn’t change that often, you’ll have a change of a CEO, you’ll have a change of a couple of board members. You may change of a CFO, but by and large, the culture’s there, the strategy’s there, and 90% of the leadership team is there.

Government’s very different. You’ve got a different dynamic in that every four to eight years, you’re wiping out all of the politicos and all the leadership team, you’re coming in with perhaps a new agenda and a new strategy.

The government structure, keeping that in place or getting it ramped up quickly, I think, is very important to making it sustainable. I think the controllership function with the oversight from the CFO office, which can be done at the career level, I think is very important to keep in place.

I think the developing the workforce of the future is really important within government at large, not just at HUD. I do think in the private sector, the workforce is a little more ahead of the government workforce and getting ready for this digital age that we’re in.

Continuing the program of the RPA and the digitalization is very important to continue the progress. We used the shared service center. We improved that while I was there. I think there’s more opportunity to utilize the shared service center that comes out of Treasury. That’ll be very important to expand that.

We were doing a lot of customer experience in call center to make it easier for the people that we serve to work with HUD. There was more work to do in that area, and I hope that continues. Then the whole data analysis and analytics and those initiatives I think will be really important to continue.

My team was aware of the vision and the road map, and I’m hopeful that will continue, but I do dedicate a chapter to that in “Transforming a Federal Agency,” in my book, because I think it is so important that some of that infrastructure stuff just hopefully gets embedded into the process and doesn’t fall apart later on.

Bluey: Well, Irv, as we wrap up here, would you encourage people to take a job in government based on your experience? And if they did follow in your footsteps, what advice do you have for them?

Dennis: I actually spend a lot of time in my book talking about opportunities working … inside federal government.

I’m sort of embarrassed to say this, I wasn’t expecting the quality and the dedication of the federal workforce to the mission at hand. There are a tremendous amount of smart people. The people work very hard. It’s a story that doesn’t get told too often, so I spend a lot of time in my book talking about that. I would encourage anyone that has an appetite to and a desire to work inside the federal government to do so.

I think of it myself, that if I had spent two or three years working in the executive branch, understanding how laws are passed, how policy is made, and how the regulatory environment works, I would’ve been a better adviser to my clients. Then conversely, if everyone in government on the infrastructure side had two or three years in the private sector, knowing what financial excellence looks like, I think our government would be better.

But I spent a lot of time talking to college students and I put on to my agenda speaking about the opportunities in the federal government. There’s not an industry that’s not touched by government. You can move around pretty easily within agencies. I think it’s a tremendous career opportunity. I didn’t have that perspective before I worked at HUD, but I certainly do now, and I’ve become a big fan of what a meaningful career path it could be working inside of government.

Bluey: Thank you for your public service, Irv. We appreciate it. Finally, you’re now working at the American Cornerstone Institute with Dr. Carson again. Can you tell our listeners about the organization and how the they can learn more about it?

Dennis: Sure. So, we have a tremendous website, it’s called American Cornerstone Institute, as you said. Secretary Carson wanted to set up this not-for-profit to promote the principles of our Founding Fathers and of our nation and have the discussion in a nonpartisan civil way. The pillars are faith, liberty, community, and life.

We have a great website that talks about our programs and what we’re doing. There’s about six or seven of us from HUD that are working with Secretary Carson on this.

We’re not only doing op-eds and “Cornerstone Conversations” with talk about matters that are important in today’s society within our four pillars, but we’re also developing educational programs. We started Little Patriots, which is educational programs for kindergarten through fifth grade. We’ll expand that as we grow. Again, it’s talking about why America matters and promoting founding principles of our nation.

We’re also working on a program within our “More Perfect Union” agenda. What we’re doing there is developing a college certification course to educate people that are interested in the executive branch. Talking about the confirmation process, talking about getting a job within the executive branch, talking about how the executive branch interacts with the legislation and judicial branch.

We’re excited about that, and we’ll be launching that sometime in early spring of next year, but it’s a great group of people. We’re working hard. We had a very successful first year and AmericanCornerstoneInstitute.com, and you can see all about what we’re doing and where we are.

Bluey: Irv Dennis, thanks so much for your leadership, not only there today, but also in the past at HUD. I certainly appreciate learning more about how you were able to transform this big government agency.

Again, the book is called “Transforming a Federal Agency: Management Lessons From HUD’s Financial Reconstruction.” We’ll be sure to leave a link in both the transcript and the show notes for any listeners who would like to learn more about it.

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