[Senate Hearing 107-151]
[From the U.S. Government Publishing Office]
S. Hrg. 107-151
EXPANDING FLEXIBLE PERSONNEL SYSTEMS GOVERNMENTWIDE
=======================================================================
HEARING
before the
OVERSIGHT OF GOVERNMENT MANAGEMENT,
RESTRUCTURING, AND THE DISTRICT OF COLUMBIA
SUBCOMMITTEE
of the
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
JULY 17, 2001
__________
Printed for the use of the Committee on Governmental Affairs
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COMMITTEE ON GOVERNMENTAL AFFAIRS
JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan FRED THOMPSON, Tennessee
DANIEL K. AKAKA, Hawaii TED STEVENS, Alaska
RICHARD J. DURBIN, Illinois SUSAN M. COLLINS, Maine
ROBERT G. TORRICELLI, New Jersey GEORGE V. VOINOVICH, Ohio
MAX CLELAND, Georgia PETE V. DOMENICI, New Mexico
THOMAS R. CARPER, Delaware THAD COCHRAN, Mississippi
JEAN CARNAHAN, Missouri ROBERT F. BENNETT, Utah
MARK DAYTON, Minnesota JIM BUNNING, Kentucky
Joyce A. Rechtschaffen, Staff Director and Counsel
Hannah S. Sistare, Minority Staff Director and Counsel
Darla D. Cassell, Chief Clerk
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OVERSIGHT OF GOVERNMENT MANAGEMENT, RESTRUCTURING, AND THE DISTRICT OF
COLUMBIA SUBCOMMITTEE
RICHARD J. DURBIN, Illinois, Chairman
DANIEL K. AKAKA, Hawaii GEORGE V. VOINOVICH, Ohio
ROBERT G. TORRICELLI, New Jersey TED STEVENS, Alaska
THOMAS R. CARPER, Delaware SUSAN M. COLLINS, Maine
JEAN CARNAHAN, Missouri PETE V. DOMENICI, New Mexico
MARK DAYTON, Minnesota THAD COCHRAN, Mississippi
Marianne Clifford Upton, Staff Director and Chief Counsel
Andrew Richardson, Minority Staff Director
Julie L. Vincent, Chief Clerk
C O N T E N T S
------
Opening statements:
Page
Senator Durbin............................................... 1
Senator Voinovich............................................ 2
WITNESSES
Tuesday, July 17, 2001
Hon. David M. Walker, Comptroller General, U.S. General
Accounting Office.............................................. 5
Hon. Sean O'Keefe, Deputy Director, Office of Management and
Budget......................................................... 7
Charles O. Rossotti, Commissioner, Internal Revenue Service...... 9
Charles S. Abell, Assistant Secretary of Defense for Force
Management Policy, Department of Defense....................... 11
Bobby L. Harnage, Sr., National President, American Federation of
Government Employees, AFL-CIO (AFGE)........................... 28
Susan L. Shaw, Deputy Director of Legislation, National Treasury
Employees Union................................................ 30
Myra Howze Shiplett, Director, Center for Human Resources
Management, National Academy of Public Administration.......... 32
Alphabetical List of Witnesses
Abell, Charles S.:
Testimony.................................................... 1
Prepared statement........................................... 91
Harnage, Bobby L., Sr.:
Testimony.................................................... 28
Prepared statement........................................... 110
O'Keefe, Hon. Sean:
Testimony.................................................... 7
Prepared statement........................................... 83
Rossotti, Charles O.:
Testimony.................................................... 9
Prepared statement........................................... 86
Shaw, Susan L.:
Testimony.................................................... 30
Prepared statement of Ms. Colleen M. Kelley submitted by Ms.
Shaw....................................................... 128
Shiplett, Myra Howze:
Testimony.................................................... 32
Prepared statement........................................... 137
Walker, Hon. David M.:
Testimony.................................................... 5
Prepared statement........................................... 41
EXPANDING FLEXIBLE PERSONNEL SYSTEMS GOVERNMENTWIDE
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TUESDAY, JULY 17, 2001
U.S. Senate,
Oversight of Government Management, Restructuring,
and the District of Columbia Subcommittee,
of the Committee on Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:35 p.m., in
room SD-342, Dirksen Senate Office Building, Hon. Richard
Durbin, Chairman of the Subcommittee, presiding.
Present: Senators Durbin and Voinovich.
OPENING STATEMENT OF SENATOR DURBIN
Senator Durbin. Welcome everyone. I apologize for my
tardiness. The Appropriations Committee is marking up the
agriculture bill, which has some consequence to the State of
Illinois, and I wanted to be there and cast my vote. So I
apologize, but I rushed right over as quickly as I could. Thank
you all for being here as the Senate Subcommittee on Oversight
holds a hearing entitled, ``Expanding Flexible Personnel
Systems Governmentwide.'' I have indicated to Senator Voinovich
on several occasions that his dedication to this question of
human capital challenge facing Federal Government is one that
leads this Subcommittee and will continue to, though there has
been a change in some of the titles around here, but I am
pleased to have this opportunity, at his request, to delve into
another aspect of the issue.
Our focus today will be on some of the various personnel
flexibilities and special authorities granted by Congress to
specific government agencies to facilitate personnel retention,
recruitment, pay and promotion. Senator Voinovich launched a
series of Subcommittee hearings in the 106th Congress to probe
the issue of the Federal Government's human capital challenges.
This hearing builds on that foundation.
In showcasing three agencies today, the General Accounting
Office, the Internal Revenue Service, and the Department of
Defense, we will examine their experiences in implementing the
flexibilities extended to them through congressional
enactments. Last year, GAO was accorded an array of
flexibilities that were added under the GAO Personnel
Flexibility Act of 2000. These include authorizing senior level
positions for scientific, technical or professional staff;
voluntary early retirement offers to individual employees;
separation payments for realignment purposes; and reduction-in-
force flexibilities for downsizing, realignment, or correction
of skills and balances. These recent authorities build on
authority extended to GAO over 20 years ago to develop its own
personnel system. GAO's system includes broad-banding of its
pay grades, pay-for-performance, and flexible hiring and
promotion practices.
With respect to the Internal Revenue Service, under the
Restructuring and Reform Act of 1998, Congress included human
capital flexibility provisions covering a wide range of
personnel-related functions. These included eliminating the use
of enforcement statistics and employee evaluations; authority
to terminate employees for committing certain acts or omissions
in performance of official duties; providing critical pay to
attract senior managers; streamlining hiring, travel and
relocation procedures; and implementing a broad-banded pay
system.
The Defense Department has also been a beneficiary of
congressional authorization to engage in a variety of
demonstration projects to test improvements in managing its
civilian workforce. For example, in 1980, Congress authorized
China Lake and other U.S. Navy facilities, such as science
laboratories, to participate in the first personnel
demonstration project under Title VI of the Civil Service
Reform Act of 1978. The lab sought to improve recruitment and
retention of high-quality workers by increasing their control
over classification, pay and other personnel matters.
The project was expanded several times and now covers
approximately 10,000 employees. It was extended indefinitely in
1994, and in 1995, the Navy was given authority to expand the
project throughout the Naval Air Systems Command. In addition
to eliciting the insights of key leaders of these three
agencies today, we seek to learn more about the plans of the
administration to address workforce planning concerns. We are
anxious to hear the perspectives on personnel flexibility of
representatives of employee labor organizations and interested
public administration associations.
I want to particularly explore several questions about the
utility of these tools, how useful has these authorities been;
what are the strengths and drawbacks; has there been particular
impediments to using existing authority; how has the agencies
engaged with employees and employee organizations in
implementing these authorities. Is it working? Can it be
improved?
A key outcome of our inquiry will be identifying the
lessons other agencies and Congress ought to apply and the
cautions they should be heeding in considering whether to
extend any of these authorities more broadly. I want to now
yield to the Ranking Minority Member of the Subcommittee, my
good friend and a leader on Capitol Hill on this important
issue--Senator Voinovich, your opening statement.
OPENING STATEMENT OF SENATOR VOINOVICH
Senator Voinovich. Thank you, Mr. Chairman. I am pleased
that the Subcommittee is holding this hearing on ``Expanding
Flexible Personnel Systems Governmentwide,'' and I would like
to welcome our two panels of witnesses.
Mr. Chairman, today's hearing is the ninth that our
Subcommittee has held on the Federal Government's human capital
crisis since July 1999. I would like to thank you publicly for
your partnership in the examination of this issue during my
time as Chairman of the Subcommittee and for your commitment to
continue examining these problems and seeking solutions during
your chairmanship.
I think we both agree that one of the real crises that we
face in the Federal Government today is the human capital
crisis. I consider this a key hearing on the Subcommittee's
human capital agenda. When examining the Federal Government's
human capital problems, some are quick to say that entirely new
civil service architecture is needed to address this system's
many problems. I am sympathetic to that argument. However, we
all know how difficult that overhaul would be. That is why it
is critical to explore two other options when considering civil
service reform.
The first option is that we simply try to use the
authorities available under current law more effectively. I
have discussed that approach with both Mr. Walker and Mr.
O'Keefe, and we all agree that a great deal can be done through
better management and the use of current laws and regulations.
I am pleased to note that Kay James was confirmed by the Senate
last Wednesday to be the Director of the Office of Personnel
Management. Earlier this year, I discussed with her that OPM
should do all it can to relax certain rules and regulations
that make some aspects of the Civil Service System overly
bureaucratic. For example, there are certain elements of the
hiring system that should be changed. Lieutenant General Robert
Flowers, Chief of the Army Corps of Engineers, recently
indicated to me that since the Corp's special hiring authority
was rescinded, it takes him 4 months to hire an engineer. This
is unacceptable in a competitive field.
Second, we should identify the special personnel
flexibilities provided to some agencies, such as the Internal
Revenue and General Accounting and the Department of Defense,
examine how effectively they have been employed, and determine
if those flexibilities should be extended governmentwide. The
purpose of today's hearing is to explore the second approach.
The primary advantage of that approach is that if it is agreed
that a certain flexibility is proved to be worthwhile,
extending it to the entire Executive Branch is certainly better
than designing a whole new system and can help address the
human capital crisis until more comprehensive reforms can be
agreed upon and implemented.
The General Accounting Agency, under the leadership of
Comptroller General David Walker, has tried to make itself an
example of excellence in government. Its personnel system is a
great candidate for examination today. The Internal Revenue
Service has a relatively newer alternative system, which was
authorized in Congress of 1998. The Restructuring and Reform
Act directed IRS to establish a performance management system
and provided human capital flexibility provisions that covered
a wide range of personnel-related functions. Commissioner
Rossotti, I look forward to hearing from you about how you
think that system is working.
I am especially pleased also that we have Charlie Abell,
Assistant Secretary of Defense for Force Management Policy,
because the DOD has over 3 million active duty military,
reserve, and civilian personnel combined. Managing this
enormous workforce is a tremendous challenge. Secretary Abell,
I am eager to learn from you what the Bush Administration is
doing or what you intend to do to address the human capital
crisis that we have at the Defense Department.
I would also like to mention the fact that my staff and I
worked closely with Mr. Abell last year to insert language in
the fiscal year 2001 Department of Defense Authorization Act to
reshape its workforce by offering voluntary separation
incentive payments to 1,000 senior employees in this fiscal
year. That provision also authorized another 8,000 slots for
the next 2 fiscal years. I am really pleased, Secretary Abell,
that the money to fund that is in the President's 2002 budget,
and hopefully the money will be there in 2003.
I think we are all familiar also with former Defense
Secretary James Schlesinger's testimony before this
Subcommittee several months ago, where he indicated that, for
all intents and purposes, the Department of Defense, in terms
of personnel and the human capital crisis, is in intensive
care. You might be interested that I recently had a human
capital roundtable in Dayton, Ohio at Sinclair Community
College. Dr. Russo, Executive Director of Aeronautical Systems
Center at Wright Patterson was there, Colonel Larry Strauser,
Vice Commander, Air Force Research Laboratory, Wright
Patterson, and local college students were in attendance.
I wanted to find out from those students: Are you
interested in going to work for the Federal Government? If you
are, why? If you are not, why not? It was interesting, first of
all, that many really did not know about the opportunities
available to them in the Dayton area, in the Defense
Department. Several of them mentioned that they felt that the
pay was not competitive with the private sector. The colonel,
after one student explained that he was an electrical engineer,
said to him, ``We have got a job for you now, right now, in a
work-study program.'' I saw a big smile on the youngster's
face. Then I asked the colonel, ``How long is it going to take
for you to have your hiring of this young man approved?'' He
looked at me with a straight face and he said, ``Five months.''
Well, at that point, you could have heard a pin drop in the
room.
I am also pleased today that we have with us Presidents
Harnage and Kelly from the American Federation of Government
Employees and the National Treasury Employees Union. I have
said on numerous occasions we cannot expect to change the Civil
Service System unless we closely involve those who will be
affected most directly. I look forward to your analysis of
these new personnel systems from the unions' point of view.
Last, but certainly not least, I look forward to hearing
the perspectives of Ms. Shiplett on behalf of the Human
Resources Center at the National Academy of Public
Administration. NAPA has studied these issues closely for many
years and they have a great deal to offer to this discussion.
Again, I thank the witnesses for coming today and I look
forward to your testimony. Thank you, Mr. Chairman.
Senator Durbin. Thank you, Senator Voinovich. I want to
welcome the first panel: David Walker, Comptroller General of
the U.S. General Accounting Office. Mr. Walker is the Nation's
chief accountability officer and the head of GAO, a Legislative
Branch agency that assists Congress in insuring the
accountability of the Federal Government. Sean O'Keefe, who is
the Deputy Director of the Office of Management and Budget. In
addition to overseeing the preparation of the budget,
supervision of the administration of Executive Branch agencies,
OMB is at the centerpiece of Federal agency management
oversight. Charles Rossotti is the Commissioner of the Internal
Revenue Service. Almost since the time of his appointment to
that post in November 1997, Mr. Rossotti has had the
challenging task of overseeing the restructuring of the IRS.
Charles Abell joins us from the Department of Defense. A
retired Army lieutenant colonel, he is the Assistant Secretary
of Defense for Force Management Policy. In that capacity, he is
responsible for the policies, plans and programs for military
and civilian personnel management, including recruitment,
education, career development, equal opportunity compensation,
recognition, discipline and a separation of all DOD personnel.
Thank you for coming. We look forward to your testimony. As
is customary in the Subcommittee, we swear in all witnesses. So
would you please rise and raise your right hand? Do you swear
the testimony you are about to give the Subcommittee is the
whole truth, and nothing but the truth?
Mr. Walker. I do.
Mr. O'Keefe. I do.
Mr. Rossotti. I do.
Mr. Abell. I do.
Senator Durbin. Let the record note that the witnesses
answered in the affirmative, and so they will be allowed to
continue. I would ask that you limit your oral statements to no
longer than 5 minutes, and remind you that your entire
statement will be entered into and made part of the record.
Mr. Walker, please proceed.
TESTIMONY OF DAVID M. WALKER,\1\ COMPTROLLER GENERAL, U.S.
GENERAL ACCOUNTING OFFICE
Mr. Walker. Thank you, Mr. Chairman. It is a pleasure to be
here and I will summarize my extensive statement that has been
provided for the record. Mr. Chairman, I have tried to make
human capital a top priority for GAO ever since I was the
Comptroller General of the United States. First, externally,
with regard to evaluation work that we are doing, as well as to
try to provide tools and methodologies to help agencies help
themselves see the way forward in this critically important
area.
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\1\ The prepared statement of Mr. Walker appears in the Appendix on
page 41.
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Second, we have also tried to make human capital, or our
people, a top priority within GAO, with the objective to try to
lead by example. The way that we do things is not the only way.
It is not necessarily the best way, but it is a way. We are not
perfect and we never will be. On the other hand, we believe as
the leading accountability organization in the United States
and possibly the world, we have a responsibility to lead by
example in all critical management areas, and we are trying to
do that.
As you know, Mr. Chairman, GAO recently designated the lack
of strategic human capital in management as a governmentwide
high-risk area. Unfortunately, all too frequently, the Federal
Government has viewed its employees as a cost to be cut, rather
than an asset to be valued. We believe very strongly that this
must change in the future, because of the fact that we are now
in a knowledge-based economy. People are the source of all
knowledge. We must be able to attract some of our Mation's best
and brightest to run what is arguably the largest, the most
complex, the most diverse and the most important entity on the
face of the earth, namely the U.S. Government.
We cannot afford to do otherwise. We believe that there is
a three-phased approach that is ultimately going to have to be
followed in the area of human capital. First, agencies should
do everything they can within the context of current law to
attract, retain and motivate a skilled and knowledgeable
workforce. Second, they should seek, based on a business case
analysis, selected additional flexibilities targeted additional
changes. In addition, the Congress should consider providing
additional flexibilities and to a broader range of Federal
agencies, along with appropriate safeguards to prevent abuse.
Third, there is going to be a need for broader, more
comprehensive civil service reform over time.
However, we must learn from what has worked and what has
not worked with regard to the best flexibilities and we must
reach out to try to involve all key stakeholders to build a
consensus before comprehensive civil service reform will be
possible. In my opinion, that is at least 2 years away. Many
have shared responsibilities for addressing the human capital
challenge, including all agency heads, OMB, OPM and a variety
of other players.
As you properly pointed out, Mr. Chairman, GAO has certain
additional flexibilities that have been granted to us in past
years. For example, in 1980, the GAO Personnel Act was passed.
It was passed primarily with two concepts in mind, independence
and innovation. It was passed in order to provide GAO
reasonable independence from OPM and other entities, since we
have the responsibility to review, evaluate and audit certain
entities; therefore, we wanted to make sure that there would
not be a potential conflict of interest with regard to our
activities relating thereto.
Second, it was also passed with the idea to try to use GAO
as a potential experiment for certain new and innovative
approaches. The three major areas dealt with hiring practices,
classification, and compensation practices. In the hiring area,
we have streamlined hiring authorities, but it is important to
note that we still maintain veterans preference to the extent
applicable under current law, under Title V, and in addition to
that we also conform with merit principles in all of our
practices. We use broad-banding as a classification system for
most mission personnel. In addition to that, we have a pay-for-
performance system for compensating our mission related
employees, the desire being, that to the maximum extent
possible, we make decisions on who we hire, who we promote, who
we reward and who we discipline based upon skills, knowledge
and performance.
The 2000 act that was passed last fall, with the help of
both of you Senators and others, provided us with four
different authorities. First, the authority to create a new
senior-level position going up to the SES level of compensation
for certain specialists and technical professionals. We have
implemented that authority and we have put about four new
people into that category and we have reclassified about four
others. We have the authority to use voluntary early retirement
authority, as well as buyout authorities, to realign GAO,
rather than to downsize GAO. We have issued the regulations on
voluntary early retirement and we sent out an offer yesterday,
as a matter of fact, for a voluntary early retirement authority
for our employees to consider during the next 45-day period.
We have not proposed buyouts, nor do we plan to. We do not
believe they meet the cost-benefit requirement, at least as
they are currently structured. And, we have not promulgated
revised reduction in force regulations, even though we have the
authority to do that, because these are not issues that are
presently before us.
Two more quick things, Mr. Chairman--first, I have outlined
in my statement a number of actions that GAO has taken, within
the context of current law, within that 80 percent that can be
done within the context of current law that we hope will be
informative to this Subcommittee as well as other agencies.
Second, I have also outlined in my statement a number of
legislative actions that we believe Congress should consider
that would provide agencies reasonable flexibility to attract,
retain, and motivate a qualified workforce, while providing
adequate protections to prevent abuse.
Last, let me say, Mr. Chairman, that I believe this is a
critically important area. It is one that is going to require
the concerted efforts of a variety of parties, including the
Congress, to see our way forward. We are more than happy to do
what we can to help agencies help themselves, as well as to try
to provide additional tools and methodologies and examples of
how one can move forward in this area. Thank you, Mr. Chairman.
Senator Durbin. Thank you very much. Mr. O'Keefe.
TESTIMONY OF HON. SEAN O'KEEFE,\1\ DEPUTY DIRECTOR, OFFICE OF
MANAGEMENT AND BUDGET
Mr. O'Keefe. Thank you, Mr. Chairman and Senator Voinovich.
It is a pleasure to be here this afternoon. If you have no
objection, Mr. Chairman, I will submit the statement for the
record and summarize if briefly.
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\1\ The prepared statement of Mr. O'Keefe appears in the Appendix
on page 83.
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Mr. Durbin. Without objection.
Mr. O'Keefe. First and foremost, the strategic management
of human capital is one of the President's five top management
priorities. It is a management agenda he has formulated during
the course of the last 6 months, quantified in the blueprint to
accompany the President's budget that was submitted on February
28 and expanded dramatically in the budget submission that was
made in April. We have discussed it and testified about it
rather widely, this being one of the primary functions, all of
which are interrelated, that of the integration of budget and
performance criteria, the strategic management of human
capital, competitive sourcing objectives, e-Government
initiatives and a range of other factors that are related in
that regard. As a result, what we are looking at is all these
factors working off each other as a piece, an interrelated
effort as part of the President's management agenda.
Workforce planning becomes one of the primary aspects of
what is required in achieving this approach. So, even the
requesting of the departments and agencies--and they have gone
through the rather laborious task of preparing all the efforts
necessary to achieve, certainly, the first two objectives,
which is to look at the implications on the workforce
requirements as integrated within the budget criteria, based on
some set of performance criteria, to determine exactly and
justify exactly what the basis of requirements may be for this
particular human resource.
As part of the 2003 objectives, what we were also looking
to is, for fiscal year 2003 to be submitted this January, a
handful of very interrelated factors with this five point
management agenda that the President has prepared. First and
foremost is--as David Walker just testified to--is to
capitalize on the proposition, that we need to exploit the
current flexibilities as they exist today. I will submit to you
as an opening proposition, most of the senior leadership of
most of the departments in the Federal Government are not even
aware of the extent to which those flexibilities exist.
The President's Management Council was just constituted
recently, and as a result, the new deputy cabinet officers,
have been designated largely as chief operating officers across
the Federal agencies and departments. Having convened just a
week ago, the first order of business was to walk through from
OPM what the current flexibilities are and discuss those
extensively. We have just begun that task. Although there is an
awful lot that has been accomplished and an awful lot discussed
throughout the institutional framework, the leadership of those
particular departments and agencies have just become more and
more familiar with what the extent of the flexibilities are.
Second, the pilot and test authorities exist not only
within the three agencies and departments represented here this
afternoon, but also across a range of other Federal agencies.
The assessment and evaluation necessary to determine the
success or relative utility of each of those particular
approaches has yet to be taken on in earnest. As a consequence,
that is the effort here over the course of the next couple of
months, to look to prepare all the necessary analysis that
would support offering to you, as part of a larger fiscal year
2003 legislative initiative to accompany the fiscal year 2003
budget, a proposal to extend those authorities where
appropriate and to make them available.
Certainly, equally important is the clarification of a
number of different approaches of management criteria as well
as objectives that have been usefully put together by the
General Accounting Office and summarized in David Walker's
testimony today, as a matter-of-fact, that is very widely
available, making sure each of the departments and agencies are
aware of the extent to which some of those authorities could be
utilized, and then building those into the performance criteria
that we anticipate will become part of the review for fiscal
year 2003, as well as to determine what the performance
criteria is and which resources would then become available as
part of the integrated effort there.
Last, as each of these performance measures are introduced,
to start with a fundamental proposition of what is the outcome
or objective, a very familiar theme, certainly, within this
Committee, sponsorship of the Government Performance Results
Act, having determined what those performance criteria would be
for selected programs, it then gives us groundwork and basis
for further determination of precisely the extent to which we
need to expand the human capital requirements for training, for
education retention programs and a range of other flexibilities
across the board in this area. So, for all of those, as part of
the fiscal year 2003, our attempt is to corral-up all those
points prior to seeking a wider range of reform initiatives,
which we anticipate would be after the fiscal year 2003
preparation has been completed, so we can give you a more
comprehensive picture therein. But we are about, from a
management and administration objective, precisely the same
objectives that you enunciated so eloquently in your opening
statements. Thank you, Mr. Chairman.
Senator Durbin. Thank you. Mr. Rossotti.
TESTIMONY OF CHARLES O. ROSSOTTI,\1\ COMMISSIONER, INTERNAL
REVENUE SERVICE
Mr. Rossotti. Thank you, Mr. Chairman and Senator
Voinovich. Just about 3 years ago, the Congress passed the
Restructuring and Reform Act, which was a really massive
mandate for change in the IRS. One of the keys in delivering on
those mandates is to develop and retain a highly skilled and
motivated workforce, and a workforce that is organized and
managed in line with our mission and our strategic goals as
laid out in the act. To this end, we have benefited a great
deal from the personnel flexibilities that were incorporated
into that act.
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\1\ The prepared statement of Mr. Rossotti appears in the Appendix
on page 86.
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As I will just briefly summarize in my opening statement,
and describe in more detail in my written statement, they have
enabled us to employ a number of management techniques that
have made a critical difference in recruitment and in
reorganizing the workforce and in performance management. It is
important to note, as the other witnesses have mentioned, that
these flexibilities complemented existing authorities that were
underway, and it was really the combination of the existing
authorities plus the new flexibilities that we think has made
such a difference in our ability to move forward on the
mandates of RRA.
To mention a couple of areas, the IRS modernization program
requires a very high level of senior level leadership that is
far beyond the capacity of any one or two individuals. Much of
that talent was and is available within the IRS, but for
certain positions, especially those requiring expertise in
business systems modernization, leading organizational change,
emulating best practices in the private sector, and
communicating more effectively with taxpayers, we looked
outside the government to recruit selectively. RRA gave us
streamlined critical pay authority to hire up to 40 such
individuals. To date, we have used this to hire 32 people, many
with very distinguished careers. They are now filling such
positions as chief information officer, director of business
systems modernization, taxpayer advocate and commissioner of
the large and mid-size business division and commissioner of
the small-business, self-employed business division.
We have also effectively used the combination of existing
authorities and RRA flexibilities to recruit, at the entry-
level, talented, front-line professionals. For over 5 years,
budget constraints really kept the IRS out of the recruiting
market while we suffered attrition in our critical occupations.
Fortunately, due to congressional funding in fiscal 2001, we
were able to get back into the market and to launch a
significant recruiting initiative aimed at filling hundreds of
entry-level key professional positions, such as criminal
special agent, revenue agent, revenue officer, and some new
positions in our new structure, tax specialist and tax
resolution representative. Many of these positions are going to
be filled with people with accounting degrees or other kinds of
accounting and business skills, and there is quite an active
market out there for those kinds of people.
We developed a focused marketing and recruiting strategy,
aimed at both outside employees as well as soliciting current
employees and providing support to current employees for
advancement. One of the special authorities RRA gave us is
called category rating ability for new recruits, which we used
to expedite the rating process and hiring process, particularly
for revenue agents, which is one of the most difficult
occupations to recruit for, yet one of the most important. I am
pleased to say that while it is not fully complete, most of the
recruiting for this year has been done and has been successful.
Overall, we have recruited over 2,000 new people into the IRS
in these targeted positions, including about 400 that came in
through the category rating process.
The RRA also mandated a major shift in our reorganization.
Our whole structure has moved from a geographic structure to
one that is based on a customer focus, built around four major
taxpayer segments. This required a comprehensive workforce
transition strategy because it was a massive change, not only
in Washington and headquarters, but across the entire country.
This change went from top to bottom across the IRS. I am
pleased to say that as of last October--26 months after the
Restructuring Act was passed by Congress--the old 50-year-old
structure was gone and was replaced with a new, customer-
focused structure. As part of this, nearly all of our mid- to
upper-level management positions were abolished, and new
selections were made to fill these newly defined positions. In
this process numerous layers were eliminated, the structure was
flattened and about 25 percent of our total number of mid- to
top-level positions were eliminated. All this was done in 26
months without any involuntary separations, making active use
of existing authorities, together with early out and buyout
authorities that were provided in RRA.
Last, let me mention the other key element that was called
for in RRA and is a major part of our strategy, which is making
sure that all of our managers and employees are focused on
achieving our organizational priorities and goals. This was
mandated in some special ways because of the special mission of
the IRS in terms of tax compliance. We implemented those
mandates through what we call our balanced measure system,
which identifies a set of performance measures for every
organizational unit that balances and quantifies customer
satisfaction, business results and employee satisfaction. We
then use this performance management system, which measures
unit objectives down to individual performance through our new
executive and managerial performance appraisal system.
This appraisal system includes a core set of competencies
for management responsibilities that are tied to our balanced
measure system, with more specific commitments built around our
plan for the upcoming year. Complementing this was pay-banding
authority that was available to us in RRA, which we have used,
so far, for all of our mid- to top-level managers. This allows
us to link individual performance assessments to the
advancement of senior managers in their pay process. They
progress from step to step within the band only if the rating
under the performance management system meets or exceeds
certain standards.
In conclusion, many of the human resource initiatives that
I described are still being implemented and it is too early to
make any definitive assessment of their results. Nevertheless,
I have to say that the results so far have been very promising.
We have used them effectively to do the things that we set out
to do. Again, I stress that I think they were effective because
they did complement our full use of the existing authorities
that existed in the law. We used both of them to achieve our
goals and I think together they have been extremely powerful in
letting us get to the point that we are. Thank you.
Senator Durbin. Thank you very much. Mr. Abell.
TESTIMONY OF CHARLES S. ABELL,\1\ ASSISTANT SECRETARY OF
DEFENSE FOR FORCE MANAGEMENT POLICY, DEPARTMENT OF DEFENSE
Mr. Abell. Mr. Chairman and Senator Voinovich, Congress has
been very generous to the Department of Defense in granting,
through the use of demonstration project authorities, certain
civilian personnel systems flexibilities. I have provided the
Subcommittee with written testimony that provides an overview
of these legislative provisions, examines how the Department
has used them and discusses their effects on the workforce.
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\1\ The prepared statement of Mr. Abell appears in the Appendix on
page 91.
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This legislation has encouraged the Department to conduct
civilian personnel demonstration projects in our science and
technology reinvention laboratories and for our civilian
acquisition workforce throughout the Department. We are now
conducting eight such projects under two separate legislative
provisions. In addition, two pilot programs are authorized for
science and technology labs and two test and evaluation centers
in each of the military departments. Congress has also granted
the Department flexibilities in hiring and compensating
scientists and engineers in the Defense Advanced Research
Projects Agency, DARPA, the military departments, the National
Imagery and Mapping Agency and the National Security Agency.
The hiring and pay innovations of these demonstration
programs and pilot programs are outlined in my written
statement. While we do not have any formal evaluation of the
results of these yet, I believe the flexibilities of the
demonstration projects and pilot programs have had a positive
effect on civilian human resource management within the
Department. Although we have evaluations of the demonstration
projects scheduled in fiscal year 2002 and again in fiscal year
2003, the preliminary indications are that broad-banding and
the other flexibilities we have employed have helped us manage
our human capital. We have been able to recruit and retain
scientists and engineers through the use of categorical hiring,
scholastic achievement appointments, modified term
appointments, pay for performance and expanded probationary
periods.
We have also used a voluntary emeritus program to permit us
to retain the skills and experience of retired civil servants
who want to volunteer to remain on the job and help us
transition the next generation of leaders. In closing, I would
like to thank this Subcommittee and the Congress for the
support given to the Department to facilitate our downsizing
and transition. We have been able to avoid over 147,000 layoffs
since 1993 by using the voluntary separation incentive payment
program. In addition, using the voluntary early retirement
authority, we have avoided over 67,000 involuntary separations
and demotions. This has gone far to support the moral of the
workforce and the efficiency of the Department. I look forward
to continuing this partnership as we continue our efforts to
reshape the workforce in the Department. Thank you, Mr.
Chairman.
Senator Durbin. Thank you, Mr. Abell. Last year, I joined
with Senator Voinovich and Senator Akaka in offering an
amendment to the defense authorization bill relative to
offering student loan repayments as an incentive to attract
qualified employees to Federal service. The amendment was
adopted by the Senate, part of the final conference package
signed into law October 30, 2002. OPM published final
regulations and issued them on January 11. The new
administration wanted to review them and they became effective
on April 12, 2001. Currently, OPM is amending these regulations
and some of these amendments I think are positive. I like the
way they are headed.
I have been advised that OPM is awaiting approval from OMB
at this moment before they publish the final regulations.
Meanwhile, agencies have begun to start making plans to
implement the student loan repayment program--Commerce, State,
Veterans Affairs and others, GSA, for example. Part of my
concern last year in putting this language in the DOD
authorization bill was the fact that this was not a new idea.
This was an idea that was enacted into law in 1990 and OPM
never issued rules and the agencies never utilized the
authority in the ensuing period of time.
My amendment suggested imposing a specific, but what I
thought was a reasonable deadline for rule-making with final
rules to be issued by June 30 of this year. I would like to ask
Mr. O'Keefe: Are you familiar with this situation and can you
tell me when this will be approved and available for all
agencies to use, this student loan repayment?
Mr. O'Keefe. No sir, I am not familiar with it, but I will
be by the end of the day and I will be back in touch with you.
Senator Durbin. Fair enough.
Mr. Abell, one of the things I found interesting was this
dual compensation issue, which must have been a disincentive
for military retirees to work at the Department of Defense, and
last year Congress repealed it. If I understand it correctly,
retired military officers coming back into civilian service had
to forego 50 percent of their military retirement pay. Has the
appeal of working for the Department of Defense changed,
particularly with those who have experience and have served our
country?
Mr. Abell. Yes, sir. There was a fairly complex algorithm,
but essentially 50 percent was the forfeiture, and the repeal
has allowed not only us, but all Federal agencies, to receive
the benefit of the experience, the leadership and the technical
knowledge of former military, both enlisted and officers, who
would like to continue to serve in a civilian capacity
following their military assignment, but thought that the
monetary penalty was just too great. We have examples all the
time throughout, where it not only assisted the Department of
Defense in hiring experienced leaders and technical people, but
also in areas such as pilot shortage and so forth, where we
were able to put a retired aviator into a staff deposition and
put the military aviator back out into the cockpit.
Senator Durbin. Mr. Rossotti, when we decided a few years
back to pass the RRA, the IRS Restructuring and Reform Act, we
had Section 1203 in there, which has been characterized as the
ten deadly sins, which, as I understand it, are ten acts which
proven against an employee of the Department of Treasury and
the IRS, would require mandatory termination. I have read
through these ten deadly sins and from my religious
perspective, I would say to Senator Voinovich, eight or nine
are mortal sins and one is a pretty serious venal sin.
I would not argue about any of this in relation to eight or
nine of these. There is one that is pretty open-ended,
harassing a taxpayer. These are taxpayers that I assume are
being audited or investigated for example. There are a lot of
complaints from people who are working at your agency about
Section 1203, whether it is fair. I think, as I said, some of
these things are beyond debate, but when it comes to this whole
question of harassment, there is a news article that made the
Chicago papers last year, but it said of the first 830
complaints of taxpayer harassment filed under that new law, not
one of them was found to be worthy and meritorious. I think the
information given later by the representative of NTEU suggests
that the percentage of those who are actually found to have
violated one of these is very small and yet she raises the
point, and I think a valid one, that it has a very chilling
effect on the personnel in the Department and in terms of their
morale. Could you comment on that?
Mr. Rossotti. Yes, Mr. Chairman, there were over 70
specific provisions in the Restructuring Act, many of them
pretty complex to implement. We now have had 3 years of
experience with them. I can tell you, having lived through
this, that there have been none that have been as difficult to
work with as Section 1203. The reason is not that the offenses
listed for the most part of Section 1203 are not serious
offenses, as you noted, and had always been considered serious
offenses. I will come back to a couple of exceptions, but, for
the most part, everyone, including most of our employees,
acknowledges that. Nor has it been the problem that many people
have been terminated unfairly. There was that great fear
initially, but we have taken tremendous care to administer this
law, and it does provide the commissioner the ability to
personally mitigate any termination, which we have taken very
seriously.
I think at this point we have enough experience to be able
to cling to employees, which we have been able to do. We have
not been just terminating people willy-nilly that we should not
be. The way it is viewed by our workforce is that under Section
1203, if somebody accuses me of, let's say, harassment of a
taxpayer, first, I am put onto death row and sentenced to the
death penalty and then a year later I might get a reprieve. In
fact, I probably will get a reprieve, but the process of going
through that is very difficult for people and very burdensome
and cumbersome.
I will also say, any provision of the tax law is a balance
and unfortunately, even though it is designed to protect
taxpayers, there will be some fringe element of taxpayers who
will attempt to abuse that provision and take advantage of it.
We have that situation too. We have practitioners out there who
make it a practice of simply filing Section 1203 complaints
routinely. They have it on a form letter and they file it any
time one of their clients is audited or subject to a collection
action or something like that.
So, this has been very difficult. Within the last week, we
have submitted to our tax writing committees some proposed
modifications to RRA, including Section 1203. We had a
discussion of this at a hearing earlier this year, the joint
hearing where all the six committees come together. Subsequent
to that, we have submitted specific legislative suggestions or
proposals on a number of provisions that we think would help us
to administer Section 1203, administer the whole Restructuring
Act, completely in accord with the intent of Congress, but
eliminating some burdensome things, including some elements of
Section 1203. Specifically, what we have proposed with respect
to Section 1203, is that we would keep these offenses on the
books, because exactly as you said, Mr. Chairman, we consider
them to be serious offenses, and if someone really and truly is
found guilty of some of the things that are in there, they
should be terminated or at least subject to a penalty.
The key change that we propose is to keep the offenses on
the books, but to eliminate the mandatory penalty provision,
and simply allow the IRS the ability to terminate someone, but
also the flexibility to impose other penalties. We have laid
out how we would expect to do this. This is a key change that
we have proposed. We have also proposed eliminating one other
thing which has been somewhat unfair. Included in the deadly
sins is failure to file a timely tax return. It turns out that
includes someone who files a refund return. Well, under the tax
law, there is no penalty to a taxpayer who fails to file a
return in which they are due a refund, other than they do not
get the refund.
So, we have had lower grade employees, typically seasonal
employees, many of them in the service center, that may not
file a return on time even though they are due a refund, and
under this provision they would be subject to mandatory
termination. We have used our authority to mitigate a lot of
those offenses, but that is a rather cumbersome process, to go
through the whole thing and mitigate it. We have laid these
proposals on the table now. We have sent the letters to the
tax-writing committees that would consider them. And my view is
that there are some others, which I will not cover here, which
I think would help us on other provisions of RRA----
Senator Durbin. As I am out of time on this round, I would
just like to ask one question in closing. I had the unhappy
experience 20 years ago of having a small business that I owned
back in Springfield, Illinois audited. We did not turn out to
have any additional tax liability, he says for the record. I
will tell you that the people that came out from the IRS were,
I thought, reasonable. They had a tough job, though. They
basically said our business had not paid its taxes, and we
believed we had and established that fact. That is kind of a
contentious relationship to start with though. Most business
people are not going to welcome you into their offices and
invite you in for coffee to audit them. And to have this
looming over their heads, how difficult is it to fill the ranks
of those who are involved in these investigations and audits?
Mr. Rossotti. Well, as I said, we have not been filling
many until this year because there was not money, but we have
been successful in attracting some very qualified people with
the help of the flexibilities. I think the real problem is the
work environment, the motivation. We have very qualified
employees who are doing a very difficult job. They spend all
day, every day, out there talking to taxpayers. They do an
excellent job. They do a professional job. If there is a
taxpayer who has a beef, there are now many different channels
that they can follow through RRA to get their side of the story
heard. We feel with the proposed modifications of the RRA that
we have made, we would still be able to protect taxpayer
rights. We would still be able to remove an employee, that rare
employee I must say, who really does violate these rules, but
we would not have this cumbersome process, as it is viewed by
the employees, as first you put me on death row and then you
give me a reprieve a year later.
Senator Durbin. Thank you. Senator Voinovich.
Senator Voinovich. Thank you, Mr. Chairman. Mr. Walker, as
part of the Legislative Branch, GAO arguably has had a greater
degree of flexibility in personnel system more than the
Executive Branch agencies; however, I understand that many of
the apparent restrictions that exist within the Executive
Branch are the result of rules and regulations imposed by the
Office of Personnel Management and the simple failure of
individual human resource bureaus to use the authorities that
they have. What actions do you believe need to be taken in
order to remedy that situation? Or, do you agree with that?
Mr. Walker. First, I think one of first things that needs
to be to done is that we need to summarize all the different
flexibilities that are available. It is my understanding that
OPM has started to do that. They have actually put together a
publication with the intended purpose of summarizing all the
existing flexibilities. I have a copy of it. There seems to be
a significant gap between what OPM believes agencies can do
within the context of current law and the understanding of the
agencies with regard to what they believe they have the
authority to do.
In addition, many of these flexibilities have strings
attached to them. They have strings attached such that you must
go to OPM for certain types of approvals. I think clearly one
of the first things we need to do is to take a hard look at
what flexibilities are available. To what extent can you
provide what I am going to refer to as class exemptions? In
other words, we are going to delegate authority for you to be
able to do things, as long as you meet conditions A, B, C, and
D, and that we might have a mechanism to periodically review
and find out whether you are complying with them, but to
minimize the number of occasions that people have to come back
for an individual exemption or individual approval.
I can tell you that having attended at least one of the
President's Management Council meetings within the last month,
there is a tremendous amount of frustration on behalf of
department and agency executives, and this is one of their top
priorities, and I expect that it will be one of Kay James' top
priorities, now that she has been confirmed.
Senator Voinovich. Would you like to comment on that, Mr.
O'Keefe?
Mr. O'Keefe. No, I could not concur more. Thank you, Mr.
Walker, because that is an affirmation of precisely the focus
we have been after, trying to pull together first an
understanding of what everybody believes to be the existing
authorities and corral those up. So this is the first
comprehensive effort that I have seen that OPM has conducted,
and the document Mr. Walker was referring to was just put
together here in recent weeks. So, as a consequence, that is
the first step in the equation. Next is to determine where the
difference is between interpretations, and that, then, as,
Senator, we have discussed a few times, forms the basis of some
reform initiatives, I think, that will be informed, as opposed
to simply calling for variations of what may be existing
authorities today.
Senator Voinovich. Mr. Rossotti, you dealt with the Office
of Personnel Management and you said that the additional
authorities and flexibilities you were given were on top of
what was already there. What has your experience been in terms
of utilizing those flexibilities?
Mr. Rossotti. We have worked very closely with OPM, because
of the fact that we do have these new flexibilities and some of
the existing ones, and I guess it could be fairly said that we
pressed the envelope against probably all of them, given the
massive change that we have been going through in the IRS. I
think that actually we have also had very good support from our
Treasury Department. We have an excellent Human Resource
Officer, Mr. Sanders, who knows the ropes on this stuff very,
very well, together with Treasury, and they have worked with
OPM to make it clear to us what we could do--how we could deal
with the existing authorities and what the new authorities
provided.
So, by working that process very aggressively with some
knowledgeable people, I think we have gotten the benefit of it.
I will say that for a person like myself who comes from outside
the Federal Government and is certainly not a Federal personnel
expert, it is a bewildering set of rules. For any manager that
comes in, unless you have someone to advise you--when I came
into the tax agency, I was not a tax lawyer and people thought
that might be a problem because I did not know anything about
taxes. Little did I know that my real problem was that I did
not know anything about Federal personnel systems. The tax part
of it was relatively not as hard, and this is not an
exaggeration really, because you have some very good tax
lawyers and very good resources to figure out what happens, at
least in the IRS, on taxes.
I think that the comments that Mr. O'Keefe and Mr. Walker
made about just clarifying what you can do and making it
simpler to understand what you could do would go a long way,
especially if you could find some way to translate it into
something that a non-expert, somebody that is a top manager,
but not an expert, can do, because figuring this stuff out is a
big part of the challenge.
Senator Voinovich. It would probably be a good idea, Mr.
O'Keefe, if you set up a little group of the customers that
deal with OPM, and the ones that have been around for awhile,
have them come back and recommend to you how to improve OPM's
role as a service provider to Federal agencies. I think, Mr.
Walker, you referred to flexibility with strings and how the
strings can be eliminated to create a quality management
project where the folks who are really using OPM's services can
come back with recommendations on how to streamline the current
system.
Mr. O'Keefe. That is precisely what we are after, Senator.
Again, a week ago, with the President's Management Council,
which was the succeeding meeting to the one that Mr. Walker
referred to a few moments ago, OPM went through an exhaustive
presentation of the material that the Comptroller General just
referred to. But also they have a follow-up requirement to meet
every one of the individual departmental inquiries that have
been made, to work through the workforce planning documents
that we have asked for, that were due to be submitted about 3
weeks ago, to then decide exactly how those flexibilities have
been incorporated in meeting those objectives.
So we are trying to pick up on precisely the kind of a
theme that you are talking about administratively, to work
through each of those steps and then determine what objectives
we have to go after across the board, as opposed to simply
trying to call for reform initiatives now. So, yes, we are
trying to pull those kinds of groups together at the present
time.
Senator Voinovich. I think one of the alternatives that
could be looked at also would be the issue of giving the
agencies more authority to do the personnel hirings Mr. Walker
suggested. Too often, agencies have been granted such
flexibilities only to have OPM take them back. I know you are
doing an assessment now of the departments and the skills and
experience of their employees. Is an extra effort being made to
identify whether or not the departments have a human capital
piece to that process?
I know the agency heads are getting familiar with this, but
whether or not that process bears fruit depends upon what kind
of human capital people you have inside of your shops, and Mr.
Rossotti you have a pretty good one, I understand.
Mr. Rossotti. Yes, I think so.
Mr. O'Keefe. Well, you have to wonder how good he is if it
is more complicated than the tax code, the way he has explained
it to him.
Mr. Rossotti. It helped cut through it, though. [Laughter.]
Mr. O'Keefe. I know your expert from a previous
incarnation. We will talk later.
Mr. Walker. I think a key point here is you not only have
to have very capable human capital professionals, which I think
hopefully all of us do, but you must have committed leadership
from the very top. Basically, what we are talking about here is
cultural transformation. It is nothing less than that. It is
really tough work, and the fact of the matter is that one of
the agencies that has to engage in a cultural transformation,
is OPM. They do a lot of things that are helpful, but I would
say in general they need to become more of a consulting
organization rather than a compliance organization, and they
need to focus more on tools rather than on rules, and they need
to focus more on enabling, rather than inhibiting agencies.
They have a lot of good people and I think they can do it, but
they need to undergo a huge cultural transformation.
Senator Voinovich. Mr. Rossotti, you have been doing a lot
of recruiting for your agency, and as I talk to people around
the country, they say many agencies recruit at the wrong time.
Some do not even recruit at all. Obviously, you have done a
fairly good job in that area, but you have had to go out and
try to find some high-quality mid-level people. Mr. Abell, you
may be doing the same thing with the Defense Department's
workforce reshaping provisions. How successful have you been
with that and what impediments have you had in terms of
bringing people into mid-level positions from the private
sector? How receptive are they to coming to work for the
Federal Government, and what hurdles do you find?
Mr. Rossotti. Actually, Senator, we really have not brought
very many in at the mid-level, interestingly. We brought some
in at the top level, and then we have people coming in at the
entry-level. At the mid-level, except in very small numbers, we
have really not hired many people. For one thing, we have had
somewhat of a surplus, as we flattened the management layers.
So at this point, we have not brought in too many people at the
mid-level.
Senator Voinovich. How about the senior managers, then?
Mr. Rossotti. The senior managers, we have the so-called
Critical 40, or Critical 32, and I have to thank this
Subcommittee, because this Subcommittee was one of the ones who
helped us when we went through RRA to get this. It was a little
controversial at the time, but it has been absolutely critical.
As I mentioned, we brought in 32 people. Many of these are
people that have a whole career behind them in the private
sector, or a large portion of a career with very distinguished
records, and have come in to help us with this massive
transformation.
We have people, for example, the Chief Information Officer
and Director of Modernization, who are critical, running some
of these new operating divisions, which are really the
forefront of instituting the change, as well as other
positions, for example, the technology management and
communications and marketing, which were not strong points at
the IRS. So those are people that we have been able to recruit
one at a time, to fill very specific positions, and they are
not going to be here for 10 or 20 years, in most cases. A few
might be. They come in on 4-year term appointments. It can be
renewed once. But they have, in our case, made a tremendous
difference in the time that they are in the agency.
We do not view them as replacing the Senior Executive
Service. Most of the talent that we have is from the
traditional Senior Executive Service, but what we have done is
complemented our internal Senior Executive Service with people
that have a lifetime of experience in something that is a
related field, and I really have to say that is one of the
gratifying things for me and I think that is one of the
critical items that has helped us to get to the point that we
are in now.
Senator Voinovich. I just want follow-up. You bring them in
at fairly high salaries; don't you?
Mr. Rossotti. This is called the critical pay authority. It
gave us the ability to go up to the Vice President's salary for
total compensation, which is, I think, $183,000 right now, and
frankly not all of them have been brought in at that maximum.
Some of them have been brought in at somewhat less. But, most
of the people we recruited were people who were earning
substantially in excess of that in the private sector and they
really were coming into the government for public service.
Senator Voinovich. Has there been any resentment among the
Senior Executive Service to the fact that these folks have come
in, they are earning the big bucks, while they remain at the
same level? And we also have to consider the severe pay
compression now with the Senior Executive Service earning
essentially the same salary.
Mr. Rossotti. I think that when we first proposed this
idea, it was certainly controversial internally, as well as
externally. I think that now that we have this experience where
almost all these people are working side-by-side with Senior
Executive Service people, they know that they are getting a
developmental opportunity, working with most of these folks.
They also know that they are not--they do not have some of the
other things that the Senior Executive Service might--they have
no longevity or seniority or anything like that. They are just
there for the time that they are there.
So while it has, obviously, in the early stages especially,
raised some of those issues, I would say at this point those
are kind of behind us and we really have got these people
working as part of a team. I do not know whether this would be
something that would work forever, but in the period that we
are in at the IRS, where we have been going through this
massive change, where we have got modernization, we know this
works. The Restructuring Act says you have got to emulate best
practices in the private sector, in technology, in customer
service, even in terms of things like auditing, all these
things. If you can bring in a few people that have that
personal experience, having lived that, and have them work
directly side-by-side with people that have done it the IRS
way, both of them being good people, you really get, in my
opinion, if it works right, an equation with the so-called
cliche of two-plus-two equals five. I think, in many cases, we
have been able to do that.
Senator Voinovich. Thank you.
Senator Durbin. Thank you, Senator. Thanks to your
leadership, we have identified this human capital challenge as
one of our major priorities in the Subcommittee. The GAO has
identified as a high risk across the Federal Government. I do
not know that we are the first to acknowledge it. We are trying
to focus our attention and resources in dealing with it. Back
in 1990, former President Bush signed into law the Federal
Employees Pay Comparability Act, designed to close gradually
the gap between the private sector and Federal white collar
employee compensation.
In the years that led up to that and ever since, the
measured gap between Federal and non-Federal pay has been
measured at about 30 percent average, nationwide. I would like
to have comments from you in reference to--first Mr. Walker and
the others, as well--how big a factor is this disparity between
pay in the private and public sector, in terms of recruitment
and retention? Second, and this is probably going to be
something I will regret asking, how big a problem is Congress
in dealing with this? Because if we do not appropriate the
funds for pay and do not give adequate increases on an annual
basis, it is no wonder that Federal employees cannot keep up. I
might also add the President's budget starts the process, so
each President since the former President Bush would have some
culpability in this situation. Mr. Walker.
Mr. Walker. Well, several things. First, pay is an issue.
There is no question about it. But I think we have to keep in
mind that most of the people who come to work for the Federal
Government come to work for reasons other than to maximize
their net worth. They come for reasons because of the nature of
the work, the challenge, the opportunity to make a difference,
and the ability to try to achieve a better balance between work
and family. Nonetheless, we have to have reasonable
compensation for these people. I think at the SES level,
compression has gotten to the point that something has to be
done about it. A significant majority of all the SES members
now making the same amount of money.
Senator Durbin. Senior Executive Service?
Mr. Walker. Senior Executive Service, exactly. There is a
significant incremental layer of duties and responsibilities
that you have, and related obligations and pressures that come
with that when you are at the SES level. To the extent that you
get a situation where there is very little economic
differential, then that serves as a disincentive for people to
want to move up to that level or to stay at that level as
compared to some of their private-sector options. I do think we
have to be careful, however, with regard to the use of
averages. Averages can be deceiving. I believe that over time
we have to start compensating our people based upon skills,
knowledge and performance. We do not do that to a great extent
today.
Today, most of the Federal pay system is based more on the
passage of time and the rate of inflation, rather than skills,
knowledge and performance. As a result, I think that if you did
a critical analysis of this, you would find that there are some
Federal workers that are significantly underpaid and are very
deserving of additional compensation. There are some levels and
some occupations where, quite frankly, you might find that they
are overpaid as compared to their private sector counterparts.
I think we have to be careful when you talk about averages,
because averages can be very deceiving.
Senator Durbin. What about the culpability of
administrations and Congress in this?
Mr. Walker. I think the Congress is part of the problem
from the standpoint that----
Senator Durbin. We will acknowledge that for the record.
[Laughter.]
Mr. Walker. Obviously, there is more than one member of
Congress, so we can spread it around. But the fact of the
matter is I think there are problems with regard to certain
linkages that exist, rightly or wrongly, in compensation. The
ripple effect that pay compression has, as well as whether, in
certain circumstances, Congress has provided reasonable
flexibilities with adequate protections are important issues.
Other important issues include whether Congress has, in certain
circumstances where a business case has been made, provided
resources, for example, to allow agencies to inventory the
skills and knowledge of their workers, to go to a new modern
performance appraisal system, to be able to have reasonable
training and professional development for their workers.
We have some things, quite frankly, that I have just come
across, Mr. Chairman, where we are penny wise and pound
foolish, where we are saying you cannot spend money for some
minor kinds of things that not only do not make any sense, but
quite frankly pour salt in the wounds, and I have given several
examples in my testimony.
Senator Durbin. Mr. O'Keefe, let me ask you this, there is
another issue that comes up regularly, and that is the whole
question of contracting out. OMB, the agency that you work
with, issues directives to Federal agencies about percentages
of work they want contracted out. I once asked some of my
colleagues when I served in the House, on this issue of
privatization and contracting out, what is the goal here? What
are we trying to achieve? Is it higher quality of service,
lower cost to the taxpayers, or just turn out the lights in
some Federal agencies and give them the money--the taxpayer
dollars to private sectors to perform the work?
I think you would concede--at least I would think we all
could concede--that this process of contracting out is not
exactly a morale builder for those who are still in. They have
to wonder what the value of their work is if there is this
constant drumbeat to send it off the farm and let somebody else
try and do it. Could you comment on the OMB directives?
Mr. O'Keefe. Sure. The approach, again, as I mentioned in
the opening statement, is part of the five-element plan of the
President's management agenda, strategic management of human
capital being one, competitive sourcing being one of the
others, and that is where I think the distinction is. There has
been a drumbeat for outsourcing, privatization, a general focus
as if that was the answer, the solution to the problem, when
instead the empirical evidence would suggest that the active
competitive sourcing, in and of itself, regardless of who wins,
which sector, has been the element that has yielded the
greatest efficiencies, in terms of cost savings, as well as
performance.
Senator Durbin. Is there real competition?
Mr. O'Keefe. Yes, sir.
Senator Durbin. Do the public agencies really have an
opportunity to compete with the private-sector alternative?
Mr. O'Keefe. Based on all the evidence I have seen, the
answer to that is positively yes, and as a matter of fact,
testimonial to the resilience of public institutions and public
servants who are liberated from process rules, to go about the
business of competing in a way they think is most efficient to
deliver the outcome, the objective, the performance standard
that is expected. In almost 60 percent of the occasions, the
public entity is successful and the private offer that is made
does not work. A lot of the experiences throughout the Defense
Department further demonstrate that it is at least on the order
of a 20 to 30 percent savings each time you go through that
particular effort all by itself.
So, if anything, the focus we have concentrated and the
inflection in the Bush Administration now is very much towards
competitive sourcing, with little regard for the question of
exactly how the sector results may come from that. The other
element that is involved here--I am a little bit reticent to
advocate specific objectives. We will go from this point
forward, beyond that, I think, demonstrated track record of the
last few years that has emerged from this general policy focus,
Dave Walker is currently chairing and heading up a commission
that Congress has required for looking at competitive
practices, to look at a range of different issues, of which I
and Bobby Harnage and others are all members of, to try to come
up with what is the most appropriate means to accomplish this
particular task. But, again, I am very much wed to the
propositions and objectives that are incorporated in the
President's objectives now, of looking at competitive sourcing
alternatives to achieve that task without particular bias
towards what the outcome might be, as long as there is a
performance improvement or a cost savings--hopefully both--
attendant to it.
Senator Durbin. Let me ask you about another item that is
often pointed to in terms of compensation and benefits for
Federal employees, and that is the Federal Employees Health
Benefits Program, basically our health insurance plan, which I
hasten to add is the same program that members of Congress are
covered by. Some people think we have something else, but we
are under the same program, and I think it is one of the better
ones in the country. And yet some have said, in comparing it to
what is being done in the private sector, it is not that
generous.
I am told that 250,000 Federal employees currently do not
enroll for health insurance, though they have an option to do
so, because it appears, at least for many of them, they cannot
afford to pay the employee share on this. I do not know if any
people can comment, but I am looking at Mr. Walker. What are
your thoughts? I know GAO has looked at this in the past, along
with the Congressional Research Service.
Mr. Walker. Obviously, everything in the world is relative.
It depends on who you are comparing the program to. If you are
comparing it to a major employer which has a unionized work
force, which does not have a whole lot of competition, then in
that circumstance you could say that maybe this program is not
as competitive as comparing it to a small-business or to an
employer that faces a tremendous amount of competition. I think
we have to recognize that health benefits are very important
benefits, but they are one element of total compensation. You
need to look at salary. You need to look at pensions. You need
to look at health. You need to look at vacation. You need to
look at disability. You need to look at all these various
areas, and I think it is important that we start doing that
more in the Federal Government, because there is a tendency to
look at each piece by itself, rather than looking at the
overall package.
I will say that, quite frankly, the concept that the
Federal Government has, which is to offer more choice and to
offer employees more options as to the level of the coverage
and the provider of that coverage, quite frankly, I think, is
probably something that is going to be a trend that you will
see the private sector adopting with increasing frequency in
the future.
Senator Durbin. We can only hope so. Open enrollment once a
year is an amazing option that people in the private sector
never get a chance, many of them never get a chance to see. Let
me ask you about the incentives that we use to retain and
recruit. The statistics come back and say they are hardly ever
used. We are talking about one-tenth of one percent of
employees who would perhaps get efforts in the Executive Branch
to recruit, retain, and relocate--incentives. Mr. Rossotti, how
often do you use them in your agency?
Mr. Rossotti. We have begun to use them more extensively as
part of this new recruiting process for our professional
occupations. This was something that we had the authority to
do, especially where we were doing the so-called category
rating. I am getting a little deeper into these personnel
details than maybe I know, but we were able to, at least with
revenue agents, which is a very competitive occupation, use
this new technique, and we did set up a sort of internal set of
standards that if we had the highest-rated person, we would be
able to provide certain incentives, such as relocation and some
starting bonuses. We were also able, for people that were
already employed in the workforce, to match their current
salary by bringing them in at a higher step. We did use these.
I do not have the statistics in my head, but I can get them for
you, for the record, as to how many we used.
This is just recently, within the last few months, that we
have done this, and I think it certainly was helpful. I will
say, with regard to the matter of pay, the problem with having
these kind of incentives, of course, is equity. We are bringing
in new people, and I think it has been helpful to us, in terms
of getting people into the professional occupations, but of
course you have the majority of the workforce that is already
there, and you run into a little bit of an equity problem when
you start to bring in the new people with these special
authorities.
So I think it is obviously not my place to comment on the
overall pay raise, but I would say within the kind of business
that the IRS is in, where we have a significant number of
people in professional occupations--I am thinking about people
that are basically accountants, auditors, people that are
dealing with taxpayer representatives--they do not stay just
for the pay. It is important that they have some kind of
reasonable progression to look forward to, not just to get them
in at the front-end, which we are doing, but to have them stay
in and be motivated and realize that that is successful. It
takes a couple of years after they get in for them to really be
productive, at least a couple years, and then they are at their
peak period, and we really want to make sure we hang onto them,
not just keep them for the first 2 years.
Senator Durbin. Your comments remind me of the parable of
the prodigal Federal employee, but that is something else we
have read about. I literally have 1 minute to go vote, and so
if I could ask the panel to just stand at ease until Senator
Voinovich returns, to see if he has a follow-up question, if he
does not, we will bring up the second panel, and I will be
right back.
The Subcommittee stands in recess.
[Recess.]
Senator Voinovich [presiding]. I suspect that you exhausted
the Federal Employees Pay Comparability Act. But I suspect it
probably has not been implemented because of the cost and
perhaps because the Clinton Administration felt that the Bureau
of Labor Statistics may not have been the best place to
determine the basis of comparability. We have not really looked
at the Federal Government's classification system since 1978. I
would like your response to the point that I think both of our
union witnesses are going to make, and that is if we did
something about that, many of the problems we are faced with,
in terms of retaining people and bringing them on board, would
disappear. I would like your views on it. How do you go about
determining an objective way of determining pay comparability?
Mr. O'Keefe. Mr. Chairman, if I could offer, I am of a mind
that pay compression and comparability certainly are
contributors to the challenges we are facing, in terms of
overall personnel recruitment and retention for the right skill
mix and for the skill mix you need at the present time and the
present capabilities to do so. Having said that, I think by
comparison to some of the other factors that are extant today,
that is but one of many different impediments or issues within
this personnel system that exists, because the larger problem,
I think, is captured quite nicely by the Comptroller General's
reference to the culture transformation that is necessary.
Right now, the focus of the system is towards a very career
oriented objective. All the incentives, all the motivations,
the idea is to come in at entry-level and stay until you
retire, and all the motivations are built on that proposition.
So the issues of comparability and compression and so forth are
a growth from that, as opposed to what has become
generationally represented by many of the folks sitting behind
you, is a set of interests that is quite different from the
kind of motivation that was designed and built around the
personnel system that exists today within the Federal career
force, and that is opportunities to move around to lots of
circumstances, mobility, lateral entry, a range of incentives
to enjoy different experiences, to try different alternatives,
those are sorely lacking within the system.
The movement between and among departments for entry-level,
junior-to-mid-grade kinds of opportunities is one you really
must aggressively push if you want to have those opportunities
availed to you, and that has little to do with pay compression,
little to do with comparability. It has to do with the erection
of a series of impediments that make this particular process so
hard to do, unless you consciously set about it.
Senator Voinovich. If you are running General Motors or any
other major corporation, you have people working for you at a
salaried level. And you know very well, that you have to pay a
competitive wage if you intend to retain good people. Isn't
there kind of a floor that you must have in terms of pay? From
my experience, and it goes way back when I overhauled the
classification system when I was mayor of Cleveland--you have
to pay your staff a competitive wage. In Cleveland, we found
that people from the entry levels to mid levels were fairly
competitive, but the salaries of our senior staff were not
competitive. And then, on the other hand, after we completed
our study, we found that some people were overpaid. In fact,
many people remained in their salaries and positions for 3
years because they were being overpaid.
The point is that there were people who were way underpaid,
and we had the self-discipline to go through the exercise.
Don't you think it is about time we got to that in the Federal
Government, and if we do get to it, who would do it?
Mr. Walker. One of the things I mentioned, Senator, when
you were voting is that I think, over time, we have to move to
a system that is focused more on skills, knowledge and
performance, and that ties back into classification to a
certain extent, because I think what you have right now is you
have a circumstance where you have some people who are
significantly underpaid, you have some people that are
reasonably paid, given some things the government has to offer
that the private sector does not, and you have some people that
are overpaid, as you found out in your red-lining positions.
I think, at least based on my experience, I was a global
partner with Arthur Andersen. I headed our human capital
services practices worldwide. Typically, when you are looking
at these issues, you want to do it with the people that are on
the front line, actually engaging in the competition on a day-
in and day-out basis. In other words, you need to have OMB and
OPM play some coordinating role and try to ensure a reasonable
degree of consistency so everybody is not doing their own
thing.
On the other hand, the people that have to be at the
forefront are the people who are in the war for talent, the
people who are on the front line, trying to attract, retain and
motivate a quality workforce. So I think part of it has to be
is we need to have their involvement more in this process, with
OMB and OPM maybe providing a facilitation and a coordination
role, rather than saying it has all got to come down from above
and one size fits all, I think, which has been one of our
problems in the past. We have tended to look at things that
way, and the world is just not that way.
Senator Voinovich. But I am still getting at what does the
new Secretary of Transportation do, for example, in terms of
looking at the people that are there, and how does he
determine----
Mr. Walker. I will tell you some things that we have done
and they can think of it as a guideline. First, we did our
strategic plan. We looked at what we are trying to accomplish,
how we measure success. We realigned the organization based
upon that strategic plan, eliminated a layer of hierarchy. We
did not fire the people. We just eliminated a layer of
hierarchy, reduced the number of silos, had more people focused
cross-organizationally and externally. We then ended up looking
at our performance measurement and reward systems, to be able
to link those to that strategic plan.
We inventoried the skills and knowledge of the people
within the organization. We compared that against what we think
we need. That told us where we were long, where we were short,
and where we had gaps. We analyzed where we were having
increasing difficulty in attracting people and retaining
people. We try to understand the reasons for that through
polling existing employees, prior employees, and potential
recruits. We took all that information and figured out what we
thought we needed to do in order to try to address those
problems.
Senator Voinovich. In other words, you created a new
classification system for the General Accounting Office.
Mr. Walker. We already have a new classification system.
But I think these are things you can do and you should do
whether you have a new classification system or not, although I
will tell you that I think over time you may find that the
concept of broad-banding and pay-for-performance, which we
have, is something that may well have broader application
throughout government. But you have to make sure that you have
the support systems to make them work. You have to have a good
performance appraisal system. You have to know what skills and
knowledge you are looking for. You have to have a good
recruiting and college relations program. You have to have a
good training and development program. As Mr. O'Keefe said
before, these things are linked. They have to be linked with
each other.
Senator Voinovich. But the fact is you re-did your
classification system. You had the flexibility. But a lot of
these other agencies do not have such flexibility. How much
flexibility do you have, Mr. Abell, in your operation, for
instance, to change it around? Aren't you locked in with
certain classifications? I know you are locked into
classifications, because I have a nurse in the Hart Building,
who just got her master's degree in nursing and she is a GS-11.
She wants to get a job that is a GS-13. She cannot get a job
that is a GS-13 because she has never been a GS-12.
Mr. Abell. We have not been blessed with that level of
flexibility yet.
Senator Voinovich. Don't you think we need to look at the
classification system?
Mr. Abell. I think the points you make are valid, Senator,
and I agree with Mr. O'Keefe, as well, that we have some
flexibilities we have not used. This is not among them, as it
turns out, but there are many factors that have to be included,
and I will tell you that many of the things that we have
discussed here today, the Department has explored and continues
to explore. I am struck by the parallels between the challenges
of managing the military force and the challenges in managing
the civilian force, and the impact and the ability to move
between the two, and the impact of the generational effect, as
Mr. O'Keefe has laid out, the impact of pay gaps, if there are
any, and how that affects, and my view is the pay gap is not as
important as the behavior that results from that pay gap.
So we have to watch all those things, and again back to the
fact that people serve in government, both the military and
civilian side, for reasons other than compensatory.
Mr. Walker. Sir, I think you are going to need to look at
the classification system, yes. [Laughter.]
Senator Voinovich. OK. Charlie, I am sorry you did not get
many of the questions today, but I would be interested in any
further information that you have. I would like to sit down
with you to talk about the flexibilities that other parts of
the Defense Department have had, for example, the China Lake
demonstration project and how that is working out.
Senator Durbin is not back yet. Do you want to give me a
couple minutes? Have you had a chance yet to really look at
those flexibilities, to compare them and see whether or not
they are working--be candid with me if you have not.
Mr. Abell. No, I will, Senator. From the time between our
discussions in April and today, I have tried to spin up rather
quickly on the flexibilities that were provided by the Congress
and what we have done to implement them, and I will tell you
that I am fairly proud, and I got an `` 'Atta boy'' from my
friends on Armed Services for moving forward on several
provisions of legislative authority that were given to us in
2000 and 2001 defense bills, because when I got to the
Department and said, ``Where are we on this,'' we where
essentially nowhere.
So my experience is learning about them and trying to get
them implemented in a way that makes sense, and as some of the
other witnesses pointed out, when you implement these
flexibilities you also have to do a fair amount of training at
the manager levels, supervisors. They have to learn how to deal
with these flexibilities. It requires sort of new skill sets
for them. They have to exercise judgment. They have to exercise
a certain amount of courage in some cases, in pay banding and
pay performance and so forth. So we are, on those
flexibilities, at the neophyte level. On the China Lake, the
permanent authorities, I think those are ingrained in those
laboratories and reinvention labs and S&T centers that function
under those authorities. It has become a way of life and I
think they are better for it.
Senator Voinovich. They are working?
Mr. Abell. Yes, sir.
Senator Voinovich. Remember I talked to you about the daisy
chain process. I would be interested to see if that has been
changed, because that is one of the things that our people are
still complaining about.
Mr. Abell. Yes, sir. We are working on it.
Senator Voinovich. Good. I have a lot of other questions,
but our second panel has been very patient. I really appreciate
the fact that you have been here today and again I want to
publicly acknowledge the fact that Senator Durbin has been
wonderful in terms of going forward with this agenda. He is on
board and supportive, and I want to say I am grateful to him
and I look forward to continuing to work with you on this big
challenge we have. Thank you. We will stand in recess until
Senator Durbin gets here.
[Recess.]
Senator Durbin [presiding]. I would like to introduce our
second panel of witnesses: Bobby Harnage is the President of
the American Federation of Government Employees, of the AFL-
CIO, 600,000 Federal and D.C. Government employees, the largest
union for government employees, some 1,100 locals here in the
United States and Chicago and overseas. Thanks for being here;
Susan Shaw is the Deputy Director for Legislation with the
National Treasury Employees Union, and she will be delivering
the testimony of Colleen Kelly, NTEU's President, whom I
understand had a last-minute scheduling conflict. NTEU
represents more than 155,000 Federal employees across the
government, including those who work for the Internal Revenue
Service. Myra Howze Shiplett joins us from the National Academy
of Public Administration. Director of the Center for Human
Resources Management, she has 30 years of experience in public
service, including managing the State Department's Civil
Service Personnel Program. Thank you for coming. It is
customary now to swear you in. If you would please rise and
raise your right hand. Do you swear the testimony you are about
to give to the Subcommittee is the truth, the whole truth, and
nothing but the truth?
Mr. Harnage. I do.
Ms. Shaw. I do.
Ms. Shiplett. I do.
Senator Durbin. Thank you. Let the record reflect that they
answered in the affirmative, and I will ask you to limit your
oral statements to 5 minutes. We will put your entire written
statement in the record. I have read several of them and am
prepared to ask a few questions, and Mr. Harnage why don't you
proceed first?
TESTIMONY OF BOBBY L. HARNAGE, SR.,\1\ NATIONAL PRESIDENT,
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO (AFGE)
Mr. Harnage. Thank you, Mr. Chairman, and I want to thank
you for the opportunity to testify today on the issue of
flexibility in the Federal personnel system. The government is
in the midst of a serious personnel crisis that is self-
inflicted and as a result of more than a decade of downsizing,
contracting out and failure to match either private or public
sector standards for pay and benefits. In addition, political
leaders have criticized and demeaned Federal employees,
cynically feeding public misperceptions of government and the
people who work for it.
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\1\ The prepared statement of Mr. Harnage appears in the Appendix
on page 110.
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Congress and the last three administrations have failed to
invest in improvements in the government's infrastructure,
training of its workforce, or invest in more modern tools and
equipment. This refusal to make the necessary capital
investment has been penny wise and pound foolish, with
predictable results. This crisis is not only self-inflicted, it
was planned. A good example of this planned crisis is while
some agencies are now attempting to hire and train the next
generation of Federal employees, their efforts are thwarted by
the administration's orders to put an additional 425,000 jobs
on the chopping block as they begin to comply with OMB's
directive to convert or compete 10 percent of the FAIR Act list
each year.
Another example is the arbitrary number of management
positions targeted by the administration to be eliminated. We
continue to downsize rather than to rightsize the government.
Management by competition or quotas is a disservice to the
taxpayers. It drives costs up, not down. There is no proverbial
silver bullet answer to the personnel crisis, but certainly it
is not rational to publicly malign Federal employees or
rational to undermine their morale, standard of living, or
valuation by refusing to pay competitive salaries. It is not
rational to withdraw or withhold training or deprive them of
resources and equipment necessary to high-quality performance.
None of these personnel practices is consistent with the
human capital approach to personnel management. I have been
asked whether expanding the use of flexibilities in Federal
personnel systems will be a useful way to address the human
capital crisis. In short, management flexibilities alone will
not solve this problem. In fact, exercise of some of the
flexibilities which have been proposed are more likely to
worsen the problem. AFGE's opposition to unilateral increases
in management's authority on flexibility is not a defense of
inflexibility or a challenge to the rights and responsibilities
of management. In principle, we believe that any expansion of
Federal management authority or flexibility must be
counterbalanced with an expansion of the rights of Federal
employees to bargain collectively over the terms of change.
Pay and benefits and a process for determining their level
are written into Federal statute. Because of the statutory
framework, Federal employees can inform their elected
representatives on their views on the adequacy and fairness of
these statutory items. We can lobby Congress for advantageous
changes. We can lobby Congress to defend against harmful
changes. If statutory protections are eliminated in order to
make Federal compensation flexibility so change can be
implemented unilaterally by management, the absence of
collective bargaining rights would deprive Federal employees of
any democratic process through which to make our voice heard.
An expansion in collective bargaining rights would be a
necessary component of any expansion in management rights. One
example is DOD's effort to replace the current pay-setting
process with a management-design process called Contribution-
based Compensation and Appraisal System, CCAS, which is a
version of pay-banding. DOD excluded any meaningful role for
the union and grants enormous discretion to management.
Managers are able to make unilateral decisions regarding the
pay of individual employees. Pay matters that under Title V are
covered by government-wide laws and regulations which ensure at
least some measure of consistency and fairness are, in DOD's
CCAS system, controlled by local managers who are able to
operate with extremely broad authority.
The system was designed for and by management. Pay
decisions are made by a management panel, and bargaining unit
employees have no right to challenge them. AFGE suggests four
broad policy changes which could help resolve the Federal
Government's human capital crisis in a way that would help
taxpayers and Federal employees. First, provide Federal
employees with compensation that is comparable and competitive
with that paid by large public and private-sector employers.
Congress and the administration should fully implement the
Federal Employees Pay Comparability Act of 1990 and also
increase the government's contribution to the Federal
Employee's Health Benefit Program from an average of 72 percent
of premium to 80 percent.
Second, the administration should eliminate arbitrary FTE
ceilings and hire according to agency mission needs. The fact
that Federal employee agencies are prohibited from hiring above
these ceilings is a critical component of the human capital
crisis. In view of many reports of the government losing out on
desirable job candidates who are instead hired by employers
able to make on-the-spot offers, many people are focusing on
the question of how to speed up the hiring process. AFGE
supports any attempt to speed up the hiring process, as long as
merit principles and veteran preferences and internal
candidates' rights are preserved.
Third, the government should end the practice of
contracting out all new Federal work and privatizing work
presently being performed by dedicated public employees.
Mr. Chairman, I have submitted my statement, my full
statement, and I appreciate your consideration of that, and
that concludes my oral testimony. I would be glad to answer any
questions.
Senator Durbin. Thanks, Mr. Harnage, and I have read your
statement. I appreciate that much.
Susan Shaw, if you would proceed.
TESTIMONY OF SUSAN L. SHAW,\1\ DEPUTY DIRECTOR OF LEGISLATION,
NATIONAL TREASURY EMPLOYEES UNION
Ms. Shaw. Thank you, Mr. Chairman. My name is Susan Shaw. I
am the Deputy Director of Legislation for NTEU. President
Kelley very much regrets that she is unable to be here today.
NTEU believes that for too long, too little attention and too
few resources have been spent on the Federal Government and its
employees, which is why we face the crisis we do today.
According to the Bureau of Labor Statistics, in some parts of
the country, the gap between private and public sector pay is
as high as 30 percent.
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\1\ The prepared statement of Ms. Colleen M. Kelley, National
President, National Treasury Employees Union, submitted by Ms. Shaw
appears in the Appendix on page 128.
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The Federal Employees Pay Comparability Act has never been
fully implemented, even in this time of record budget
surpluses. For most prospective employees, the most critical
element in deciding whether or not to accept a job is salary.
The administration's response has been to propose only a 3.6
percent pay raise next year. Although the House and Senate
Budget Committees adopted bipartisan language as part of the
fiscal year 2002 budget resolution, making clear that Federal
employees should receive identical pay raises to their military
counterparts next year, at least 4.6 percent, the
administration continues to press for only a 3.6 percent raise.
This is not reflective of an administration that takes the
human capital crisis seriously.
NTEU believes that a decision to fully implement FEPCA
would do more to address recruitment and retention in the
Federal Government than all of the other incentive programs the
government has, combined. Acquiring and retaining employees
with the best skills is a particular challenge for the Federal
Government. Agencies are so often hamstrung by inadequate
funding levels and forced to shuffle resources between
competing priorities, that they are never able to adequately
fund the range of programs they need to become an employer of
choice. This is a situation agencies face for fiscal year 2002.
Discretionary funding levels in the budget resolution are
not adequate to meet current needs, never mind the challenges
of 2002. Federal agencies currently have a wealth of
flexibilities available to them. There are programs for
retention allowances, bonuses, performance awards, student loan
repayment incentives, even bilingual awards. However, according
to OPM, less than one-quarter of one percent of the Federal
workforce received any form of recruitment, retention or
relocation incentive in fiscal year 1998. Why? Because agencies
are not being given the resources to fund the very programs
that might help them solve their human capital crisis.
Adequate and stable agency funding, coupled with
appropriate pay, benefits and incentives, are the keys to
ensuring that the Federal Government is able to attract, hire
and keep the best employees. There is a Federal pay law on the
books, but it is not funded. There are flexibilities and
demonstration project authority and a virtual laundry list of
programs available to Federal agencies, but they, too, are not
funded. The problem is not a lack of options, it is a lack of
resources.
Mr. Chairman, I also want to take this opportunity to thank
you for your leadership in introducing S. 1152. More dollars
are doled out to contractors each year than are spent on the
Federal workforce, yet there is little or no oversight of these
contracts once they are awarded. No one knows if any real cost
savings have been achieved or services have been improved. What
we do know, however, is that contracting out quotas, such as
the 5 percent and 10 percent quotas for 2002 and 2003 that OMB
recently issued send an unmistakable message to Federal
employees that they are not valued.
We cannot continue to arbitrarily award contracts to
private companies while simultaneously letting our Federal
employees walk out the door. S. 1152 will bring a measure of
accountability to this process. With regard to personnel
flexibilities in the IRS Restructuring and Reform Act, one of
the major disincentives, as this Subcommittee heard today, is
Section 1203. The mandatory firing provision has had a chilling
effect on collections and morale. No other employee in the
Executive, Judicial or Legislative branch, not to mention any
other taxpayer, must be fired for filing a tax return 1 day
late.
We are working closely with the IRS to try to make these
penalties less than mandatory termination and look forward to
working with the Subcommittee on this matter. As you also know,
the IRS is preparing to implement a pay band for its senior
managers, allowing greater flexibility when setting salaries.
However, it, too, will require additional resources to work.
Pay-for-performance has also been suggested as a step towards
improving the Federal workplace. NTEU is not opposed to pay-
for-performance or pay-banding. However, we believe that they
must be accomplished in the context of collective bargaining.
Current performance evaluations are widely viewed by our
members as subjective, susceptible to favoritism, and in some
cases discriminatory. By collectively bargaining the design and
implementation of a new system, we believe employees will have
faith in the process. Here again, though, additional resources
are going to be required to make such a system work. Finally, I
want to note that Mr. Walker commented that the FEHB program is
perhaps not as competitive if you compare it to programs
offered by major unionized employers. That is precisely what we
believe the Federal Government is, and I think that we need to
do a better job with the FEHB program as well.
Senator Durbin. Thank you, Ms. Shaw. Ms. Shiplett.
TESTIMONY OF MYRA HOWZE SHIPLETT,\1\ DIRECTOR, CENTER FOR HUMAN
RESOURCES MANAGEMENT, NATIONAL ACADEMY OF PUBLIC ADMINISTRATION
Ms. Shiplett. Thank you. Thank you, Mr. Chairman and
Senator Voinovich. The National Academy of Public
Administration appreciates the opportunity to share its views
with you, and we certainly applaud the efforts of the
Subcommittee to look at additional flexibilities. There are, as
you know, approximately 100 Federal agencies that carry out a
wide variety of missions and responsibilities, and yet despite
this diversity, they are all required to live under the same
personnel system that was developed on 19th-century principles,
and essentially has the notion that one size fits all.
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\1\ The prepared statement of Ms. Shiplett appears in the Appendix
on page 137.
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In this area of dramatic change, this very standardized
approach is detrimental to the government's ability to recruit
and retain an effective workforce. Work is changing rapidly.
Organizations need to be able to change rapidly, also, and that
requires additional system flexibility. There are three
concepts which have been tested for a number of years in
several different agencies that we suggest for the
Subcommittee's consideration. The first of those is broad-
banding. This technique was approved in 1980 for use in the
Navy's China Lake and San Diego weapons laboratories. It
involves grouping Federal pay grades into several pay bands and
permitting greater flexibility in setting pay and making
promotion decisions and reassignments within the broader pay
ban.
The Office of Personnel Management has monitored this
demonstration project very closely for the last 20 years, and
reports consistently that the laboratories are able to recruit
and retain quality employees at higher rates than a traditional
system allows.
Since cost is always an issue in these matters, it is
useful to note that the overall salary costs for the China Lake
demonstration project have increased only 3 percent over what
would be in the traditional system, over this 20-year period.
We suggest that broad-banding be made available to those
agencies who see a value in its use, not that it be mandated
for government-wide applications. The second flexibility we
would suggest for your consideration is performance-based
reduction-in-force procedures.
Earlier this year, the academy was asked to review the
reduction-in-force system at China Lake. We were particularly
interested in their approach to structuring the RIF competitive
levels, since the paramount criterion in determining retention
credit in their system was performance, rather than tenure. The
installations conducted two reductions in force simultaneously,
one for their employees in the demonstration system and one
where the employees were in the traditional system. The RIFs
conducted were conducted at the same time, by the same
management team, in the same facilities, using the same
management controls, and both of the systems used a five-level
performance rating system.
In the traditional system, of those terminated, 65 percent
had been rated either outstanding or highly successful for
their performance. In the demonstration system, only 14 percent
of those rated outstanding or highly satisfactory were, in
fact, terminated. If our goal is to recruit and to retain
highly-qualified employees in the Federal service, broad-
banding and performance-based reduction-in-force systems lend
themselves strongly, we believe, to your consideration.
The third flexibility we would suggest is that of quality
categories to replace the rule of three. The academy and the
Merit Systems Protection Board have recommended that the rule
of three be eliminated. In 1990, Congress authorized a
demonstration project for the Department of Agriculture's
Forest Service and the Agricultural Research Service. Rather
than requiring job applicants to be listed by absolute score
and selections made from the top three, which is a process that
we have seen in our research is time-consuming, litigious, and
creating a false sense of precision, these agencies were
permitted to place candidates in one of several quality
categories--for example, highly-qualified, qualified, or
unqualified.
Selecting officials could then make their selections from
the top group or from the second group, if there were not
sufficient numbers in the top-rated group. Veterans placed in
one of the categories are put at the top of that category and
are the first selected. This project was so successful in the
Department of Agriculture that in 1995, Congress approved this
approach for the entire Department. The National Academy of
Public Administration believes that these three flexibilities
have been extensively tested and have proven to be successful.
They should be made available as alternatives under the overall
structure of Title V for all Federal agencies. Enacting these
flexibilities would in no way alter fundamental merit
principles.
Thank you, Mr. Chairman and Senator Voinovich. We
appreciate the opportunity.
Senator Durbin. Thank you for your testimony. Mr. Harnage
and Ms. Shaw, if a labor organization is going to succeed, it
has to represent the wishes of its members, and when we talk
about issues of retention, when your members suggest to you
what they would like to see in their work arrangement with the
Federal Government, what is their highest priority? Mr.
Harnage.
Mr. Harnage. Right now, I think their highest priority--it
is hard to distinguish between compensation and the job
security, but I think right now the job security--they see this
issue of driving privatization regardless of cost, jeopardizing
them even having a job, regardless of what the pay is. So I
would say that is their highest priority.
Senator Durbin. Ms. Shaw.
Ms. Shaw. I would agree with Mr. Harnage and just add for
the employees we represent at IRS, Section 1203 and fixing that
section of the law is right up at the top, too.
Senator Durbin. So you heard the testimony earlier from Mr.
Walker and others--Mr. O'Keefe, I think it was--relative to
outsourcing, contracting out, and privatizing. The suggestion
was that it was truly a competition between the public agency
and the private sector. The competition led to more
productivity. In 60 percent of the cases, I believe he
testified--still stayed with the government and did not end up
being outsourced. Could you tell me your experience and the
experience of your employees on this outsourcing approach and
what their reaction has been?
Mr. Harnage. Well, first we need to understand that the
competition is for Federal jobs and the competition that he is
talking about is only 2 percent of all the privatization that
takes place in the Federal Government. There is an indication
that there is a projected 20-percent savings with the
competition, and that is one of the reasons this union has not
faulted competition. We embrace competition, fair competition,
but the problem is the competition is one-sided.
New work for Federal Government is--Federal employees are
not allowed to compete for that, even though it could be done
in-house more economically, more efficiently, more effectively,
no consideration. It is automatically privatized.
Senator Durbin. Excuse me. Can you give me an example of
that? Can you think of one where so-called new work was not--
the Federal agency did not have the chance to compete for it?
Mr. Harnage. I cannot think of an example right now. It is
not a matter of not having a chance. They are not allowed. It
is just not done. The same way with once it is privatized,
there are only very rare occasions where it is looked at
bringing it back in-house, even though it is more economical,
more effective. The only examples that are available of
bringing it back in-house is where the contractor defaulted and
there was not anybody to replace them, rather than competing it
to make sure there was that savings.
The part that bothers me the most about what seems to be
driving what we are doing is--my position is--it is referred to
as the most efficient organization, the MEO, and that is our
everyday job. We ought to be at the MEO right now, but we are
allowing----
Senator Durbin. Could you say what MEO is, for the record?
Mr. Harnage. Most efficient organization.
Senator Durbin. Thank you.
Mr. Harnage. We are allowing that inefficiency to continue
until we put everybody's jobs in jeopardy by saying we are
going to compete it. We ought to be holding these people
accountable for having the MEO every day, not just for
competition purposes. But that figure that was given to you
today has gone from 10 percent to 60 percent. We have gotten
better at it. That figure of 20 percent is going to go down,
simply because we are getting more efficient, more effective
every day. So that 20 percent is not going to hold true
forever, and that has to be taken into consideration.
But the biggest problem that we have is that most of these
are projections and nobody is looking behind to see if they
were actually realized, and that is the reason we strongly
support the act, and Mr. Chairman, I appreciate not only you
are a co-sponsor of it, but also your support for it.
Senator Durbin. May I ask Ms. Shaw, if I can, on this
Section 1203, when I read the 10 deadly sins that results in
termination for employees from their union, who work for the
IRS, as I said to Senator Voinovich, some of these are
outrageous. No one would want to defend them if you could prove
that a person had done them. The two that struck me as
arbitrary--one you have already mentioned, and that was failure
to file an income tax return in a timely fashion. I believe
there is some additional language there, as well. The second
was so open-ended, this harassment question. I would imagine,
as Mr. Rossotti testified, it almost becomes an automatic
motion filed by the attorney for someone being audited.
When you look at it, are those the two that stand out as
being particularly onerous from the employees' point of view?
Ms. Shaw. Yes. In general, I would say yes. The problem
with the harassment statute, as you have already pointed out,
is that it is so broad. There have been 1,300 charges filed to
date; seven of them have been found to have merit. But the year
it takes to get from, as I think the commissioner said, OK, now
you are on death row, and eventually you had been reprieved,
you can imagine not a lot gets done. Certainly you are not
going to want to take on any case that you are going to have to
put yourself in a position of having even more problems of this
nature.
Of the 10 deadly sins, there are others that--they are not
black and white. There are gray areas in there, and that is why
one of the provisions we have worked with the IRS on--and I
believe the commissioner referred to the language they
submitted to the Finance and Ways and Means Committee--would
allow the IRS more discretion, in general. It would not have to
be mandatory termination. They would have an opportunity to
look into the situation first, which seems reasonable to us.
Senator Durbin. Ms. Shiplett, one of the observations from
Ms. Shaw about the banding approach, which I think creates more
flexibility for compensation, is the funding question. If the
funds are not there to finance this banding approach, then it
really does not offer too much. What has been your observation
in terms of the actual funding of that type of program?
Ms. Shiplett. She is absolutely correct. It is important to
have sufficient funding, so that reasonable decisions can be
made.
Senator Durbin. And, in the instance that you cited in your
testimony, I take it that the funding was there?
Ms. Shiplett. Right.
Senator Durbin. Fine. Senator Voinovich.
Senator Voinovich. You heard the comments of the other
witnesses, in terms of the Federal Employees Pay Comparability
Act. From looking at your testimony, you believe that pay
comparability is fundamental to any kind of a new system in
terms of attracting and keeping people. The issue here is that
this law, which was enacted in 1990 has not been implemented,
and as they mentioned, it is probably because of the fact that
previous administrations determined that they did not have the
money to implement it. And then there was some question about
whether or not the Bureau of Labor Statistics was the correct
place to determine how severe the pay gap was with the private
sector.
If we were going to go forward with this law and create
this kind of an underpinning for the whole Federal pay system,
what would be your advice in terms of how you would go about
getting data that people could agree to, assuming Congress
would come up with the money that is necessary to implement it?
Mr. Harnage. Senator, the problem is not that we cannot
agree. The problem is that we make no effort to agree. NTEU and
AFGE in 1997 asked the past administration to sit down and
let's talk about fixing FEPCA. If you have a problem with it,
let's look for the fix. But we did not see a problem with it,
except the implementation side of it. But we have not had those
meetings yet. Each year, we talked about the next year's pay
increase.
Senator Voinovich. Who are you meeting with?
Mr. Harnage. We were meeting with OPM, OMB, and a
representative of the White House in these discussions, trying
to--we cannot agree on the gap. We say it is 30. You say it is
less. Let's sit down and figure out what it is. You think it is
12? Fine, you win. Pay me. So I think nobody wanted to talk
about it, simply because they did not want that last result.
Once they reached an agreement, then they have no defense but
to pay it. Where we have these enormous surpluses, there is
little justification for there to be any gaps in the Federal
pay.
I recognize, as I believe Comptroller Walker said, that
there are people that are overpaid and there are a lot of
people underpaid, but that is fewer than it was simply because
we have continued not to close that gap, and that is part of
what locality pay was for, was to help reduce that to where
nobody was overpaid and nobody was underpaid, but the locality
pay has been extremely limited, and there was a question asked
earlier about was Congress responsible--yes, to some degree,
but I do not totally blame it all on them, either, because the
administration set the mark by submitting their numbers, and
thank you very much, every year you have exceeded that.
So we managed that the gap not get any bigger in the last 4
years, but we have not done anything about closing it.
Senator Voinovich. What were your suggestions on how to
resolve this difference?
Mr. Harnage. We never got that far. We offered to sit down
and do that, but we never had those meetings. The meetings that
we had each year was simply to talk about what the next year's
pay would be, not about FEPCA.
Senator Voinovich. We have heard some testimony that people
do not come to work for the Federal Government because they
want to get rich, but because they want to contribute. I always
felt people come to work for the Federal Government because it
is a way to support their family and make a contribution to
society. But there is a certain base salary that needs to be
paid to individuals so that they can support themselves, and
when you pay them less than that, I think you basically tell
them that you do not think very much of the job you are asking
them to do.
I would really appreciate it if you would send me a one-
pager on the negotiations that you have had, and see if we can
start talking once again about how to deal with this problem. I
want to clear up one thing, Mr. Harnage, in your testimony. You
said, ``AFGE believes that the idea is based upon a zero sum
model of Federal pay, taking away from one person or group in
order to fund an increase for another is bound to exacerbate
the human capital crisis, not improve it. In this category,
AFGE would place ideas such as contingent pay, payment of one-
time bonuses, incentive pay, and merit pay.''
I interpret that to mean that you are not opposed to these
things, but that they should be available only after you pay a
sufficient base. Maybe you want to clarify that for me.
Mr. Harnage. That is correct. There need to be two things.
One is that it ought to be additional money. In the past, some
of the reasons the agencies did not implement or use the
flexibilities that they had was because they had to use current
money. In other words, if I give four employees a retention
bonus, I have got to do away with one of them, because it is
coming out of salary money. So there was a disincentive to use
those flexibilities, because it was an additional money. It
needs to be a pool of money that is additional money than what
it takes to close the gap.
The second ingredient is the employees themselves are to
have a voice in that process. They should not be left out, and
that was our problem with DOD. We met in 1998 with DOD for
about 6 months on five working groups, trying to work out a lot
of the personnel flexibilities that we are talking about today.
But where that ran into a roadblock was once DOD realized that
we were talking about we will give you flexibilities, but there
have got to be checks and balances down at the work site, that
the employees have an opportunity or their representatives have
an opportunity for input into that. That is when they threw up
their hands and said, ``We don't want any part of that.'' So
now they are piecemealing all those things we discussed in
those 6 months a little bit at a time each year, which is a lot
less productive than what it would have been if we went ahead
and reached an agreement.
Senator Voinovich. I would like to change the subject to a
degree to the issue of privatizing. I just wonder, has NAPA had
a chance to look at that issue? I know Paul Light has some
written work about the government's shadow workforce. You have
not looked at that?
Ms. Shiplett. No.
Senator Voinovich. The impression that I get is that, when
new work comes along, rather than give the union an opportunity
to compete for it, agencies just farm it out automatically,
without any consideration?
Ms. Shaw. It is my understanding that, yes, under the
current rules, there is an opportunity to do just that. Under
the administration's new directive, they have issued a 5
percent directive for 2002, that agencies contract out 5
percent of their workforce, 10 percent in 2003. Aside from the
obvious concerns we have about that, the agencies do not
necessarily have the people in place to handle these
competitions. So if they are going to be forced to meet an
arbitrary number of jobs to contract out, we are concerned that
they are going to be forced into a situation of not even doing
a competition, simply because they will not have the manpower
to do it.
Senator Voinovich. They are talking about farming out 5
percent of the current workforce; correct?
Ms. Shaw. Yes.
Senator Voinovich. That 5 percent would compete with the
private sector, and then the agency would decide whether they
are going to outsource the work or not?
Ms. Shaw. The way it is stated is that they will be
competed, 5 percent of the jobs will be competed. But for some
agencies that do not have contracting staff, as many of them do
not, as evidenced by the lack of oversight over current
contracts, what is going to happen to those agencies when they
bump up against the October 1 deadline that they have got to
have these jobs contracted out? Are they simply going to
contract them out?
Senator Voinovich. One of the things that I would be
interested in--and it may be in the Light study on the shadow
workforce--is whether you have any statistics on the amount of
privatization that has already occurred. It has been my
impression from doing some reading that it has been enormous,
and that by downsizing the actual number of Federal employees
it looks as if the Federal Government is smaller. But if you
look at the number of outside contractors that have been hired,
in effect, the actual size has not changed very much, except
that people are no longer working for the Federal Government.
They are working for the private sector.
I am not even sure that they really understand. But it has
been enormous, I think, and the issue is that, if you farm out
that work, do you have the people inside the departments to
make sure that you are not getting ripped off?
Ms. Shaw. That is exactly our concern, and I would be happy
to send you some material.
Mr. Harnage. Senator, it is enormous, and that is one of
the items in the TRAC Act. Nobody really knows how much it is,
but we know it is somewhere about four times of what the
civilian workforce is. Nobody knows exactly what it costs, and
although we talk about these savings that are supposed to take
place, nobody can really prove they took place because nobody
is looking back to ensure that this did, in fact, happen. That
is one of our main problems, but also these quotas are driving
a lot of it.
Make sure you get what is being said by NTEU. The
instructions by OMB are to convert or compete 5 percent, and
she is saying that the agencies do not have the time, the
money, the expertise. So come October 1, they are going to
simply convert them--that is without competition--in order to
get the job done. The other thing is these manpower ceilings,
the FTEs, controls, although everybody says they do not manage
by FTEs, in private, they will admit they do, in a lot of cases
the agencies do not have the manpower to do the job any more
and they have no option but to privatize it, regardless of
cost, and that is not to the benefit of the taxpayers.
So one of the things we are saying is part of the human
capital crisis is brought about by these quotas that are
arbitrarily plucked out of the air and implemented for the sole
purpose of driving the privatization, not saving the taxpayer
money.
Senator Durbin. Senator Voinovich, I might just follow-up
from information that was printed in the Washington Post on
June 8, in an article written by Ellen Nakashima. She said that
the Bush Administration has ordered more than 40,000 Federal
workers to compete for their jobs with the private sector, a
first step toward the President's goal of making about 425,000
government jobs eligible for private contracting. The current
civilian Federal workforce is approximately 1.8 million. So
that would suggest about 25 percent, if my calculations are
correct, not quite 25 percent would be outsourced, of the
current Federal workforce.
The best estimate that they can provide in this article
related to your question comes from the Brookings study by Mr.
Light in 1999, where he estimated 5.6 million contract
employees working for the Federal Government in various
capacities, which is a little more than three times the size of
the civilian workforce of the Federal Government. It strikes me
as difficult to attract people to the Federal workforce when
you are telling them that over the next few years, one out of
four jobs will disappear into the private sector. That does not
give you one of the elements that you raised, Mr. Harnage, the
job security issue, any attention at all.
I think what I am going to do, and I do not know if Senator
Voinovich wants to join me, is to ask the GAO to give us a
study on this shadow workforce. I would like to know if we can
get a more updated number on the total involved in it, and I
would like to have a profile of several things: What are they
paid? What kind of benefits do they receive? Then, if there is
any way to measure their performance, my impression was that
some of my colleagues, at least in the House, were just
hidebound to privatize and outsource, regardless of cost,
regardless of performance. Their idea was to reduce the size of
the Federal workforce, the civilian Federal workforce, at any
cost.
When I suggested amendments, arguing that we had to save
money in the process, they rejected them. They said that is not
the point; we are not here to save money; we are here to turn
out some lights in some Federal buildings. I hope that is not
what is still driving the outsourcing fervor, and we are going
to ask the GAO to help us prepare some information for that.
I do not have any further questions. Senator Voinovich, do
you?
Senator Voinovich. No, but I would be more than happy to
join you on that request. I would like to find out more about
the size of the shadow workforce. I would like to know in what
capacity they serve and what kind of a job they are doing,
because obviously the budgets are not going down.
Senator Durbin. No, they are not.
Senator Voinovich. I think that, from my experience, it
hurts the esprit de corps of the workforce for this kind of
thing to happen, and I have been personally involved in
reversing that process. At the State level, if something new
came along, the unions were able to compete for it. Then there
were some areas, quite frankly, that we found we were not doing
as well as we should. I went to the unions and said, ``Look,
here is the deal, security people and some others, you could be
doing better,'' then we genuinely put it out for competition,
and there was a real, honest-to-goodness, objective evaluation.
Sometimes the unions won and sometimes they lost. But it was
not arbitrary or automatic. And so I think that a GAO report
would be a great way of getting a real sense of this at the
Federal level.
Senator Durbin. I would like to invite the three panelists,
if they would like, to suggest to us questions that the GAO
might look into in reference to this workforce. If, in the next
few days, you can contact the staff of the Subcommittee and
give us some ideas that you think are legitimate inquiries that
we can include in this request to the GAO, that would be
helpful. I thank you for your testimony.
Senator Voinovich. Could I just ask one last question?
Senator Durbin. Of course.
Senator Voinovich. Ms. Shiplett, you are really strong
about your three recommendation, and Mr. Harnage, you heard
NAPA's recommendations. What is your reaction?
Mr. Harnage. My reaction is to be very cautious about it. I
would be glad to get with them and talk about what their
experiences are and compare it with ours, and see if we can
come up with a consensus.
Senator Voinovich. We are interested in looking at some of
these innovations, in terms of short-term and long-term
legislation and so forth. You seem to be really sold on this,
and I would like to know a bit more. I think you said that
broad-banding ought not to be federalized, but that agencies
should be given the opportunity to ask for that flexibility; is
that what you are saying?
Ms. Shiplett. Right, but we would say that for all three of
the flexibilities. It is our belief that Federal agencies'
missions and strategic objectives and needs are sufficiently
different that we ought not to be mandating any of these in
saying every Federal agency must use them, but saying instead
that Federal agencies ought to have them as an option if they
believe their particular set of circumstances requires it.
If I could add just one more thing, and I believe it echoes
some of the comments that were made, not only in this panel,
but in the earlier panel; whatever changes are made, one of the
things that is really essentially is to make an investment in
seeing that the managers and the supervisors have the skills to
exercise these authorities appropriately, and that employees
are knowledgeable enough that they understand what the changes
are, and have the opportunity to learn about them well before
they are actually applied.
Senator Voinovich. Thank you. Mr. Chairman, I have no other
questions.
Senator Durbin. Let me just ask you this for the record,
Ms. Shiplett. I was just speaking to Ms. Upton on my staff. You
are congressionally chartered?
Ms. Shiplett. Yes, sir.
Senator Durbin. But you are not congressionally funded?
Ms. Shiplett. That is also correct. We are funded through
the contracts that we have with Federal agencies or our various
consortiums.
Senator Durbin. I am going to invite all of the panel that
are interested to give us some ideas about this investigation
by the GAO, and I thank you all for your testimony. We may have
some other follow-up questions, but I appreciate your patience
and thank you for being here today.
With that, this hearing stands adjourned.
[Whereupon, at 5 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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