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20–171 PDF 2005

S. Hrg. 109–41

UNLOCKING THE POTENTIAL WITHIN HOMELAND

SECURITY: THE NEW HUMAN RESOURCES SYSTEM

HEARING

BEFORE THE

OVERSIGHT OF GOVERNMENT MANAGEMENT, 

THE FEDERAL WORKFORCE, AND THE DISTRICT 

OF COLUMBIA SUBCOMMITTEE

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

FEBRUARY 10, 2005

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs

(

(II)

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

SUSAN M. COLLINS, Maine, Chairman 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

LINCOLN D. CHAFEE, Rhode Island 

ROBERT F. BENNETT, Utah 

PETE V. DOMENICI, New Mexico 

JOHN W. WARNER, Virginia 

JOSEPH I. LIEBERMAN, Connecticut 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

MICHAEL D. BOPP, Staff Director and Chief Counsel 

JOYCE A. RECHTSCHAFFEN, Minority Staff Director and Counsel 

AMY B. NEWHOUSE, Chief Clerk 

OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL 

WORKFORCE, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE 

GEORGE V. VOINOVICH, Ohio, Chairman 

TED STEVENS, Alaska 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

LINCOLN D. CHAFEE, Rhode Island 

ROBERT F. BENNETT, Utah 

PETE V. DOMENICI, New Mexico 

JOHN W. WARNER, Virginia 

DANIEL K. AKAKA, Hawaii 

CARL LEVIN, Michigan 

THOMAS R. CARPER, Delaware 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

ANDREW RICHARDSON, Staff Director 

RICHARD J. KESSLER, Minority Staff Director 

NANCI E. LANGLEY, Minority Deputy Staff Director 

TARA E. BAIRD, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

Senator Voinovich ............................................................................................. 1

Senator Akaka .................................................................................................. 4

Senator Lautenberg .......................................................................................... 6

Senator Pryor .................................................................................................... 18

WITNESSES 

THURSDAY, FEBRUARY 10, 2005

Hon. David M. Walker, Comptroller General, U.S. Government Accountability 

Office ..................................................................................................................... 8

Ronald J. James, Chief Human Capital Officer, U.S. Department of Homeland 

Security ................................................................................................................. 10

Dr. Ronald P. Sanders, Associate Director for Strategic Human Resources 

Policy, U.S. Office of Personnel Management .................................................... 12

Darryl A. Perkinson, National Vice President, Federal Managers Association . 26

Colleen M. Kelley, President, National Treasury Employees Union ................... 28

John Gage, National President, American Federation of Government Employees ................................................................................................................... 30

Richard N. Brown, President, National Federation of Federal Employees ........ 32

Kim Mann, on behalf of the National Association of Agriculture Employees .... 34

ALPHABETICAL LIST OF WITNESSES

Brown, Richard N.: 

Testimony .......................................................................................................... 32

Prepared statement .......................................................................................... 142

Gage, John: 

Testimony .......................................................................................................... 30

Prepared statement .......................................................................................... 122

James, Ronald J.: 

Testimony .......................................................................................................... 10

Prepared statement .......................................................................................... 74

Kelley, Colleen M.: 

Testimony .......................................................................................................... 28

Prepared statement .......................................................................................... 110

Mann, Kim: 

Testimony .......................................................................................................... 34

Prepared statement .......................................................................................... 152

Perkinson, Darryl A.: 

Testimony .......................................................................................................... 26

Prepared statement .......................................................................................... 94

Sanders, Dr. Ronald P.: 

Testimony .......................................................................................................... 12

Prepared statement .......................................................................................... 80

Walker, Hon. David M.: 

Testimony .......................................................................................................... 8

Prepared statement .......................................................................................... 45

APPENDIX

Copy of Section 2301 of Title 5 submitted by Senator Akaka .............................. 43

Neil A.G. McPhie, Chairman, U.S. Merit Systems Protection Board, prepared 

statement .............................................................................................................. 162

Post-hearing comments from United DOD Workers’ Coalition ........................... 165

Page

IV

Questions and responses for the Record from: 

Mr. Walker ........................................................................................................ 303

Mr. James ......................................................................................................... 309

Dr. Sanders ....................................................................................................... 322

Mr. Perkinson ................................................................................................... 332

Ms. Kelley and Richard Brown ....................................................................... 335

Mr. Gage ............................................................................................................ 342

Mr. Mann .......................................................................................................... 346

(1)

UNLOCKING THE POTENTIAL WITHIN 

HOMELAND SECURITY: 

THE NEW HUMAN RESOURCES SYSTEM 

THURSDAY, FEBRUARY 10, 2005

U.S. SENATE, 

OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL

WORKFORCE, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE,

OF THE COMMITTEE ON HOMELAND SECURITY AND

GOVERNMENTAL AFFAIRS,

Washington, DC. 

The Committee met, pursuant to notice, at 10 a.m., in room SD–

342, Dirksen Senate Office Building, Hon. George V. Voinovich, 

Chairman of the Subcommittee, presiding. 

Present: Senators Voinovich, Akaka, Lautenberg, and Pryor. 

OPENING STATEMENT OF SENATOR VOINOVICH 

Senator VOINOVICH. The hearing will please come to order. I 

want to thank all of you for coming. 

Almost 1 year ago on February 25, 2004, this Subcommittee convened a hearing entitled ‘‘The Key to Homeland Security: The New 

Human Resources System.’’ The purpose of that hearing was to 

consider the Department of Homeland Security’s proposed regulations for their new human resources system. 

Today’s hearing, ‘‘Unlocking the Potential Within Homeland Security: The New Human Resources System,’’ will consider the final 

regulations. 

Before we proceed I want to say that I understand there are 

many strong feelings about these regulations. However, I would 

like to ask those here today to respect the decorum that is customary in the U.S. Senate. I am asking the audience not to respond 

to the witnesses’ testimony, the questions Senators will be asking, 

or the answers of the witnesses to questions. 

I commend the Department of Homeland Security, the Office of 

Personnel Management, Department employees, and representatives of Homeland Security employees for the time they have invested in developing this new human resources management system. I personally want to thank former Secretary of Homeland Security, Tom Ridge, and former Director of the Office of Personnel 

Management, Kay Coles James, for their commitment to this process. I know that they were both engaged in this personally, and I 

admire their dedication. 

The 2-year process, the development of the regulations has gone 

through is a relief to me. Many of us were concerned that these 

2

regulations would be rapidly developed and implemented. However, 

that has not been the case. The Homeland Security Act of 2002 was 

signed by the President on November 25, 2002. Proposed regulations were published in the Federal Register on February 20, 2004. 

The final regulations, the topic of today’s hearing, were published 

only 9 days ago on February 1. 

It is clear that there has been a very deliberate and collaborative 

process, and I thank the Administration for this. For example, DHS 

and OPM used the statutory authority to enlist the assistance of 

the Federal Mediation and Conciliation Service to facilitate the dialog with labor organizations and extended that process beyond the 

30-day requirement in law. 

It is clear to me when comparing the final regulations to the proposed regulations that DHS and OPM have made some significant 

changes. For example, the new system will establish a Compensation Committee to gather input from multiple sources, including 

employee unions, in determining employee pay. In addition, the 

final regulations now allow employee input in determining members of the Homeland Security Labor Relations Board. 

Another significant change in the final regulations is a requirement for post-implementation bargaining on management actions 

for employees adversely impacted for more than 60 days. Some of 

you may recall that I raised the importance of post-implementation 

bargaining at the hearing that we had last February. 

These examples represent an increase in union involvement from 

the proposed regulations. In addition, some changes like the Compensation Committee create a role for unions unique to the Federal 

Government. 

These new regulations represent historic changes to the Federal 

civil service. I would like to remind my colleagues of the enormous 

changes the legislative proposal authorizing these regulations underwent in Congress. 

My colleagues may remember that the original legislative proposal offered almost a blanket exemption, a blanket exemption 

from Title 5 for the Department, similar to what was authorized 

for the Transportation Security Administration. 

Many of us were very concerned with this proposal including my 

good friend in the House of Representations, Rob Portman. As a result, the enacted legislation included far less flexibility than initially sought by the Bush Administration. 

I understand that all parties are not satisfied with the final regulations, and they will have an opportunity today to explain their 

concerns to the Subcommittee. 

When the Senate was considering the Homeland Security Act, I 

suggested to my colleagues that the law allow for binding arbitration over the six chapters of Title 5 that were waived. Based on my 

experience working with employees unions as Mayor of Cleveland 

and Governor of Ohio, I thought that the process would have 

brought all parties to an agreement on the regulations more quickly and with less friction. 

Having an independent third party make final decisions on 

points of contention would have fostered, I believe, additional collaboration over the regulations and given more credibility to the 

3

process. However, this suggestion was not well received by my colleagues or the Administration. 

So as a part of the largest government reorganization in half a 

century we have the new personnel system authorized by Congress. 

Regarding this, I have this observation for both the Administration 

and union representatives here today: Nothing less than the security of our Nation is at stake. That is why we created the Department, to secure the homeland and protect us from terrorism. We 

must find a way to work together. The people of this country no 

less. 

To the Administration I say it is your obligation to continue to 

collaborate with the Department’s employees and their unions and 

to do right by them in this new system. They must be treated equitably. The merit principles of the civil service that have served our 

country so well must be upheld. Managers must receive excellent 

training so that they can make fair judgments regarding employee 

performance. This point will be discussed in greater detail by the 

Controller General. Employees must receive the training and resources they need to make the most of his or her God-given talent. 

To the union leaders, I say it is your duty to roll up your sleeves 

and work with the Department of Homeland Security and the Office of Personnel Management to make this new system work well. 

It is my hope that the collaboration and dialog the Department 

and its employees have engaged in over the past 2 years will continue into the future. I expressed this sentiment to the President’s 

nominee for the Secretary of Homeland Security, Judge Chertoff, 

when I met with him 2 weeks ago. I suggested to Judge Chertoff 

that one of the first actions that he takes is to bring in the representatives of the employee unions and visit. I encouraged him to 

initiate a personal dialog with them so they know that he, too, is 

very much concerned about the Department’s human resources system. 

As I stated a year ago there is no doubt in my mind that the only 

way any organization can be successful is to have the best and 

brightest minds focused on the important task at hand. 

I know the employees of the Department of Homeland Security 

are hard-working and dedicated. It is my hope that the new human 

resources management system will assist the Department in fostering a high-performing culture that empowers these workers, encourages innovation, and supports and rewards them. 

It is because of my unwavering commitment to the employees of 

the Department of Homeland Security and its mission that I have 

called this hearing today. I understand the ramifications the system will have in the Department itself and the rest of the Federal 

service. I am committed to ensuring its success, and I know the 

Members of this Subcommittee are committed to that. 

I look forward to hearing the testimony of our witnesses today 

and a continued dialog over these important reforms. 

I now yield to my good friend, the Senator from Hawaii. This is 

the first hearing in which Senator Akaka is my Subcommittee’s 

Ranking Member. Senator Akaka and I have spent many years 

working together on Federal personnel issues. We have gotten to 

know each other a lot better through our Bible study group. I 

treasure Senator Akaka’s friendship, and I appreciate his leaderVerDate 0ct 09 2002 13:25 Jun 28, 2005 Jkt 020171 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 C:\DOCS\20171.TXT SAFFAIRS PsN: PHOGAN
4

1The copy of Section 2301 of Title 5 appears in the Appendix on page 43. 

ship and commitment to the human capital issue. Senator, I look 

forward to working with you in your new capacity as Ranking 

Member of this Subcommittee. Senator Akaka. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. Thank you, Mr. Chairman. I am especially 

pleased to join you as the Ranking Member of this Subcommittee 

and to join you as the leader of human capital issues here in the 

Senate. As we all know, you and I have enjoyed a long and successful partnership, and I look forward to that partnership continuing 

in working with you on this Subcommittee. 

I also want to welcome our panelists, Comptroller General Walker, Mr. James, and Dr. Sanders to our hearing this morning. We 

certainly are grateful and have appreciated the work of Secretary 

Tom Ridge as he developed the Homeland Security office here in 

our country. We have much to do and we are starting to do it. 

Our hearing this morning marks the first public forum on the 

final personnel rules issued jointly by the Department of Homeland 

Security and the Office of Personnel Management. I know there is 

strong disagreement over these final regulations. Many who join us 

today believe their input was not valued and their views were not 

fully addressed. 

However, I want to commend DHS and OPM for the collaborative 

and open manner in which employee groups and stakeholders were 

involved in the development of these regulations. All agencies 

should undertake organizational change in a similar cooperative 

and inclusive manner. 

I, too, participated in the consultation process by submitting detailed comments on the proposed regulations last year which discussed the preservation of employee rights and protections. I am 

pleased that some of my suggestions were included in the final regulations, which are an improvement over those proposed a year 

ago. The rules retain protections found in current law that permit 

judicial review, use of preponderance of evidence standard for employee appeals, provide for employee grievances, and govern the 

awarding of attorney fees. 

However, the regulations fall short of our common goal of protecting the merit principles on which our country’s Federal civil 

service have been developed and which serve as a model throughout the world. The principles of merit and fitness call for fair and 

equitable treatment of employees, and protection from arbitrary action, personal favoritism, and coercion for political purposes. We 

must avoid undermining the merit system, and we do not want to 

return to the spoils system. 

Mr. Chairman, I ask unanimous consent that Section 2301 of 

Title 5, which contains the merit systems principles be included in 

the hearing record.1

Senator VOINOVICH. Without objection. 

Senator AKAKA. Without adhering to this provision of law we 

may put at risk the government’s ability to attract skilled new 

workers and retain experienced employees who have already chosen Federal service. The intent of allowing the Department of 

5

Homeland Security to implement a new personnel system to ensure 

an effective and efficient workforce to meet the challenges and fulfill the missions of the Department. As such, it is essential that 

this and any human resources system be both fair and perceived 

as fair in order to be credible. I believe that DHS regulations fall 

short of this goal. 

The final rules will bring dramatic changes in the way DHS 

hires, fires, classifies and pays employees. It will also seriously diminish collective bargaining rights of employees. The rules eliminate bargaining for a majority of routine issues and deny union 

input on policy implementation. 

The creation of an internal Homeland Security Labor Relations 

Board and International Mandatory Removal Panel, coupled with 

the restrictions on the Merit System’s Protection Board and the 

Federal Labor Relations Authority to review DHS cases undermines the effectiveness and credibility of these procedures. These 

regulations will curtail employee bargaining rights and deny opportunities for front-line employees to provide critical input on departmental programs and directives. 

A well-managed organization values employee input, and its senior managers understand the critical role front-line workers have 

in protecting mismanagement. I am concerned that these changes 

could be detrimental to carrying out the Department’s programs 

and directive successfully. 

Mr. Chairman, you and I believe that the government’s most important asset is the Federal workforce, whose dedication, commitment, and courage are demonstrated every day. We should value 

the work performed by these men and women, which requires our 

unwavering effort to make sure that any government reorganization is done right the first time. Nor should we ignore employee 

morale, which plays a significant role in maintaining the DHS 

workforce. 

Congress was told that DHS and Department of Defense, which 

will release its proposed personnel system next week, needed ‘‘flexible and contemporary’’ personnel systems to meet their national security missions because Title 5 was outdated and inflexible. 

We know from the President’s fiscal year 2006 budget proposal 

that the Administration wants to let all Federal agencies use these 

new regulations to modify existing personnel systems. It is premature and shortsighted to open the door to untried and untested 

regulations for the entire Federal Government given the lack of 

employee protection in the DHS rules. I support modernizing and 

strengthening civil service laws which is one reason why I have 

worked with Senator Voinovich over the years to enact legislation 

such as categorical ranking and compensatory time for travel. Unfortunately, many agencies fail to use existing flexibilities and most 

agencies lack funds to train managers on measuring performance 

and disciplining problem employees. 

As long as these regulations and the soon-to-be released DOD 

rules are seen as a template for civil service reform, we need to be 

sure that the concerns expressed today are addressed. I want to 

make sure that there is a process by which employees have a real 

voice in policy decisions and Agency missions, and I am ready to 

work with DHS to: Provide increased opportunities for employees 

6

to bargain over issues such as scheduling and posting of employees; 

increase employee input in Department programs; provide opportunities for meaningful and independent oversight; and develop fair, 

credible and transparent performance criteria, and training programs. 

I thank you for the time, Mr. Chairman. I look forward to hearing from our distinguished panelists, and I thank all of you for 

being with us today. Thank you, Mr. Chairman. 

Senator VOINOVICH. Thank you, Senator Akaka. 

Senator Lautenberg, thank you very much for being here. 

OPENING STATEMENT OF SENATOR LAUTENBERG 

Senator LAUTENBERG. I am delighted to be here with you, Mr. 

Chairman. Unfortunately, I have a time commitment that will not 

permit me to stay, but I do want to make my opening statement. 

I congratulate you for convening this hearing. I want to say one 

thing at the start, Mr. Chairman. I have great personal respect for 

you. I know that you care about people. You have done it in your 

public service as mayor, governor, Senator, and in private conversations that we have had. I have seen you evidence concern 

about what we do with health care and things of that nature, and 

I know that you want to be fair with people and will do whatever 

you can to make sure that happens. 

We are in disagreement I think perhaps on some of the policy 

changes that are anticipated here, but I say it with all due respect 

to you, Mr. Chairman. 

Senator VOINOVICH. Thank you. 

Senator LAUTENBERG. Despite your admonition that the quorum 

had to be preserved. [Laughter.] 

Senator VOINOVICH. Senator Lautenberg, one of the things that 

I welcome in your participation on this Committee is your success 

in the business community. You are a great leader, and you appreciate probably as much as anyone how important good people are 

to an organization. 

Senator LAUTENBERG. Thank you very much. 

In case it was not obvious, I have to say that I was not in the 

Senate when Homeland Security Act of 2002 was passed into law. 

I think I am in the record as having been the oldest freshman that 

ever came to the U.S. Senate. [Laughter.] 

If I had been here I would have objected to the personnel provisions included in the bill which denied the employees of the Department of Homeland Security the same rights to bargain and to 

appeal personnel decisions afforded to other Federal employees. 

The notion that collective bargaining rights somehow threaten national security, that Federal employees who belong to a union are 

somehow suspect, I find offensive. Frankly, I am appalled by the 

attacks on organized labor. 

I have been around long enough to remember a period of time 

in America when jobs were so precious, and I remember a story 

from my father who worked in the silk mills in Patterson, New Jersey, when he and a good friend of his stood hat in hand—they wore 

hats in those days—waiting for the factory owner to pass out of his 

office so that they could appeal the decision by their foreman that 

if they took a religious holiday off that their jobs were terminated. 

7

That would have been like a death knell for my father, and he 

trembled when he told me this story about it. The owner was a 

much kinder man and things went along. 

But we cannot ever forget what it was that created the need for 

working people to organize, and when we see working people in 

jobs today that are only guaranteed $206 a week, it tells you that 

there have to be voices out there that speak to the needs of people, 

that $206 a week barely can take care of one person, and in many 

cases it is supposed to take care of a family. So we see that and 

we are reminded that people need attention in developing their 

own strength of voice. 

So the first responders I recall who rushed into the emergency 

stairwells in the Trade Center on September 11, while civilians 

were filing past them on the way down, belonged to unions. I had 

an office in that building when I was a member of the Port Authority of New York and New Jersey before I came to the Senate, and 

it was an entire city included in those few buildings there. But 

when you saw the heroism and the price paid by so many people 

who were union members, it says that it cannot be a bad thing for 

people to be able to express themselves in a collective fashion. 

I am a strong believer in protecting the Federal workforce. I have 

great respect for people in the Federal workforce, and though I ran 

a company the Chairman was kind enough to mention, a very successful company, today employs 40,000 people, and I was one of 

three young kids out of college who started that company so many 

years ago. But what I have seen of the public sector, if I can call 

it that, compared to the private sector is that there is no match, 

that the habits are the same in the private side. There are not a 

lot of perfect people around, not even here in the Senate, surprise 

to many, but the fact is that people who are in the Federal workforce are usually committed to jobs that are not competitive in the 

pay scales with jobs in the outside world. And if there was a 

change, we made it. When we took the screeners out of the private 

sector because we could not get a decent day’s work done and never 

had security, the knowledge that things were safe, we put them on 

the Federal payroll. That was a huge decision. At the same time 

we are saying we cannot permit them to have an organized voice. 

I am concerned that the plan, as proposed, could be subject to political manipulation. Doing away with the General Schedule system 

which has served Federal employees and the American people well, 

probably creates more problems than it solves. The new system 

would set wages according to the results of annual surveys, salary 

surveys of private sector workers, but private sector wages vary 

widely or fluctuate due to market changes. Given the importance 

of the DHS mission, we need to attract the best and the brightest 

to work here. Beating people down, taking away their rights to collective bargaining and other union protections is not going to create 

the DHS workforce with the morale that we need to help keep 

America safe. 

Mr. Chairman, I hope that we can work together to fix the problems with this new plan. I welcome our panels of witnesses, and 

apologize for not being able to be here during their testimony. I 

would ask that the record be kept open for any questions that I 

might submit. 

8

1The prepared statement of Mr. Walker appears in the Appendix on page 45. 

Senator VOINOVICH. Without objection, Senator Lautenberg. 

Senator LAUTENBERG. Thank you. 

Senator VOINOVICH. If the witnesses would please stand, it is the 

custom of this Subcommittee to swear in our witnesses. Do you 

swear that the testimony you are about to give is the truth, the 

whole truth and nothing but the truth, so help you, God? 

Mr. WALKER. I do. 

Mr. JAMES. I do. 

Dr. SANDERS. I do. 

Senator VOINOVICH. Let the record show that the witnesses answered in the affirmative. 

As is the custom with this Subcommittee, I would ask the witnesses to limit their testimony to 5 minutes. Your complete written 

testimony will be printed in the hearing record. 

I first would like to welcome David Walker, Comptroller General 

of the United States. I have worked often and closely with Mr. 

Walker on issues dealing with human capital. I would like to publicly say that without his help, input, and collaboration, we would 

not have been able to make the most significant changes in the 

civil service since 1978. 

I remember when I first met you we talked about this. I think 

we have come a long way since that day. I look forward to your insight today on the Department’s final regulations. Mr. Walker. 

TESTIMONY OF DAVID M. WALKER,1 COMPTROLLER GENERAL, 

U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. WALKER. Thank you, Mr. Chairman, and Senator Akaka. It 

is a pleasure to be here and it is a continuing pleasure to work 

with both of you in this and other areas of mutual interest and concern. I appreciate the opportunity to provide our preliminary observations on the Department of Homeland Security’s final regulations. I might note that it is my understanding that the Department of Defense may issue their proposed regulations as soon as 

this afternoon, and so this is a momentous day, not only from the 

standpoint of this important hearing, the DHS regulations, but also 

I expect there will be a lot of interest in whatever the Department 

of Defense proposes. 

What I would like to do, Mr. Chairman, if I can, is to summarize 

by commenting on three positive aspects, three areas of concern, 

and three comments on the way forward, and obviously make myself available for any questions after the other co-panelists have a 

chance to go. 

First from a positive standpoint. We believe that the proposed 

regulations provide a flexible, contemporary, performance-oriented 

and marked-based compensation system at least with regard to the 

theoretical framework. Second, we believe it is important, as the 

regulations note, to have continued employee, union, and key 

stakeholder involvement in developing the details—and the details 

do matter, there are a lot of details that are not addressed here—

and also in being active participants during the implementation 

phases. That involvement must be meaningful, not just pro forma. 

That is critical in order to achieve credibility and success. 

9

Third, we believe that the regulations are positive in providing 

a basis to evaluate the implementation of the regulations and to involve employee representatives in designing the evaluation criteria 

and reviewing the findings of recommendations that result therefrom. So those are several positive comments. 

Areas of concern. Obviously, one major area of concern, which is 

currently subject to litigation, and therefore I won’t get into much 

detail on it, is the proposed scope of collective bargaining and 

whether and to what extent collective bargaining should be broader 

than as proposed under the regulations. But other than that, it is 

difficult to determine the overall impact of the changes on potential 

adverse actions, appeals and labor relation processes because there 

are a lot of details that are yet to be defined. 

I think it is very important that they be defined, and how they 

are defined can have a significant impact on whether or not they 

are likely to be effective and credible. We believe it is critically important that employees have access to an independent, qualified 

and adequately resourced external appeal body in appropriate circumstances in order to ensure the consistency, the equity of actions 

while preventing abuse of employees. 

In addition we are concerned that the performance management 

system does not provide a core set of key competencies that can 

help to provide reasonable consistency and clearly communicate to 

employees what is expected of them, which competencies hopefully 

would be validated by the employees in order to gain acceptance, 

credibility and minimize adverse actions. 

And last, we are concerned that a pass/fail or three-level rating 

scale system that might be implemented would not provide for 

meaningful differentiation in performance in order to be able to 

make the most informed pay and other human capital decisions. 

As far as moving forward, we think it is critically important that 

in order to be successful here, because it is going to take the combined efforts of a number of key parties over an extended period 

of time, that there be committed and sustained leadership at the 

top. While we believe that a COO, Chief Management Officer concept is absolutely essential to the Department of Defense, we believe it might have merit at the Department of Homeland Security, 

not only with regard to human capital issues but also the overall 

business process transformation and integration. 

Second, we believe that there has to be an overall consultation 

and communication strategy that provides for meaningful two-way 

communication, creates shared expectations among managers, employees and all key stakeholders, and in fact provides for meaningful and ongoing two-way interaction. Reasonable people will differ. 

They obviously do in many cases here, but it is important that all 

sides be heard and considered seriously. 

Last, we are very concerned that the necessary infrastructure be 

in place in order to successfully implement the system. At a minimum that means a clearly-defined strategic human capital plan, 

and the capabilities to use these new authorities both effectively 

and fairly. Among other things the need for a modern, effective, 

credible integrated and hopefully validated performance management system that provides for a clear linkage between institutional, unit and individual performance-oriented outcomes, and also 

10

1The prepared statement of Mr. James appears in the Appendix on page 74. 

as appropriate, considers the core values and other aspects of the 

organization that should not change over a period of time, is a matter of critical importance. 

So in summary, Mr. Chairman, we think there are a number of 

positive things here. We have some areas of concern, and there are 

a few key points that we think will be critical on the way forward 

in order to achieve a positive outcome while minimizing the possibility of abuse. 

Thank you, Mr. Chairman. 

Senator VOINOVICH. Thank you, Mr. Walker. 

We also have with us today Ron James, the Chief Human Capital Officer for the Department of Homeland Security, and Ron 

Sanders, Associate Director for Strategic Human Resources Policy, 

Office of Personnel Management. 

I know both of you have invested an incredible amount of time 

and energy in developing these regulations. I thank you for all the 

time and effort that you have put into this task, and I appreciate 

the cooperation that has existed between the Department of Homeland Security and the Office of Personnel Management. I had some 

concerns that communication would not be forthcoming. It has 

been, and I applaud Secretary Tom Ridge and Director Kay Coles 

James for the job that they have done. Of course, I understand you 

are the ones who put in all the work. 

Mr. James. 

TESTIMONY OF RONALD J. JAMES,1 CHIEF HUMAN CAPITAL 

OFFICER, U.S. DEPARTMENT OF HOMELAND SECURITY 

Mr. JAMES. Thank you, Mr. Chairman, and I will pass along your 

kind words to the people who did the heavy lifting, my staff and 

OPM’s staff. 

Senator Akaka, Senator Pryor, it is a privilege to appear before 

the Subcommittee. 

As Congress recognized in creating the Department, we need the 

ability to act swiftly and decisively in response to critical homeland 

security threats and our mission needs. We must continue to attract and retain highly-talented and motivated employees who are 

committed to excellence, the most dedicated and skilled people our 

country has to offer. 

The current human resources system is too cumbersome to 

achieve this. Following the publications of our proposal almost a 

year ago, we received over 3,800 comments from the public, our 

employees, their representatives, and Members of Congress. After 

taking some time to examine those comments, we followed the congressional direction to ‘‘meet and confer’’ with employee representatives over the summer. 

In early September we invited the National Presidents of the 

NTEU and the AFGE to meet with the Secretary and the Director 

of OPM to present their remaining concerns. While these discussions further informed the development of final regulations, there 

remain several areas where we have fundamental disagreement. 

We believe those issues, such as using performance rather than 

longevity as the basis for pay increases and providing for increased 

11

flexibilities to respond to mission-driven operational needs while 

balancing our collective bargaining operations go to the very core 

of what Congress intended. 

We are creating open pay bands, pay progression within those 

bands will be based on performance, not longevity. We are also 

changing how market conditions impact pay. Under the new system pay may be adjusted differently by job types in each market. 

We are creating performance pools where all employees who meet 

performance expectations will receive performance-based increases. 

The system will make meaningful distinctions in performance 

and hold employees and managers accountable at all levels. With 

some important modifications, as noted below, this is the proposal 

we made last year. 

The unions pressed for a meaningful role in the design of further 

details in the pay-for-performance system. We provide that through 

a process called continuing collaboration, and through providing 

four seats for unions on the Compensation Committee. None of 

these provisions were in the original regulations. During the meet 

and confer labor unions voiced strong concerns that the implementation schedule did not allow adequate time to train managers and 

evaluate its effectiveness. We have significantly modified our 

schedule. We will have extensive training this summer. Training is 

the core of what we should be about. We will be introducing our 

new performance management system this fall. We are converting 

employees to the new pay system over the next 3 years. We will 

be making adjustments to their pay based on performance over the 

next 4 years, not 2 years. 

Until employees are converted to the new pay system they will 

continue to see adjustments to their pay under the GS system. The 

vast majority of DHS employees will have two to three full cycles 

under the new performance management system before performance is used to distinguish levels of pay. We hope this will allow 

greater time to create employee understanding and confidence regarding how pay will be administered fairly going forward. 

At the request of the unions we also provided a role for the employees and their representatives in the formal evaluation of 

whether the new system is having its intended effects. Congress 

granted the authority to modify our adverse action and appeals 

procedure. We believe we have done that while still protecting due 

process. In fact, we have shortened the time frames, minimum notice period has been shortened from 30 days to 15 days, but we 

have expanded the minimum reply time to 10 days. We have provided one unitary system for dealing with performance and conduct, which will make the appeals process easier to understand, 

particularly for those employees who are affected. 

At the request of labor representatives we have retained the efficiency of the service standard for taking adverse actions. We have 

also retained the Merit Systems Protection Board to hear the vast 

majority of cases, and we have worked with them, conferred with 

them, to get to that decision. 

We have changed our proposed regulations to adopt at the 

union’s suggestion the preponderance of the evidence standard for 

all adverse actions. We are also persuaded by our labor unions to 

provide bargaining employees the option of grieving and arbitrating 

12

1The prepared statement of Dr. Sanders appears in the Appendix on page 80. 

adverse actions. These are significant changes from last year’s proposals. Arbitrators and the MSPB will use the same rules and 

standards, the same burden of proof. We were convinced by the 

labor organizations that our proposed bar on mitigation should be 

modified, and it was. At a future date, after consultation with the 

Department of Justice, the Secretary will identify mandatory removal offenses that have a direct and substantial impact on our 

ability to perform our mission. We will again, thanks to union 

input, provide for those offenses, when identified to be published in 

the Federal Register and will ensure they are made known annually to all employees. I think, sir, that the process is a lot better 

for the union’s involvement. I think they brought constructive suggestions. Our regrets are that we could not accommodate all of 

them. 

Our regulations do require in the last area that we confer, not 

negotiate, with labor unions over the procedures we will follow in 

taking management actions, such as the critical issues of assignment of work or deployment or personnel. And the final regulations 

now require bargaining over the adverse impact of management actions on employees when that impact is significant and substantial 

and the action is expected to exceed 60 days. 

We also, lastly, altered our proposed regulations to provide for 

mid-term bargaining over personal policies, practice and matters 

affecting working conditions. We also agreed to provide binding resolution of mid-term impasses by the Homeland Security Labor 

Board. The FLRA will continue to hear matters including bargaining unit determinations, union elections, individual employees, 

ULPs and exception to arbitration awards. 

Mr. Chairman, we developed these regulations with extensive 

input from our employees and from their representatives. We listened and we will continue to listen. I pledge that to you personally. We made changes as a result of their comments. We believe 

that we have achieved the right balance between core civil service 

principles and mission essential flexibilities. Thank you. 

Senator VOINOVICH. Dr. Sanders. 

TESTIMONY OF RONALD P. SANDERS,1 ASSOCIATE DIRECTOR 

FOR STRATEGIC HUMAN RESOURCES POLICY, U.S. OFFICE 

OF PERSONNEL MANAGEMENT 

Dr. SANDERS. Thank you, Mr. Chairman, Senator Akaka, and 

Senator Pryor. It is my privilege to appear before you today to discuss the final regulations implementing a new human resources 

(HR) system for the Department of Homeland Security (DHS), a 

system that we truly believe is as flexible, contemporary and excellent as the President and the Congress envisioned. It is the result 

of an intensely collaborative process that has taken almost 2 years, 

and I want to express our appreciation to you for your leadership 

and that of the Subcommittee in this historic effort. Without that 

leadership, we wouldn’t be here today, and we look forward to it 

in the future. 

Mr. Chairman, with the Homeland Security Act of 2002, you and 

other Members of Congress gave the Secretary of DHS and the DiVerDate 0ct 09 2002 13:25 Jun 28, 2005 Jkt 020171 PO 00000 Frm 00016 Fmt 6633 Sfmt 6633 C:\DOCS\20171.TXT SAFFAIRS PsN: PHOGAN
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rector of the Office of Personnel Management (OPM) extraordinary 

authority, and with it a grand trust to establish a 21st Century 

human resource management system that fully supports the Department’s vital mission without compromising the core principles 

of merit and fitness that ground the Federal civil service. Striking 

the right balance between transformation and tradition, between 

operational imperatives and employing union interest is an essential part of that trust, and we believe we have lived up to it in the 

final regulations. 

I would like to address that balance this morning with a particular focus on performance-based pay, employee accountability, 

and labor relations. 

First, pay-for-performance. The new pay system established by 

the regulations is designed to fundamentally change the way DHS 

employees are paid, to place far more emphasis on performance 

and market in setting and adjusting rates. 

But will it inevitably lead to politicization, as some have argued? 

Absolutely not. All Federal employees are ‘‘protected against arbitrary action, personal favoritism or coercion for partisan political 

purposes.’’ Those statutory protections are still in place and still 

binding on DHS, and they most certainly apply to decisions regarding an employee’s pay. 

If a DHS employee believes that such decisions have been influenced by political considerations, he or she has the right to raise 

such allegations with the Office of Special Counsel (OSC), to have 

OSC investigate and where appropriate prosecute, and to be absolutely protected from reprisal and retaliation in so doing. These 

rights have not been diminished in DHS in any way whatsoever. 

The new system also provides for additional protections that guard 

against any sort of political favoritism in individual pay decisions. 

Under the new system, supervisors have no discretion with regard to the actual amount of performance pay an employee receives. That amount is driven strictly by a mathematical formula, 

an approach recommended by the DHS unions during the meet and 

confer process. With one exception, the factors in that formula cannot be affected by an employee’s supervisor. Rather, they are set 

at higher headquarters with union input and oversight through a 

new Compensation Committee, another product of the meet and 

confer process, that gives them far more say in such matters than 

they have today. The one exception is the employee’s annual performance rating. That is the only element of the system within the 

direct control of an employee’s immediate supervisor, and that is 

subject to higher-level approval. 

The regulations allow an employee to challenge their rating if he 

or she doesn’t believe it is fair, and if it is a unionized employee, 

all the way to a neutral arbitrator if their union permits. That is 

another product of the meet and confer process. 

Mr. Chairman, with these statutory and regulatory protections 

providing the necessary balance, as well as intensive training in a 

phased implementation schedule to make sure DHS gets it right, 

we are confident that the new pay-for-performance system will reward excellence without compromising merit. 

Let us take a similar look at employee accountability and due 

process. DHS has a special responsibility to American citizens. 

14

Many of its employees have the authority to search, seize, enforce, 

arrest, even use deadly force in the performance of their duties. 

Their application of those powers must be beyond question. By its 

very nature, the DHS mission requires a high level of workplace 

accountability. We believe the regulations ensure this accountability but without compromising any of the due process protections Congress guaranteed. 

In this regard, DHS employees are still guaranteed notice of a 

proposed adverse action, the right to reply before any final decision 

is made, and the right to representation. The final regulations continue to guarantee an employee the right to appeal an adverse action to the Merit System Protection Board (MSPB) or to arbitration, except those involving a mandatory removal offense, and I 

hope we have a chance to talk about that later this morning. 

Further, in adjudicating employee appeals, regardless of forum, 

including the Mandatory Removal Panel, the final regulations place 

a heavy burden on the Agency to prove its case. Indeed, in another 

change resulting from the meet and confer process, the regulations 

actually establish a higher overall burden of proof, a preponderance 

of evidence standard for all adverse actions, whether based on conduct or performance. While this standard currently applies to conduct-based adverse actions today, it is greater than the substantial 

evidence presently required in performance-based actions. In DHS, 

it’s now required for both. 

Finally, the regulations authorize MSPB, as well as arbitrators, 

to mitigate penalties in adverse actions. The proposed regulations 

precluded such mitigation, as does current law, in performancebased adverse actions. However, the final regulations allow mitigation when the Agency proves its case against the employee by a 

preponderance of evidence. The standard in the regulations is admittedly tougher than those the MSPB and private arbitrators 

apply, but far more stringent in performance cases where mitigation today is not even permitted. 

However, given the extraordinary powers entrusted to the Department and its employees and the potential consequences of poor 

performance or misconduct to its mission, DHS should be entitled 

to the benefit of any doubt in determining the most appropriate 

penalty. That is what the new mitigation standard is intended to 

do, but it is balanced by the higher standard of proof overall. 

Finally, let’s look at labor relations. Accountability must be 

matched by authority, and here the current law governing relations 

between labor and management is out of balance. Its requirements 

potentially impede the Department’s ability to act, and that cannot 

be allowed to happen. 

Now, you will hear that the current law already allows the Agency to do whatever it needs to do in an emergency. That is true. 

However, that same law does not allow DHS to prepare or practice 

for an emergency, to take action to prevent an emergency, or to reassign or deploy personnel and new technology to deter a threat, 

not without first negotiating with unions over implementation, impact, procedures, and arrangements. On balance, the regulations 

ensure that the Department can meet its most critical missions, 

but in a way that still take union and employee interests into account. 

15

Mr. Chairman, if DHS is to be held accountable for homeland security, it must have the authority and flexibility essential to that 

mission. That is why Congress gave the Department and OPM the 

ability to create this new system, and that is why we have made 

the changes that we did. In so doing, we believe we have succeeded 

in striking an appropriate balance between union and employee interests on one hand and the Department’s mission imperatives on 

the other. 

Mr. Chairman, that concludes my statement. I would be happy 

to answer any questions. 

Senator VOINOVICH. Thank you very much. We will have 5 

minute rounds of questions by Members of the Subcommittee. 

To both Mr. James and Dr. Sanders, are there any Federal agencies successfully using pay-for-performance that you intend to use 

as benchmarks in going forward with the program? 

Dr. SANDERS. Mr. Chairman, you know how much time we spent, 

not required by law, before we even began drafting the proposed 

regulations with a joint labor-management design team. That design team went all over the country looking at, among other things, 

pay-for-performance systems, including those that have been tried 

and tested in the Federal Government. We looked at all of them, 

visited many of them. There are benchmarks out there. This is not 

uncharted territory. There are between 70,000 and 80,000 Federal 

employees under pay-for-performance systems today. We have 

learned from them. One of the things we learned, for example, was 

to build your performance appraisal system first before you apply 

it to pay-for-performance. That is something that has now been incorporated into the Homeland Security implementation schedule. 

We have also learned from mistakes, for example, the Federal 

Aviation Administration’s current internal equity problems with its 

collectively-bargained pay system on one hand and its administratively-established system on the other. I hope we get a chance to 

talk about that. 

But there are benchmarks. There is experience. This is not uncharted territory, and we are confident that we have learned both 

the good lessons and the bad from others and will be able to proceed and not repeat some of the mistakes. 

Senator VOINOVICH. Mr. James, would you like to comment? 

Mr. JAMES. I think, Senator, as you know, I am from outside the 

government, and so I find that we sort of look at this pay-for-performance issue like it is in fact a new issue. In my 25 years of practice I do not personally know of any Fortune 500 company that 

bases pay on longevity, and the answer is that we do plan to benchmark against what is out there, what is happening at some of the 

other agencies in government, but we also plan to draw on the experience and expertise of what has happened in the private sector. 

I think it is analogous. And I think we are not going to just look 

at what is going on in the private sector when it comes to, for example, the pay issue. We are going to look at those folks against 

who we compete, and that could be State Governments who hire 

law enforcement or local governments that hire law enforcement 

people or the like. 

16

So we are open to exploring what is the best most effective way 

to in fact get to pay-for-performance, get to performance management, get to market surveys. 

Senator VOINOVICH. Are you planning on implementing this system in an incremental basis or will you try to implement it all at 

once? 

Mr. JAMES. Absolutely and unequivocally we are not going to do 

this all at once. Our original plan was to roll this out in basically 

2 years after the meet and confer. We had push back from the 

union, and I would suggest appropriately so, that this was a heavy 

lift, that we were not going to have a chance for input, evaluation, 

for tinkering, for adjustments, for focus groups with employees, for 

getting sustained feedback from all of our stakeholders. We have 

now—our first actual impact in the pay-for-performance arena, 

which will be for about 8,000 people in 2007. The majority of our 

employees will not be impacted in terms of having the performance 

management, that is how they do under the performance management system, impact their pay until 2009. 

I think that was an excellent suggestion by the union. We had 

colleagues who said that is the right way to do it, get it right, take 

it slow. We clearly are not going to do this quick and fast, and we 

may have to make other adjustments along the way, sir. I mean 

I think the data is going to drive, and it should drive, how we 

make the corrections and how fast we continue to roll this out. 

Senator VOINOVICH. Mr. Walker, do you have any comments on 

the difficulty of implementing an effective pay-for-performance and 

performance management system? One issue we talked about using 

a pass/fail rating system. 

Mr. WALKER. Right. 

Senator VOINOVICH. What is your opinion of a pass/fail system? 

Do you think that the pass/fail system is appropriate for DHS at 

the entry-level band? 

Mr. WALKER. I do not like pass/fail systems under any scenario. 

I do not think they can result in meaningful differentiation in performance levels. 

I think a three standard system is going to be difficult to create 

meaningful distinctions in performance. Time will tell, but I have 

my doubts about that. I think it is important to get it fair rather 

than fast. I would compliment the Department in recognizing the 

need to move on an installment basis and to employ a phased implementation approach. I also would compliment them in recognizing that you have to have the infrastructure in place which 

means a modern, effective, credible, and hopefully validated performance appraisal system, that you go through at least one full 

cycle before you think about tying it to pay. So I think they clearly 

have made a number of changes, but as the old saying goes, the 

devil is in the details and a lot of the details are not known yet. 

So we look forward to seeing those details. 

Mr. JAMES. Senator, if I could just comment on the pass/fail and 

try to bring some clarity to that issue, we are going to walk at this 

very slow. As a generic proposition we do not see pass/fail as the 

right way to go in terms of across the board. We only wanted to 

preserve the right to talk about pass/fail in the context of entrylevel development employees. For example, we have employees who 

17

are in school for 6 to 9 months. We have employees who if they do 

not pass a certain course in terms of technology have to go back. 

We have employees who if they do not pass marksmanship, they 

are not certified to carry a gun, they have to go back. They cannot 

go forward. 

So a lot of what happens, at least in our law enforcement community and our folks at the border in their developmental stages, 

is in fact benchmarked or determined by a pass/fail. So we wanted 

to have the option available at that level and at that level only to 

be able to use that as a mechanism because in some instances individuals will not even have a supervisor for 9 months, and in some 

instances they may not have a supervisor for a year because if they 

do not get certified to carry a gun, they may in fact be pass/fail—

up or out. That is the limitation. 

So when we talk about pass/fail our notion is, and my personal 

professional judgment is, coming from the private sector, is that we 

do not want to use pass/fail anywhere beyond the entry level, the 

training level, and the school level. 

Senator VOINOVICH. Thank you for your clarification. Senator 

Akaka. 

Senator AKAKA. Thank you very much, Mr. Chairman. 

Mr. James and Dr. Sanders, I would be remiss if I did not thank 

you and your respective staff for the hard work that was done on 

these regulations, and I also thank you for your testimony today. 

Let me begin my time with an observation. Although the regulations are not specific about the new pay-for-performance system, I 

believe that given the obvious anxiety employees are feeling in the 

Administration’s proposal to expand DHS like flexibilities to other 

agencies, it would have been advisable for DHS and OPM to be 

more specific about pay-for-performance. 

Understanding the complexity of the issue, I trust that you will 

provide detailed information on the new pay-for-performance system to our Committee and this Subcommittee well before implementation, and I look forward to that. 

I also would like to say to Mr. Walker that it is always good to 

have you with us, and I have enjoyed working with you, and you 

know how much I value your opinion. Throughout your tenure as 

Comptroller General you have done much to foster accountabilities, 

transparency and employee involvement in the Federal Government. I know that the Governmental Accountability Office has a 

great deal of experience in implementing a pay-for-performance 

program. Would you discuss the amount and the type of training 

GAO employees have received and will receive on this system? 

Mr. WALKER. Thank you, Senator Akaka. First, GAO has had 

broad banding since the late 1980’s, so this is not a new concept 

to us. We have years of experience dealing with broad banding. We 

have had some form of pay-for-performance for a significant majority of our workforce since the late 1980’s, but as a result of the latest round of legislation that Congress gave us in 2004, we now 

have the additional flexibility to be decoupled from the Executive 

Branch and to be able to have a more market based and performance oriented compensation system going forward than we had in 

the past. 

18

We now have a situation where all but less than 10 of our employees are covered by broad banding. That is out of 3,250. All but 

about 10 will be covered by pay-for-performance. We are doing this 

in phases or installments. We are conducting market-based compensation studies in order to be able to ascertain what the appropriate compensation ranges are for the different career streams or 

occupations and the different levels of responsibility and authority. 

We have completed that with regard to about 80 percent of our 

workforce, and we are about to undertake it for the balance of our 

workforce. 

Importantly, before we ended up implementing any new performance based compensation flexibilities we had designed new competency based performance appraisal systems that were developed 

in conjunction with our employees, that were validated by our employees. We also incorporated a number of safeguards to help assure consistency and protect against abuse as a supplement to the 

external appeal rights that our employees have though the Personnel Appeals Board, which is an independent body relating to 

GAO. There was a variety of training that was provided at each of 

the major key points in time in order to try to help people understand the various elements that were necessary to make it successful. 

I guess the last thing I would say on this is I personally spent 

a tremendous amount of time on this. I personally communicated 

with our employees through live closed circuit television and other 

mechanisms on numerous occasions and I will continue to do that. 

These so-called CG charts are designed to address what we are 

doing, why we are doing it, how and when we will do it. We also 

have a GAO Employee Advisory Council lead, which is a democratically elected group that represents our employees. We treat them 

the same as our top executives as to consultation on key issues. 

EAC members have and do ask me questions in front of all of our 

employees on a recurring basis about these and other matters of 

mutual interest and concern. 

But training is critically important, and we have done a lot of it, 

but you can always do more. 

Senator VOINOVICH. Senator Pryor, thank you very much for joining us today. 

OPENING STATEMENT OF SENATOR PRYOR 

Senator PRYOR. Thank you, Mr. Chairman, and again, thank you 

for your leadership on this issue. I know you are passionate about 

trying to make government run more efficiently and make sense, 

so thank you for your leadership once again. 

Let me, if I may, start with Dr. Sanders. I guess I do not have 

a copy of your statement in my packet, but the last sentence you 

said during your prepared remarks, you said something about 

needing to find the appropriate balance between—tell me what you 

said again. 

Dr. SANDERS. The appropriate balance between the Department’s 

mission imperatives and employee and union interests. 

Senator PRYOR. You are confident that we found that balance? 

Dr. SANDERS. Yes, sir. 

19

Senator PRYOR. Mr. James, you said in your statement a few moments ago that when you look at Fortune 500 companies you are 

not aware of any company that ties pay to longevity? 

Mr. JAMES. Yes, sir. I think I indicated that in my experience of 

25 years of litigating and representing Fortune 500 companies, I 

am not personally aware of any company that is a Fortune 500 

company that ties pay to longevity. Yes, that is what I said. 

Senator PRYOR. Is it not true in our economy in most instances 

that the longer a person is with a company the more he or she is 

paid; is that not generally true? 

Mr. JAMES. In the law firm, sir, that is not true. There are people 

who go up or out, and that is private sector. I think there is sometimes a great correlation between experience and your pay, but 

when I look at the civil service system, for example, I think it actually discriminates against people who are older, more experienced, 

because it assumes that your first years that you learn at a faster 

rate and you will get a pay increase every year. Then when you get 

to be in your 6th or your 10th year, it assumes that you only get 

a pay increase based on the longevity of 3 years. 

What we are trying to do is, like Dr. Sanders said, is find parity, 

find a balance. And in the pay area, yes, people tend to get paid 

more the wiser and more they work. But the way the government 

system is now, in fact, is to the contrary. It assumes that older people cannot learn or at least it assumes older workers are not going 

to learn as fast. 

Senator PRYOR. Is that not inconsistent with what you said a few 

moments ago, that you are not aware of any Fortune 500 company 

where pay is tied to longevity? Is it not in some way at least loosely 

related to longevity? 

Mr. JAMES. Sir, I would respectfully disagree. I would say in the 

law firm it is related to competencies. 

Senator PRYOR. In a law firm? 

Mr. JAMES. In the law firm I am saying is related to competencies——

Senator PRYOR. Law firms are not Fortune 500 companies and 

the government is not a law firm. So you said——

Mr. JAMES. I understand that, but if I could finish. 

Senator PRYOR. You said in your statement that you are not 

aware of any Fortune 500 company that ties pay to longevity. 

Mr. JAMES. In my experience, that is correct, sir. 

Senator PRYOR. And now the example you are giving is the law 

firm. 

Mr. JAMES. I was going to give some additional examples. 

Senator PRYOR. I used to be in a law firm and I know how that 

works and I know that there are a lot of factors oftentimes that law 

firms consider in paying their employees and partners, etc. But go 

ahead. 

Mr. JAMES. On the management side, for example, like with 

freight forwarders or with companies like airlines, managers are 

paid for delivering the results. It is results oriented business. That 

is my general observation. 

Senator PRYOR. Look, again, in the private sector, oftentimes results mean profitability. And in the government results are not tied 

by profitability because the government is not there to make a profVerDate 0ct 09 2002 13:25 Jun 28, 2005 Jkt 020171 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 C:\DOCS\20171.TXT SAFFAIRS PsN: PHOGAN
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it. To me there have to be other standards in which you measure 

results in government. Do you agree with that? 

Mr. JAMES. I would agree with that, sir, with the modification 

that the needs are the same for example. Perhaps such a concern 

about the retention of employees because if you do not it is expensive. The government should have that same concern. The private 

sector is concerned about the ability of employees to learn new 

skills, new competencies, as whatever field they are in changes. 

The government should have that very same concern. I cannot disagree with your comment that it is nonprofit, but I think that what 

we need to bring from the private sector is the attitude, is that people in the government are public servants and we need to get better each year. We need to raise the bar. We need to have concern 

about excellence. 

Senator PRYOR. I agree with that 100 percent. I mean I am all 

about trying to bring the best private sector ideas into government, 

but I also understand, or I recognize at least that there is a material difference in government service versus working in the private 

sector. 

I am sorry. Mr. Walker, did you want to add something to that? 

Mr. WALKER. When you are done, Senator. 

Senator PRYOR. I am done, go ahead. 

Mr. WALKER. Senator, clearly there are differences between the 

public sector and the private sector. I have 20 years of experience 

in the private sector and now about 12 years in the public sector. 

There are some compensation arrangements in the private sector 

that are primarily longevity based or heavily longevity based. They 

typically involve certain types of occupations and many times collective bargaining agreements. 

I think what is important is to recognize the fact that for many 

Executive Branch agencies that are covered by the General Schedule system, 85 percent plus of the annual pay raises that any individual will receive on average has nothing to do with skills, knowledge, or performance. 

Senator PRYOR. But is not a lot of that the cost of living adjustment? 

Mr. WALKER. It is several things. First, Senator, you are correct 

in saying that the annual across the board adjustment, which as 

you know is much more than cost of living because last year it was 

3.5 percent, while cost of living was 2.1 to 2.3 percent. But in addition to that you have step increases which are merely the passage 

of time, and furthermore, you can have merit step increases which 

should be performance related. However, I would also suggest that 

because of the poor performance appraisal and management systems in the government they do not always correlate as much with 

exceptional performance as they should. 

So a vast majority of annual compensation increases under the 

GS system have nothing to do with skills, knowledge and performance, and it needs to be more skills, knowledge and performance 

oriented while having safeguards to prevent abuse. 

Dr. SANDERS. Senator, can I interject? 

Senator PRYOR. Sure. 

Dr. SANDERS. You may not know this, but today Federal employees whose performance is rated unacceptable still get the across the 

21

board adjustments and locality supplements, even though their performance is rated unacceptable. 

Senator PRYOR. In fact, I agree with everything David Walker 

said a minute ago. I think that the government needs to do a better 

job—and I know I have heard Chairman Voinovich talk about this 

as well—the government needs to do a better job of managing 

itself. I think we all recognize that, and I think that we all have 

that common goal. I think the question is, what are the appropriate 

steps to get there? 

I think that you talked about, Mr. Walker, in your statement you 

said something to the effect that it is more important to get it fair 

rather than fast or something to that effect. I agree with you. I 

think we just need wisdom here as we pursue this course, to try 

to make government more efficient and more effective, but also I 

think that we do need to recognize the inherent difference in government and in business, and we should take the very best ideas 

that business has to offer, take them from corporate America or 

world models, whatever they may be, and try to incorporate them 

into government, but in my mind it is not a one-for-one proposition. 

We need to take elements of the very best and implant it in government. Thank you, Mr. Chairman. 

Senator VOINOVICH. Thank you, Senator. 

I would like to have a 3 minute round of questions for each of 

us. I think there are some other issues on people’s minds. 

Mr. James, implementing the new personnel system will require 

a massive investment in training and retraining of the workforce. 

My question then, is the workforce large enough to participate in 

the training or will you need to bring in outside help, for example 

some float group so that front line employees can receive the training they need, without shortchanging the Department’s day-to-day 

mission? Furthermore, do you have enough people in house to conduct the training or are you going to hire assistance? What are 

your thoughts as to how this will happen? Finally, the President’s budget requested $53 million in fiscal 

year 2006 for implementation. Is this adequate? Do you have any 

idea of what the implementation cost will be for future years? 

Mr. JAMES. Thank you, Senator. I cannot agree with you more 

that training and communications are at the very core of what we 

need to be about if we are going to make this work and if we are 

going to make it fair and if we are going to make it and get it right. 

I would like to thank Congress and the Senators who are assuring 

us that we had $10 million alone for training in our budget in this 

current fiscal year. We have asked for another $10 million. We are 

hopeful we will have that money because we do need to change the 

culture and we need to inform our employees, we need to inform 

our managers and we need to be able to train the trainers. I am 

convinced that with the $10 million we have this year and hopefully with the $10 million we will have next year, that we will be 

able to get the training done. We will have to hire some outside experts. We will have to hire some people who have done this before. 

We have also talked, not about a float, sir, but we have talked 

about some other issues like through the Chief Human Capital Officer’s Council, I have offered the opportunity for individuals and 

other agencies who anticipate they may be going down the same 

22

road as we are in 2 to 3 years, to send people over to work with 

us, to help us with some of the training, help us with some of what 

I would describe as getting a fresh set of eyes on this, both as to 

the training and as to the procedures or the regulations that we 

are writing. As to your last question, the $53 million, yes, that is adequate, 

and the reason it is adequate is because when we originally requested monies, we had anticipated rolling out the pay-for-performance in 2 years. We basically now have elongated that and we believe by elongating that we will in fact have sufficient monies to 

get this done and get it done right, get it done fair, and get it done 

with the kind of input that it will take. 

Senator VOINOVICH. Senator Akaka. 

Senator AKAKA. Thank you very much, Mr. Chairman. 

Dr. Sanders, in addition to serving as Ranking Member on this 

Subcommittee I am proud to be the Ranking Member on the Senate Veterans’ Affairs Committee and preserving veterans’ preference is very important to me. Would you please explain how veterans’ preference is protected under the DHS regulations, and do 

you know whether there are any changes to current veterans’ preference regulations or statutes either in principle or in practice? 

Dr. SANDERS. Sir, I can state unequivocally that veterans’ preference has not been diminished at all in any way whatsoever in 

these final rules. In fact, while there were a number of options that 

considered that, both DHS and OPM said unequivocally, we are not 

going to touch veterans’ preference. 

I will give you an example where in fact we have extended the 

privileges we accord our veterans and which they deserve. In the 

case of employees who first come to the Department, we have created something called an initial service period that can be up to 2 

years, primarily to accommodate extended training and development cycles, some of the occupations that Mr. James mentioned. 

During that initial service period it is easier to remove those employees. In the case of veterans, we have retained the current 12 

months probationary period. Once they complete 12 months they 

get full due process and hearing rights where non-preference eligibles do not until the conclusion of that initial service period. 

We have extended that same right to veterans in excepted service appointments. Where today a veteran, in an excepted service 

appointment, does not have any rights until after 2 years, we have 

now given that veteran rights after 12 months, full appeal rights 

to MSPB if there is any adverse action taken. So we have not only 

protected what exists, but we have extended it. 

Mr. JAMES. Could I just provide, sir, a footnote to that that may 

be of interest to you? 

Senator AKAKA. Yes, Mr. James. 

Mr. JAMES. Secretary Ridge and I met with a coalition of about 

25 veterans’ groups in the month of December, and at that meeting 

Secretary Ridge committed that he would reinforce his commitment 

to making sure that veterans’ affairs and veterans’ preference and 

veterans’ issues were a primary concern to the Department, and he 

promised that group that he would issue a management directive. 

I am pleased to tell you that his very last act on his very last 

day was to issue a management directive on veterans’ affairs and 

23

how important it is to the Department, and suggested some, what 

I would describe as some review procedures that were mandatory 

when veterans were being considered for jobs, and if the Subcommittee will permit, I will be happy to either share that with the 

Subcommittee or provide that to the Senator. 

Senator AKAKA. Thank you. As you know, because of the situation today and the deployment of many reservists and National 

Guard troops, this question has become very important, and I 

thank you so much for your responses. 

Thank you, Mr. Chairman. 

Senator VOINOVICH. Senator Pryor. 

Senator PRYOR. I will try to keep mine shorter this time because 

I went a little long last time. Sorry about that. 

But if I may, Dr. Sanders, in Washington they call this a 

‘‘prebuttal’’ but we are going to have a witness here in a little bit. 

I think he is on the next panel, John Gage, President of the AFGE, 

and I have looked through some of his testimony, and in his testimony he talks about actions that employees have taken to try to 

enhance security and improve how the various agencies have operated, and he goes through some policies that they have challenged 

and they think that on the grounds they have a better way to do 

things, etc. We will let him talk about that. 

But are you aware of any real concrete examples of where the 

existing personnel system that we have in place today has left 

America less protected than it should be? 

Dr. SANDERS. I will let others judge whether America is less protected, but let me give you some examples of where we believe the 

current system, particularly the current collective bargaining system needs to be recalibrated, and that is what we have tried to do 

in the final regulations. 

Under current law, before management can exercise any of its essential operational rights, let us say, for example, the introduction 

of new search or surveillance technology, it must first bargain with 

the union over implementation, impact, procedures, and arrangements. It must delay acting until those negotiations are concluded. 

Senator PRYOR. So it is too cumbersome, too slow? 

Dr. SANDERS. Yes. Here is the balance we have tried to strike in 

the regulations, and there are examples: The introduction of personal radiation detectors, vehicle and container inspection systems, 

firearms policy, etc. All of those actions are reserved to management, but the law requires bargaining over implementation before 

management can institute them. 

What we have tried to do in the final regulations is say management can go ahead and institute them. In those cases, the one I 

have just given you, where there is literally a long-lasting effect—

we know those policies or technologies are going to be in place—

management has to bargain over the impact of those new changes, 

and deal with appropriate arrangements for employees, but after 

they have acted. They do not delay action, but they still bargain 

afterwards. 

Similarly with work assignment and deployment procedures. 

There are examples, Senator, where the deployment of personnel 

within a commuting area from a seaport to an airport is delayed 

because of negotiated work rule procedures, or where those work 

24

rule procedures require you to send the most senior employee when 

the least senior would do or vice versa. 

Here is the balance we have tried to strike. Some procedures remain fully negotiable. Those procedures that deal with so-called 

personnel management rights, procedures that deal with discipline 

and promotion and performance management, those remain fully 

negotiable, as negotiable in the final rules as they are under current law. But those procedures that deal with operational matters, 

the assignment of personnel, the deployment of personnel, those 

are no longer subject to collective bargaining, but the final regulations obligate the Department to sit down and confer with the 

unions over those procedures for 30 days to try to reach agreement, 

to try to work out their differences, but ultimately they do not 

make them subject not to just collective bargaining, but resolution 

by some third party who has no accountability for the Department. 

The other thing that we added in the final regulation, Senator, 

is the ability of employees and the union to enforce whatever rules 

and regulations management may establish through the negotiated 

grievance and arbitration procedures. While we may have limited 

the union’s right to negotiate some procedures, those procedures 

that deal with operational matters, we have retained an employee’s 

right and the union’s ability to try to enforce those procedures, 

make sure management is doing what it said it was going to do, 

through grievance and arbitration. 

So again, we have tried to strike a balance. It has not all gone 

away as some would allege. 

Senator PRYOR. Thank you, Mr. Chairman. 

Senator VOINOVICH. I would like to thank the panel. I look forward to future oversight hearings that we will have. Mr. Walker, 

I appreciate your continued interest in what is happening in Homeland Security. 

I would like to add, Mr. James and Dr. Sanders, I am very much 

impressed with the detail that you have provided. You understand 

what you are doing, and that is very comforting to me. Often people are not as familiar with some of the details as you are, and I 

am impressed. I thank you for the time and effort you have put 

into it. 

In the future the Subcommittee will examine specific areas of the 

new human resources system, such as the transition from the General Schedule to pay banding, the fairness of training, both generally for the DHS workforce and specifically for the new personnel 

system, and whether employees’ voices are heard and responded to 

as the personnel system is implemented. 

In addition we will evaluate the effectiveness of the top leadership of the Department and the thoroughness of DHS’s communication strategy. For example, I am very impressed with what Mr. 

Walker has discussed regarding his involvement in communicating 

with GAO employees. So often things get started and then employees are not informed. As a result, rumors are circulated and people 

believe things that are not a fact. 

Thorough communication for the new personnel system is extremely important. 

Furthermore, the performance management system, including 

the Department’s human capital plan, is something that this SubVerDate 0ct 09 2002 13:25 Jun 28, 2005 Jkt 020171 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 C:\DOCS\20171.TXT SAFFAIRS PsN: PHOGAN
25

committee will continue to monitor. I want you to know that I want 

the new personnel system to be a success. I want it to be a success 

because we are depending on this Department for our security. I 

am very concerned about the stress that many Americans feel in 

terms of the potential of terrorism. I would like for my children and 

grandchildren to live in an America that they know is secure. I do 

not want them to have these worries with them every day as they 

go to and from work or to school. It is a heavy, heavy responsibility 

that you have. 

Another issue as you know, is on whether the similar reforms 

should be extended to the rest of the government. I have talked to 

the Chairman of this Committee about this issue. How well the Department of Homeland Security implements this system will heavily influence whether those of us in Congress are going to be receptive to that proposal. 

Thank you for being here. 

Mr. JAMES. Senator, if I could just on a personal note, thank you, 

and I promise you personally that I heard your comments about 

the need to continue the collaboration, and whether it is performance management or labor relations, where we do have significant 

differences, we will continue. I will personally continue to keep the 

communication lines open because it is critical that we involve our 

employee representatives. I will take your advice, not as a criticism 

but just as a admonishment that I need to do better, that we will 

do better going forward. I thank you. 

Senator VOINOVICH. Thank you. 

We will take a 5-minute recess as the next panel comes to the 

table. 

[Recess.] 

Senator VOINOVICH. If our second panel will come to the witness 

table, I appreciate your patience. 

Do you swear that the testimony you are about to give is the 

truth, the whole truth, and nothing but the truth, so help you, 

God? 

Mr. PERKINSON. I do. 

Ms. KELLEY. I do. 

Mr. GAGE. I do. 

Mr. BROWN. I do. 

Mr. MANN. I do. 

Senator VOINOVICH. Let the record show that the witnesses answered in the affirmative. 

Our next panel consists of representatives of the employees at 

the Department of Homeland Security: Darryl Perkinson is the National Vice President for the Federal Managers Association; Colleen 

Kelley is President of the National Treasury Employees Union; 

John Gage is the National President of the American Federation of 

Government Employees; Richard Brown is President of the National Federation of Federal Employees; and Kim Mann is the General Counsel of the National Association of Agriculture Employees. 

I want to thank all of you for coming today. I know that you have 

spent the past 2 years working tirelessly with the Department of 

Homeland Security and the Office of Personnel Management on developing the new human resources management system. I also 

know that you have many concerns. Some of you have made them 

26

1The prepared statement of Mr. Perkinson appears in the Appendix on page 94. 

known to me privately, and we do look forward to hearing your testimony today. 

Mr. Perkinson, we will start with you. As I mentioned to the 

other panel, I would like you to try to limit your remarks to 5 minutes. Your complete statement will be printed in the record. Mr. 

Perkinson. 

TESTIMONY OF DARRYL A. PERKINSON,1 NATIONAL VICE 

PRESIDENT, FEDERAL MANAGERS ASSOCIATION 

Mr. PERKINSON. Chairman Voinovich, Ranking Member Akaka, 

and distinguished Members of the Subcommittee, I sit before you 

today as the National Vice President of the Federal Managers Association, which represents the interests of nearly 200,000 managers, supervisors, and executives in the Federal Government, including those managers in the Department of Homeland Security. 

I am presently a supervisor training specialist at Norfolk Naval 

Shipyard in Portsmouth, Virginia, where I have been in management for nearly 20 years. Let me begin by thanking you for allowing me this opportunity to express FMA’s views regarding the final 

personnel regulations at DHS. 

I hope that we can continue to have more opportunities in the 

future to engage in this dialogue about the best way of governing 

the most efficient and effective workforce to protect American soil. 

Managers and supervisors are in a unique position under these 

final regulations. Not only will they be responsible for the implementation of the Department’s new personnel system, they will 

also be subjected to its same requirements. As such, managers and 

supervisors are pivotal to ensuring the success of this new system. 

We at FMA recognize that change does not happen overnight. We 

remain optimistic that the new personnel system may help bring 

together the mission and goals of the Department with the on-theground functions of the Homeland Security workforce. 

Two of the most important components to implementing a successful new personnel system are training and funding. Managers 

and employees need to see leadership from the Secretary on down 

that supports a collaborative training program and budget proposals that make room to do so. We also need the consistent oversight and appropriation of proper funding levels from Congress to 

ensure that both employees and managers receive sufficient training in order to do their jobs most effectively. 

As any Federal employee knows, the first item to get cut when 

budgets are tightened is training. Mr. Chairman, you have been 

stalwart in your efforts to highlight the importance of training 

across government. It is crucial that this happens in the implementation of these regulations. Training of managers and employees on 

their rights, responsibilities, and expectations through a collaborative and transparent process will help to allay concerns and create an environment focused on the mission at hand. 

Managers have also been given the authorities under the final 

regulations in the areas of performance review and pay-for-performance. We must keep in mind that managers will also be reviewed on their performance and hopefully compensated accordVerDate 0ct 09 2002 13:25 Jun 28, 2005 Jkt 020171 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 C:\DOCS\20171.TXT SAFFAIRS PsN: PHOGAN
27

ingly. As a consequence, if there is not a proper training system in 

place and budgets that allow for adequate funding, the system is 

doomed to failure from the start. Our message is this: As managers 

and supervisors, we cannot do this alone. Collaboration between 

manager and employee must be encouraged in order to debunk the 

myths and create the performance- and results-oriented culture 

that is so desired by these final regulations. 

Managers have also been given greater authorities in the performance review process that more directly links employees’ pay to 

their performance. We believe that transparency leads to transportability, as intra-department job transfers could be complicated by 

the lack of a consistent and uniform methodology for performance 

reviews. 

FMA supports an open and fair labor relations process that protects the rights of the employees and creates a work environment 

that allows employees and managers to do their jobs without fear 

of retaliation or abuse. 

The new system has relegated the authority for determining collective bargaining rights to the Secretary. Toward this end, the recognition of management organizations such as FMA is a fundamental part of a collaborative and congenial work environment. 

Title 5 CFR 251/252 allows FMA as an example to come to the 

table with DHS leadership and discuss issues that affect managers 

and supervisors. While this process is not binding arbitration, the 

ability for managers and supervisors to have a voice in the policy 

development within the Department is crucial to its long-term vitality. 

There has also been a commitment on the part of OPM, DHS, 

and DOD to hold close the Merit System principles, and we cannot 

stress adherence to those timely standards enough. However, we 

also believe there needs to be additional guiding principles that 

link all organizations of the Federal Government within the framework of a unique and single civil service. 

We, at FMA, are cautiously optimistic that the new personnel 

system at DHS will be as dynamic, flexible, and responsive to modern threats as it needs to be. While we remain concerned with 

some areas at the dawn of the system’s rollout, the willingness of 

OPM and DHS to reach out to employee organizations, such as 

FMA, is a positive indicator of collaboration and transparency. We 

look forward to continuing to work closely with Department and 

Agency officials. 

Thank you again, Mr. Chairman, for the opportunity to testify 

before your Subcommittee and for your time and attention to this 

most important matter. Should you need additional feedback or 

have any questions, we would be glad to offer our assistance. 

Thank you. 

Senator VOINOVICH. Thank you, Mr. Perkinson. 

Colleen Kelley, welcome back. You have appeared before this 

Subcommittee on many occasions, and I am grateful for your commitment to open communication on these important issues. I know 

my staff appreciates the ongoing communication they have with 

your staff. Thank you for being here today. 

28

1The prepared statement of Ms. Kelley appears in the Appendix on page 110. 

TESTIMONY OF COLLEEN M. KELLEY,1 PRESIDENT, NATIONAL 

TREASURY EMPLOYEES UNION 

Ms. KELLEY. Thank you very much, Senator. Chairman Voinovich, and Senator Pryor, I really appreciate the opportunity for 

NTEU to share its views with you on the new DHS personnel system. Fifteen thousand employees in the Department are represented by NTEU and will live under these regulations. 

It is unfortunate that after 2 years of collaborating with DHS 

and OPM on this new system that I come before the Subcommittee 

today unable to support the final regulations. 

Because these regulations fall woefully short on a number of the 

Homeland Security Act’s statutory mandates in the area of collective bargaining and employee appeal rights, NTEU, along with our 

fellow Federal employee unions, has filed a lawsuit in Federal 

court. The lawsuit seeks to prevent DHS and OPM from implementing these final regulations related to these areas and would 

order DHS and OPM to withdraw the regulations and issue new 

regulations that fully comply with the relevant statutes. 

The Homeland Security Act requires that any new human resource management system ‘‘ensure that employees may organize, 

bargain collectively, and participate through labor organizations of 

their own choosing in decisions which affect them.’’ NTEU believes 

that the final regulations do not meet this statutory requirement 

in the following ways: 

Under the final personnel regulations, the responsibility for deciding collective bargaining disputes will lie with a three-member 

DHS Labor Relations Board that is appointed by the Secretary 

with no Senate confirmation. A true system of collective bargaining 

demands independent, third-party determination of disputes. The 

final regulations do not provide for that. 

Second, under the final regulations, not only will management 

rights associated with operational matters, such as deployment of 

personnel, assignment of work, and the use of technology, be nonnegotiable, but even the impact and implementation of most management actions will be non-negotiable. 

Third, the final regulations further reduce DHS’ obligation to collectively bargain over the already narrowed scope of negotiable 

matters by making department-wide regulations non-negotiable. 

Bargaining is currently precluded only over government-wide regulations and Agency regulations for which a compelling need exists. 

A real-life example of the adverse impact of the negotiability limitations on both employees and the Agency will be in the area of 

determining work shifts, even when these shifts last for more than 

60 days. The current system provides that employees have a transparent and explainable system. After management determines the 

qualifications needed for employees to staff shifts and assignments, 

negotiated processes provide opportunities for employees to select 

shifts that take into consideration important quality-of-life issues of 

individual employees, such as child care, elder care, the ability to 

work night shifts or rotating shifts. There will be no such negotiated process under the regulations as issued. The impact of these 

29

changes will have a huge impact on employees and be a huge detriment to Homeland Security’s recruitment and retention efforts. 

One of the core statutory underpinnings of the Homeland Security Act was Congress’ determination that DHS employees should 

be afforded due process in appeals they bring before the Department. The HSA clearly states that the DHS Secretary and OPM 

Director may modify the current appeals procedures of Title 5 only 

in order to ‘‘further the fair, efficient, and expeditious resolution of 

matters involving the employees of the department.’’ Instead, the 

final regulations undermine this statutory provision by eliminating 

the Merit System Protection Board’s current authority to modify 

unreasonable Agency-imposed penalties. The new regs authorize 

the MSPB to modify penalties only where they are ‘‘wholly unjustified’’. This ‘‘wholly unjustified’’ is a new standard that will be virtually impossible for DHS employees to meet. 

The final regulations also provide the Secretary with unfettered 

discretion to create a list of mandatory removal offenses that will 

only be appealable on the merits to an internal DHS Mandatory 

Removal Panel appointed by the Secretary. 

The President’s 2006 budget again proposes that a similar proposal that exists in the IRS today should be dropped. It is known 

as the ‘‘10 deadly sins,’’ and the President’s budget wants it removed from the IRS to allow the Agency more discretion. This draconian, inflexible provision should also be dropped from the DHS 

regulations. 

The final regulations as they relate to changes in the current 

pay, performance, and classification systems of DHS employees 

also remain woefully short on details. Currently, performance evaluations have little credibility among the workforce, but it appears 

that now these subjective measures will become the determinant of 

individual pay increases under the new system. This will lead to 

more recruitment and retention problems at DHS, not less. This 

kind of a system will be particularly problematic for the tens of 

thousands of DHS employees, such as CPB officers, who perform 

law enforcement duties where teamwork is critically important to 

their successful achievement of the Department’s goals. 

Based on our serious concerns with regard to these regulations, 

NTEU urges both Congress and the Administration not to extend 

them throughout the Federal Government as proposed. As was already noted, the Homeland Security Act provided for these changes 

based on national security considerations. Those considerations do 

not apply to the rest of the government. 

I appreciate and agree with the comments made by several Senators on this Subcommittee that it would be premature to expand 

these rules until there is at least some sense of their impact in 

DHS. I look forward to continuing to work with this Subcommittee 

to help the Department of Homeland Security meet its critical mission. NTEU wants this Department to be successful, just as every 

American does, and I look forward to any questions you might 

have. Thank you. 

Senator VOINOVICH. Thank you. 

Mr. Gage, I had a fairly good working relationship with your 

predecessor, Bobby Harnage. Since you have been on board, you 

and I have not seen that much of each other, and I think that I 

30

1The prepared statement of Mr. Gage appears in the Appendix on page 122. 

would like to see more of you and your staff. As we move through 

this implementation process, talking about it would be very helpful 

to me. I just want you to know I would welcome your input, and 

thank you for being here today. 

TESTIMONY OF JOHN GAGE,1 NATIONAL PRESIDENT, 

AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES 

Mr. GAGE. Thank you, Senator Voinovich and Senator Pryor, it 

is a pleasure to be here. 

Mr. Chairman, DHS regulations usurp not only the rights and 

protections of our members, they also undermine the authority of 

the Congress to set the standards for a politically independent civil 

service. The DHS regulations rest upon a false premise: That carefully designed civil service procedures that have stood the test of 

time are an obstacle to homeland security, and that union representation interferes with the protection of the American public 

from terrorist threats. Neither of these premises has any validity, 

but now DHS has put forth a personnel system that undermines 

the integrity of the civil service, its political neutrality, its meritbased personnel management system, its market-based pay system, 

its public accountability, and its tolerance for democratically elected unions. 

In the year-long process of formal and informal consultation with 

those who would be directly affected by any new DHS systems, the 

unions participated in absolute good faith. We offered proposals 

that I describe in detail in my written statement that conceded the 

Agency’s right to implement any action it considered necessary to 

protect homeland security. But the Agency’s problems were process, 

and to take care of process problems they took away rights. And 

that is our objection. 

Our offers and our proposals were ignored in their entirety. The 

DHS internal review panels are also described in detail in my written statement. It is absurd to pretend that a panel consisting solely 

of management appointees can be a fair or disinterested arbiter of 

labor-management disputes. In addition, DHS has insulated this 

inevitably biased panel from outside review or accountability by 

dictating the MSPB standards for adjudication. 

Specifically, DHS has told the MSPB that in its review of the 

penalties and disciplinary actions taken against DHS employees, 

the MSPB may no longer consider the Douglas mitigating factors 

which were developed by the courts and have been successfully 

used by them for more than 25 years. These factors include the 

nature and seriousness of the offense, its relation to the worker’s 

duties, position, and responsibilities, whether the offense was intentional or inadvertent, was committed maliciously or for personal 

gain, or whether it was repeated. By DHS edict, the MSPB or arbitrators can no longer consider a worker’s past disciplinary record, 

work record, length of service, or performance. The MSPB or arbitrators may no longer check the consistency of the penalty with 

those imposed on others for the same offense. 

These are the kinds of considerations DHS has decided are either 

not modern or not consistent with homeland security, and these are 

31

the kinds of considerations that we think form the basis of a fair 

and rational and politically independent civil service system. We 

simply cannot understand how DHS can interpret its authority to 

include dictating to the MSPB in this way, and we cannot understand how anyone could connect consideration of these kinds of 

mitigating factors with exposing our Nation to an increased threat 

from terrorists. 

The DHS regulations narrow the scope of collective bargaining. 

In practice, neither management nor the affected workforce will be 

able to negotiate over work schedules, overtime, detailed selection 

methods, uniforms, dress codes, health and safety procedures, or 

travel. And the Agency has authorized itself without limitation to 

issue Agency-wide prohibitions on bargaining over the few issues 

that remain negotiable. 

Finally, DHS gave itself the right to invalidate any provision of 

an existing collective bargaining agreement. This is not flexible. 

This is not modern. This is not even credible. In the aftermath of 

the September 11 attacks, when the INS official line was that our 

Northern border was entirely safe and protected, two courageous 

front-line Border Patrol agents from Michigan stepped forward to 

tell Congress the truth about our Nation’s vulnerabilities. As a 

direct response to these disclosures, the Congress voted to triple 

the number of Border Patrol agents, immigration inspectors, and 

Customs Service personnel along the Northern border. The INS 

management’s direct response, however, was to release these Border Patrol agents for speaking out, and it was only through the 

intervention of their union and eventually the Congress that the 

retaliatory firings were avoided. Under the DHS regulations, the 

union will be unable to protect whistle-blowers in cases like these, 

and all of us will be less secure as a result. 

The Agency likes to tout its rules as being mainly about transforming the pay system into one that will reward high performance. We wish that were so. The fact is that it is not a pay system 

at all. It is unbridled discretion to set salaries on an individual-byindividual basis. There will be no necessary consistencies between 

salaries of those with identical job duties or between salary adjustments for those subject to the same market forces. 

There is no extra funding to avoid having a zero-sum competition 

that makes anyone’s gain someone else’s loss, making a mockery of 

the kind of teamwork and cooperation that is crucial for successful 

law enforcement. There is nothing in place to hold managers accountable for pay decisions. There is nothing to prevent pay-forperformance from being used to depress overall Federal pay. And 

there is no doubt that it will be used to drop the bottom out of Federal pay scales. We predict chaos, litigation, and very low morale. 

We also predict that you and your colleagues will be hearing a 

lot from DHS employees. After all, Congress established several 

chapters of Title 5 so that employee concerns, whether individual 

or collective, could be raised and resolved in an open, balanced, and 

fair system. With a statutory system, no one promised that there 

would never be problems, only that they could be resolved in ways 

that would allow employees and their supervisors to get on with 

their work and their lives. Now DHS employees’ only recourse will 

be their Representatives and Senators. 

32

1The prepared statement of Mr. Brown appears in the Appendix on page 142. 

In closing, Mr. Chairman, I would like to urge this Committee 

to initiate legislation that will restore the scope of collective bargaining for DHS and, in so doing, reinstitute checks and balances 

that are so necessary. We ask that you ensure that whatever DHS 

managers do with pay, employees at least be kept on par with the 

rest of the Federal workforce in terms of funding so that the Agency does not suffer constant turnover and the loss of experienced 

workers. We also ask you to step in and restore the mitigation 

power to neutral outside adjudicators and eliminate the internal 

Labor Relations Review Boards that will have no credibility either 

within or outside the Agency. 

Thank you, Mr. Chairman. 

Senator VOINOVICH. Thank you, Mr. Gage. Mr. Brown. 

TESTIMONY OF RICHARD N. BROWN,1 NATIONAL PRESIDENT, 

NATIONAL FEDERATION OF FEDERAL EMPLOYEES 

Mr. BROWN. Mr. Chairman, Ranking Member Akaka, and Senator Pryor, thank you for allowing this testimony today. Certainly 

the statement is longer than 5 minutes, but I will shorten that up 

to something that I believe needs to be stated here publicly. 

As you know, the National Federation of Federal Employees is 

affiliated with the International Association of Machinists and 

Aerospace Workers, and we have also been designated by the National Association of Government Employees as well as the Metal 

Trades Department of the AFL-CIO to deal with DHS matters. 

One of NFFE’s principal DHS bargaining units is the U.S. Coast 

Guard’s Civil Engineering Unit of roughly 50 employees out of 

Providence, Rhode Island (CEU Providence). The employees at this 

facility serve the First Coast Guard District, the Northeast, including all of New England and parts of New York and New Jersey. 

The employees of CEU Providence, mostly architects, engineers, 

environmental specialists, planners, real property specialists, and 

contracting officers, provide facilities management and engineering 

services for the shore plan in the First District, which covers over 

1,500 structures located in seven States. The shore plan consists of 

a variety of structures that enable the Coast Guard operations, 

such as piers, fueling facilities, aviation facilities, firing ranges, 

barracks, communications towers, and aids to navigation. In short, 

the employees of CEU Providence make sure our Coast Guard has 

the facilities necessary to protect this country. 

CEU Providence is a high-performing facility, with approximately 85 percent of its work being done in-house, using their own 

design professionals. The CEU Providence has received awards for 

their efficiency, honoring their ability to save millions in consulting 

fees and freeing those resources for actual construction projects. 

In April 2003, the employee representatives of the CEU Providence bargaining unit from NFFE Local 1164 went into contract 

negotiations with management. Keep in mind this took place after 

the establishment of the Department of Homeland Security. 

Contrary to what DHS might want you to think is the case, Department officials in contract negotiations had absolutely no proposals whatsoever regarding national security. Now, I would think 

33

that if labor unions and the work rules spelled out in collective bargaining agreements were truly hampering national security, the 

Agency certainly would have raised some concerns. The reason they 

did not raise any concerns is that the unions and the collective bargaining agreements do not impede national security in any way. 

Under prior law, the Agency had the ability to take ‘‘whatever action may be necessary to carry out the Agency mission during 

emergencies,’’ including the ability to remove an employee on his 

first offense or make unilateral changes to working conditions if 

needed by acting first and negotiating later. It is not just the CEU 

Providence installation that has been unable to come up with any 

rationale how unions might hamper national security. During the 

meet and confer process with DHS and OPM staff, management 

was unable to cite a single case where the union, or a collective 

bargaining agreement, for that matter, had in any way compromised national security nationwide. 

But let me tell you where the overhaul of the personnel system 

becomes problematic. I was telling you about the contract negotiations at CEU Providence bargaining unit. By July 16, 2003, the 

contract was agreed upon and signed. It was shortly thereafter approved by the Agency head, who again had no suggestions for 

changes related to national security. For over a year now, management and bargaining unit employees have lived happily under that 

contract. 

The CEU Providence installation is a good example of effective 

and productive labor-management relations at DHS. It is evident 

that the rules under Chapter 71 are working well for the Department. Under the newly issued regulations, I believe labor-management relations at DHS will experience significant breakdown, and 

success stories such as those at CEU Providence will be hard to 

come by. I predict moving into a new system will be a disaster for 

employees at the Department for two main reasons: 

One, under the new regulations, extensive questions will emerge 

as to whether many of the articles and provisions of our contract 

will be deemed negotiable under DHS rules. The parties will be 

compelled to go before the DHS Labor Relations Board, a board 

which does not currently exist, to answer questions under procedures that are currently unwritten. Both sides will spend a considerable amount of time preparing testimony, evidence, and arguments that support its position. Rather than prompt, efficient completion and execution of a collective bargaining agreement, we will 

be seeking third-party assistance to apply rules which have not 

been created. I ask you how these frustrations, this delay, and this 

expenditure enhance homeland security. 

Two, DHS employees on the whole are uneasy about the new 

personnel system. The uncurbed authority to impose severe disciplinary penalties for illegitimate reasons, the ability to significantly reduce the pay of employees without having to provide any 

justification, and the power to arbitrarily reassign employees anywhere in the country on a temporary or permanent basis will be 

demoralizing to Federal workers and will reduce the ability to recruit and retain quality employees. This will substantially hurt the 

Department’s ability to carry out its mission. 

34

1The prepared statement of Mr. Mann appears in the Appendix on page 152. 

NFFE greatly appreciates the Subcommittee’s decision to hold 

this hearing and to listen to the views of the DHS employee representatives. It is our opinion that the authorities granted to DHS 

under the new regulations are overly broad and excessive. More 

importantly, they are not in compliance with the Homeland Security Act on a number of accounts. The sum total of the new system 

as proposed is one that will be demoralizing to Department employees. Implementing this personnel system will certainly have harmful influence on the ability of the Department to carry out its mission, as I stated earlier. 

This concludes my statement. Once again I thank the Subcommittee for the opportunity to give my testimony. 

Senator VOINOVICH. Thank you, Mr. Brown. Mr. Mann. 

TESTIMONY OF KIM MANN,1 ON BEHALF OF THE NATIONAL 

ASSOCIATION OF AGRICULTURE EMPLOYEES 

Mr. MANN. Mr. Chairman, and Senator Akaka, I represent the 

National Association of Agriculture Employees, by far the smallest 

union at the table, and we do appreciate an opportunity to address 

this Subcommittee. We certainly agree with the specific detailed 

critique given by Colleen Kelley, John Gage, and Richard Brown, 

and I am not going to try to repeat their comments here today. But 

I wanted to give you first a very brief glimpse as to what NAAE 

is and, more importantly, who we represent. We are unique. We 

want to express more than the details about the system which we 

believe is flawed. We want to express how that flawed system will 

impact the people it is intended to govern. And we believe that impact also is going to have a big impact on the mission of the Department of Homeland Security. 

We represent 2,000 bargaining unit positions—and that is the 

key word, positions—that were transferred to the Department of 

Homeland Security in March 2002. These 2,000 positions represent 

employees we call Agricultural Specialists and Agriculture Technicians, and they are unique. They have a unique mission. Their mission, not like these gentlemen, not like Ms. Kelley’s people, but 

their mission is to protect American agriculture. That is one of the 

stated primary missions of the Department of Homeland Security, 

according to the Homeland Security Act. The 2,000 positions came 

over from the U.S. Department of Agriculture, from an Agency 

within USDA called Animal and Plant Health Inspection Service. 

The mission of these 2,000 transferred employees really is to protect American agriculture. They do that by performing agriculture 

quarantine inspection services, or what we call AQI services. No 

one else in CBP, Customs and Border Protection, has the education, the training, or the expertise to perform those services. 

NAAE, like NTEU and AFGE, participated actively in the DHS 

process that led to these regulations. 

We have a very simple, straightforward message that we would 

like to deliver to this Subcommittee this morning, and that is, if 

these regulations are allowed to go into effect as written, they will 

jeopardize American agriculture. Count on it. 

35

During the past 2 years, CBP has watched its cadre of Legacy 

Agriculture employees—that is what we call our Agriculture Specialists and Technicians—dwindle from 2,000-plus positions, transferred in March 2003, to approximately 1,300 people today. That is 

about a 40-percent decline in personnel. These are the trained, 

highly educated professionals who are charged with protecting 

American agriculture. The how and the why behind this dangerous 

decline is really the key to understanding why NAAE is so concerned about the adverse impact of these regulations upon U.S. agriculture. 

How has CBP precipitated this 40-percent decline? Well, it has 

consciously ignored the agriculture mission component of its overall 

mission. This is the principal mission of the Agriculture Specialists 

and Technicians. It has also done so by consciously disregarding 

the rights of Agriculture Specialists as valued employees. Unlike 

the Legacy Customs and Legacy Immigration colleagues with 

whom they work, the CBP Agriculture Specialists are college graduates with degrees in the biological sciences. Many have graduate 

degrees in the sciences. They are trained and experienced in detecting and eradicating plant and animal pests and diseases that 

threaten American agriculture. They are not law enforcement officers. They do not have arrest powers. They do not carry a gun. 

They are simply trained to detect pests and diseases that are likely 

to enter this country. And yet CBP in a proceeding pending before 

FLRA is challenging the status of these employees as professional 

employees. Why the decline has occurred in the past 2 years? Morale has been driven to a breaking point. And these CBP Agriculture Specialists in particular have responded by walking. They 

have bailed out of CBP at an alarming rate, quitting. Many of them 

have gone back to USDA and Animal and Plant Health Inspection 

Service where the agriculture mission is alive and well. 

The new DHS regulations codify in effect this unilateral power 

that CBP management already exercises over the Legacy Agriculture employees’ rights and conditions of employment. These regulations as a practical matter eliminate negotiation rights and 

deprive third-party review boards of the power to mitigate. They 

install pay-for-performance schemes in which top performers are 

not assured of appropriate rewards for excellent performance. 

The regs virtually promise to widen the gap between the CBP 

staffing levels needed to protect American agriculture and those 

achievable under the personnel system. This threat to American 

agriculture is not theoretical. It has already led to unprecedented 

recalls of commodities found to have contained agriculture infested 

pests, primarily the long-horned beetle. I have detailed those recalls in my written testimony, and yet today—yesterday an APHIS 

newsletter reported another major outbreak of the Asian 

longhorned beetle in New Jersey. This comes from the solid wood 

packing material from China, and basically CBP has almost 

stopped inspecting for that particular commodity. 

My time is up, and I thank you very much for listening to our 

concerns, and we would be happy to answer any questions. 

Senator VOINOVICH. Thank you very much. 

All of you have been very critical of these regulations. Is there 

anything good? If you are not willing to share any thoughts on 

36

what is good, please discuss where the Department has been responsive to your concerns. There have been some changes in the 

regulations, and I mentioned several of them in my opening statement. The most important thing that I am interested in is whether 

there is any consensus on two or three reforms that could really 

make a significant difference for the new personnel system? I have 

heard from all sides concerns about retention and recruiting. Second, I have heard concerns that once people are hired, we may lose 

them because of reduced collective bargaining rights. 

Ms. Kelley, I would like to start out with you. 

Ms. KELLEY. I would definitely say and acknowledge, as I have, 

that there are changes that were made as a result of the 2 years 

we spent working with the Department and with OPM. You listed 

some of those. Some of them were listed by DHS and OPM. And 

we have acknowledged those. 

The problem is that at the core of the collective bargaining issue, 

that language has been gutted and just precludes union involvement on issues critical to the employees who we represent. 

I would say that there definitely were changes made that were 

positive as a result of our involvement, and if for no other reason, 

that was definitely worth it. It is very disappointing, though, that 

they did not listen to the very real solutions that we provided. 

For example, even in the comments that you made, Mr. Chairman, about if anything was going to last more than 60 days, they 

had an obligation to bargain. That will rarely be the case because 

things as I described about shift assignments and selecting shifts 

and work assignments that today employees have a process that 

has rhyme and reason to it because of the negotiated system, that 

will not be required to be negotiated, even though it will last more 

than 60 days because the regulations define it as routine operational matters. And if the Department says it is a routine operational matter, they have no obligation to bargain regardless of 

how long it lasts. And we believe that the language in these regulations was written as it was in order to ensure that there are very 

narrow and limited situations where they have to engage the 

unions at all. That is the clear intent of the language of these regulations, and it should not be that way. 

Senator VOINOVICH. In terms of shift assignments, is that in the 

collective bargaining agreement? 

Ms. KELLEY. It is. 

Senator VOINOVICH. For example, the longer you work for an 

agency, the more flexibility you have in terms of picking the shifts? 

Ms. KELLEY. It would abrogate it. It would eliminate any negotiations of a process, and it would be up to management to unilaterally decide who would work and when, with no expectation on 

the part of employees that there will ever be an opportunity for 

that to change or for them to raise their hand and say I need to 

do this, I have a working spouse, I am a single parent, whatever. 

And there are processes today that allow employees to have that 

volunteer process. They were all negotiated and they work. For the 

Department to say that they get in the way of them delivering on 

their mission is just disingenuous. 

Senator VOINOVICH. Any other comments on changes to regulation would make a difference? I have got to be frank with you. 

37

Passing legislation is not going to be easy because the Administration will object to it. Furthermore for Congress, this is a political 

issue over which two campaigns were fought. 

Is it possible for you to get together and develop changes you 

think will make a difference for us to evaluate. The issue is what 

can we do that will make a difference for your membership and 

allow the Department to move forward? You have a lawsuit filed 

and I do not know how long it will take for that to be resolved. Has 

the Court granted an injunction preventing implementation? 

Ms. KELLEY. We are asking for that, but I would say the issue 

of pay, Chairman Voinovich, is one where a lot of the decisions 

have not been made. I know no more about the pay system they 

want to put in place today than I did a year ago, even though there 

have been constant communications about——

Senator VOINOVICH. You are talking about the pay-for-performance? 

Ms. KELLEY. Yes, pay-for-performance, performance management 

system, the whole compensation system. The last conversation I 

had with Secretary Ridge on his last day as the Secretary was on 

the issue of our future involvement in helping to develop a system 

that is fair, credible, and transparent. So that opportunity is still 

there before us, and NTEU is looking forward to the opportunity 

to really have——

Senator VOINOVICH. So that is an action management may take. 

Ms. KELLEY. Yes. 

Senator VOINOVICH. There are a series of things that management could do to respond to many of your concerns without additional legislation. It is important for us to know what those things 

are as well so that we can bring to bear on them through oversight 

things that facilitate participation. Next, there are areas where we 

need to continue with strong oversight to make sure the new personnel system is implemented successfully. 

Mr. GAGE. Senator, one of the things that I liked that we convinced them to do was to go slow on the pay. The Agency is still—

‘‘growing pains’’ is saying it——

Senator VOINOVICH. Yes, the challenge is merging 180,000 people. Mr. Mann, I am going to check into what you are saying. I am 

very concerned about losing good people. One of the most important 

people in this whole process—who I met her out in the hall—is retiring after 37 years. I became involved with Federal workforce 

issues 6 years ago because I was concerned about the looming 

human capital crisis. This was the year that 70 percent of our Senior Executive Service would be eligible to retire. 

Mr. Gage, I am sorry. I interrupted you. 

Mr. GAGE. Well, I was just going to make the point that I think 

that dropping this new personnel system and new pay on the Department of Homeland Security of all departments is really going 

to be a challenge. I have just great apprehension about what this 

type of system will do in law enforcement. It has never been shown 

to work in law enforcement. And I hear the human resource types 

talk about how they are going to be able to make this thing so far 

and objective, and I have been hearing that for years. But I am 

really concerned on that side that so many resources are going to 

go into the development of this system and into these personnel 

38

changes, and they would be much better spent for front-line employees and more people out there doing the job of homeland security. 

Senator VOINOVICH. Thank you. I want to make one point. I am 

beyond my 3 minutes here, but, Mr. Perkinson, I was really interested in your comments. You are more open than some of the other 

panelists here about this new system. To me that is important because it is your people who are going to be really involved in this. 

Mr. PERKINSON. Exactly. 

Senator VOINOVICH. I really want you to know that I want to 

hear from you. I have been through this. I did this when I was 

mayor. I did this when I was Governor, and this is not easy. So 

you are very important here. Your members must be trained because they will influence how the system works. 

Would anybody like to comment? I have taken more time than 

I should. 

Mr. MANN. Mr. Chairman, if I could just follow up, I agree with 

Colleen Kelley and John Gage that pay is probably the most important ingredient, the one thing that we could do something about. 

Obviously, our people would like to be treated as the professionals 

they are, but I do not think we can legislate or regulate that to 

happen. But that is part of our problem. Pay is the other part. 

If they do not have a pay system that is fair and transparent—

and by transparent, what I mean is one that is easy to understand 

by the employees it is intended to compensate the overall system 

is bound to fail. I have listened to the explanations that OPM and 

DHS staff have given as to what this pay system might look like. 

And I do not understand it myself, and I listened over and over 

again, and I think they had some rocket scientists in there trying 

to explain it to us, and they could not either. I am afraid that at 

the end of the day, that system is not going to be comprehended 

by the average person. 

I am also concerned that the Agriculture Specialists and Technicians who are excellent performers are not going to be assured of 

any meaningful reward for that top performance. 

Senator VOINOVICH. Well, can I make a suggestion to you? 

Mr. MANN. Yes. 

Senator VOINOVICH. If I were you, I would get a hold of David 

Walker and see what he has done in the Government Accountability Office. Their system is working, so it may provide a benchmark. 

Mr. MANN. I heard his remarks, and I took note of that as well. 

Senator VOINOVICH. What we are looking for here are benchmarks, exisiting systems for us to consider. They said there are 

70,000 Federal employees that are involved in alternative personnel systems. I think maybe we need to talk to them. 

Again, thank you very much for your testimony here today. Senator Akaka. 

Senator AKAKA. Thank you very much, Mr. Chairman. 

Taking it from the Chairman here, when he mentioned the lawsuit, in thinking back I think believe this is the first time unions 

have coordinated their efforts and filed a lawsuit against the government. And so I would like to ask a question to all of you about 

39

the lawsuit that was filed to stop the implementation of the DHS 

personnel regulations. 

I am interested in several of the issues raised in the filing, and 

I know there are many details that we can touch on, but I think 

your filing of the lawsuit and the reasons you did it are the basis 

of the problem. So I would ask each of you to elaborate just on the 

arguments made in the lawsuit, especially discussing judicial review and the limitations of independent, quasi-judicial agencies 

mandated by the regulations. I think these are important issues 

that will give us an idea of where you are and why you are doing 

this. 

Let’s start with Mr. Perkinson on this. Will you elaborate on 

your arguments? 

Mr. PERKINSON. I cannot elaborate on the lawsuit for you, Senator, but I will go to Ms. Kelley for that. 

Ms. KELLEY. The lawsuit is focused on the collective bargaining 

and on the appeals issues. I would note that there is no subject in 

the lawsuit that affects the pay-for-performance or compensation 

system today, perhaps in large part because we do not know a lot 

about it yet, but the lawsuit is only aimed at where we see the 

shortfalls in the collective bargaining and the appeals. And we believe they are in conflict with other statutes. 

On the appeals issues, I guess the way I would explain it is that 

everything that the Department has set up in these regulations allows for internal review by the Department rather than outside review, as exists today for other Federal employees. And we believe 

that is wrong, first and foremost. 

Second of all, it incorporates the FLRA and the MSPB into their 

regulatory processes, but defines their roles differently than those 

organizations. Those agencies have their own roles today defined 

by statute. The FLRA has its authority under statute. The MSPB 

has its authority. And these regulations choose to take those two 

agencies and narrow what it is they can do in the realm of the Department of Homeland Security. And we believe that they don’t 

have the authority to do that. So that is what that part of the lawsuit is about. 

And as to collective bargaining, this Congress, the Congress that 

passed the Homeland Security Act, made it very clear that its intent was that collective bargaining would continue and those rights 

would continue for employees within the Department. And if you 

look at the language in these regulations, that does not comply 

with the intent of Congress, in our opinion, because it so narrowly 

restricts and in many cases eliminates those rights, that it is not 

collective bargaining as is defined in the law today. 

Senator AKAKA. Mr. Gage. 

Mr. GAGE. I would just like to make two points. The mitigation 

of penalties is over the top where an arbitrator or an MSPB examiner cannot mitigate a penalty. 

The second thing is on collective bargaining, and I heard Dr. 

Sanders here talk about how the union could stop implementation 

of a management initiative or a management exercise, and that is 

just not true. But the objections of the agencies to collective bargaining were on process, and we should have addressed it on how 

fast we can do bargaining, how management can set up a date 

40

when they had to act and they could complete their obligations to 

talk to employees before then. But to say that, well, sometimes this 

process went on too long and even though the unions have put up 

proposals to really shorten it, we think we will just take the right 

away altogether, and that is what we are concerned about, and 

that is why we are pursuing this in the courts as well as every 

other forum. It is just wrong to take away rights when the process 

could be fixed. 

Senator AKAKA. Mr. Brown. 

Mr. BROWN. Yes, my esteemed colleagues here stated it quite 

clearly. I am not going to go on about that. But you have to understand that our membership lives by a collective bargaining agreement. It defines their work rules, or part of them, anyway, a good 

majority of them. And one of the previous panel members stated, 

well, what if we had to have practice to defend the homeland, we 

had to do this, we had to do that? What would make better sense 

than regulations, i.e., a collective bargaining agreement where verbiage is such that everyone knows what they have to live by, that 

it would not impede the implementation because it would have already been dealt with and everyone would have known the parameters which they would work under and how that would affect 

them on the job? 

If you lose your voice in the workplace and do it because I said 

so and no other rationale, you will never have an employee workforce in any part of this country with the commitment that you 

have today. Thank you. 

Senator AKAKA. Mr. Mann. 

Mr. MANN. Senator Akaka, NAAE was not a primary architect 

of that complaint. We fully support it and we support its objectives. 

But as a lawyer, one of the things that intrigued me personally 

about the complaint is the attack upon the impermissible delegation of authority that DHS made in those regulations to MSPB and 

to FLRA. DHS does not have the authority to do that. It not only 

attempted to delegate authority, it also attempted to control the 

procedures and the protocol by which that authority would be used. 

So that delegation provision in the DHS regulations is something 

that I think really deserves to be reversed. 

Senator AKAKA. Mr. Chairman, if you would permit me, may I 

ask a question of Mr. Perkinson? 

Senator VOINOVICH. Yes. 

Senator AKAKA. I strongly believe that for there to be any degree 

of success in carrying out the regulations, there must be continuous 

training—and the Chairman alluded to training—on the implementation of the new human resources system at DHS. Will you please 

describe the training Federal Managers members routinely receive 

on measuring performance and disciplining employees under the 

current system? 

Mr. PERKINSON. One of our concerns, Senator, has been that 

under the current system, when it comes to grading performance, 

of course, with us going to the pass/fail system of performance, 

there is not extensive training on how we approach that type of 

system. Most of our agencies that we deal with have gone to pass/

fail so there is not an extensive effort. 

41

Where our concerns come from the Federal Managers Association 

is that with the move to pay-for-performance, we have to have 

transparency in some form of set pre-standards that the employee 

as well as the manager know what they are being measured 

against. That is going to be the difficulty. And when we look at Department of Homeland Security alone, we are looking at 22 disparate agencies that came together under one roof, and they all do 

not do the same type of work. So those measured performance levels that we would go measure people by in order to ensure that we 

are fair when we do pay-for-performance on the manager level is 

going to be very difficult, and it will take a lot more extensive 

training in the pay-for-performance area than we presently receive. 

Senator AKAKA. If costs were not the issue, what further training 

would benefit managers? 

Mr. PERKINSON. I think managers would need to have some type 

of understanding on how to rate personnel on an equitable basis, 

that we have to have a system in place and we have to have the 

measures in place, performance-based standards set for an employee when we sit down at the beginning of the year and say these 

are our expectations, not to steal a line from Mr. Covey, but winwin agreements or those types of things where you sit down with 

an employee. At our senior management level at some agencies, we 

have gone to win-win agreements where you know what your expectations are, and if you achieve them, those things will get you 

to the point where you receive your pay. 

Now, I think when we go to pay banding and those type of 

things, it is going to be even more complicated to the point of how 

you determine your No. 10 player versus your No. 1 player. And 

those are the things—that is going to be a difficult and challenging 

task for a first-line manager to have to execute in the workplace. 

Senator AKAKA. Thank you, everyone. Thank you, Mr. Chairman. 

Senator VOINOVICH. Thank you. 

Again, I want to thank all of you. I assure you that this is not 

the last of our oversight hearings on the implementation of these 

regulations. I would like you to collectively get together and come 

back with a consensus on what changes would make the biggest 

difference for the new personnel system. 

Again, I want to emphasize that this is really important. The biggest threat we have in our country today will be tackled by this Department. We have to work together to make sure that we are secure. 

Thank you. 

[Whereupon, at 12:32 p.m., the Subcommittee was adjourned.] 

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