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20–176 PDF 2005

S. Hrg. 109–85

CRITICAL MISSION: ENSURING THE SUCCESS OF

THE NATIONAL SECURITY PERSONNEL 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

MARCH 15, 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 .................................................................................................. 3

Senator Coburn ................................................................................................. 7

Senator Levin .................................................................................................... 19

Senator Pryor .................................................................................................... 21

Senator Warner ................................................................................................ 32

Prepared statement: 

Senator Lautenberg .......................................................................................... 39

WITNESSES 

TUESDAY, MARCH 15, 2005

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

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

Hon. Charles S. Abell, Principal Deputy Under Secretary for Personnel and 

Readiness, U.S. Department of Defense ............................................................. 10

George Nesterczuk, Senior Advisor to the Director on Department of Defense, 

Office of Personnel Management ........................................................................ 12

Richard Oppedisano, National Secretary, Federal Managers Association .......... 26

John Gage, President, American Federal of Government Employees ................. 28

Gregory J. Junemann, President, International Federation of Professional 

and Technical Engineers ..................................................................................... 30

ALPHABETICAL LIST OF WITNESSES

Abell, Hon. Charles S.: 

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

Prepared statement .......................................................................................... 72

Gage, John: 

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

Prepared statement .......................................................................................... 124

Junemann, Gregory J.: 

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

Prepared statement .......................................................................................... 138

Nesterzuk, George: 

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

Prepared statement .......................................................................................... 87

Oppedisano, Richard: 

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

Prepared statement .......................................................................................... 104

Walker, Hon. David: 

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

Prepared statement .......................................................................................... 40

APPENDIX

Elmer L. Harmon, President, AFGE Local 2635, NCTAMS LANT DET, Cutler, Maine, prepared statement .......................................................................... 148

Questions and responses for the Record from: 

Mr. Walker ........................................................................................................ 149

Mr. Abell ........................................................................................................... 153

Mr. Nesterczuk ................................................................................................. 174

Mr. Oppedisano ................................................................................................. 180

Mr. Gage ............................................................................................................ 183

(1)

CRITICAL MISSION: ENSURING THE SUCCESS 

OF THE NATIONAL SECURITY PERSONNEL 

SYSTEM 

TUESDAY, MARCH 15, 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 Subcommittee met, pursuant to notice, at 10:05 a.m., in 

room SD–342, Dirksen Senate Office Building, Hon. George V. 

Voinovich, Chairman of the Subcommittee, presiding. 

Present: Senators Voinovich, Coburn, Warner, Akaka, Levin, and 

Pryor. 

OPENING STATEMENT OF SENATOR VOINOVICH 

Senator VOINOVICH. The hearing will come to order. 

Good morning and thank you for coming. Today, this Subcommittee convenes a hearing entitled, ‘‘A Critical Mission: Ensuring the Success of the National Security Personnel System.’’ The 

purpose of this hearing is to examine the proposed regulations of 

the National Security Personnel System and to continue the dialogue over its design. 

When thinking about the Department of Defense, we often visualize the over 2 million active duty and reserve men and women 

in the Armed Forces. We are grateful to them for their heroic service to our country, but we must not forget that working alongside 

them are approximately 650,000 civilians who can be found working across the globe in support of our military. 

These hardworking and dedicated individuals, including the 

20,000 in my home State of Ohio, understand that the work that 

they do every day is instrumental to our national security. What 

responsibility could be more important than that? In April 2003, 

the Department of Defense presented to Congress a proposal for 

new personnel flexibilities. In essence, Defense sought similar and 

additional authorities to what was authorized for the Department 

of Homeland Security to develop a system that is able to respond 

to current and future workforce and mission needs. 

Through the National Defense Authorization Act for fiscal year 

2004, Congress granted the Department the authority to design the 

National Security Personnel System (NSPS). The proposed regulations for NSPS were published in the Federal Register on Monday, 

2

February 14, 2005. The proposed regulations have a 30-day public 

comment period. It closes tomorrow. Next, the Department of Defense is required, by law, to enter into a meet-and-confer process 

with its employee organizations that must last a minimum of 30 

days. 

I understand that the process leading up to the publication of the 

proposed regulations was not always smooth. I encourage both 

sides to make the most of the meet-and-confer process, to have a 

constructive dialogue on what is needed for the new system. As 

with the Department of Homeland Security, I know many employees and their union representatives at the Department of Defense 

are concerned about the content of the proposal and the subsequent 

implementation of NSPS. 

Several Defense employees in Ohio will transition into NSPS in 

a Spiral 1.1. Many of my constituents have taken the time to phone 

or to E-mail me. They are uncertain what changes they will see 

and unsure where to go to find the answers. One woman who 

works for the Defense Finance and Accounting Service in Columbus 

shared these thoughts with me in an E-mail: 

‘‘I understand that pay raises will be based on the discretion of 

your supervisor. This causes me great concern, as we have supervisors in our office who cannot take the time to do quarterly appraisals and awards let alone write appraisals to give them a raise. 

Also, we have asked management many questions about NSPS, 

and it appears that nothing has really been settled because they 

are unable to answer our questions.’’

To the administration, I would say it is your obligation to continue an open dialogue and maintain a collaborative process with 

your employees as you refine the proposal regulations for NSPS. It 

seems to me that the consensus of outside observers is that the 

labor-management collaboration process at DOD was not as open 

as the process at DHS, and I would invite all of today’s witnesses 

to share their thoughts on this point. 

The Defense Department must recognize that while the new personnel system is intended to assist it in responding to its national 

security mission, it, also, must provide employees the tools and 

structure to encourage, support and reward them. Defense leaders 

must recognize that despite the Department’s experience with alternative personnel systems, the changes put forth at NSPS are 

new for the majority of the employees at the Department. It will 

take time to gain understanding. 

The proposed regulations will impact the most fundamental concerns of an employee: Will my contributions be recognized? What 

are my opportunities for advancement and promotion? How will I 

be paid? What recourse do I have if unfairly treated? 

Employees must be able to see that they have a valued role in 

shaping NSPS. 

To employee organizations, it is your duty to roll up your sleeves 

and work with the Department of Defense and the Office of Personnel Management. It is not enough to say you do not like the system. I ask you to continue to offer constructive suggestions to improve the proposed regulations. 

I want to assure all of you that I am committed to ensuring the 

success of NSPS. The regulations are not finalized. The publication 

3

of proposed regulation is only one of the many milestones leading 

up to full implementation of NSPS. I know there are many interested parties that have suggestions for improvements. I am certain 

the Comptroller General, who I am pleased to welcome back to the 

Subcommittee today, has some thoughtful observations. 

At times, I have had my own concerns with aspects of NSPS. For 

example, this time last year, I learned the Department was rushing 

to implement the system by October 2004. I thought this was simply unrealistic. I was so concerned that I went over to the Pentagon 

on March 30, 2004, and met with Deputy Secretary Paul Wolfowitz, 

Secretary of the Navy Gordon England, and Principal Deputy Undersecretary Charlie Abell, who I am pleased is here today. I conveyed to them my concerns that the Department was proceeding 

much too rapidly and that the massive change envisioned by NSPS 

would take years to implement properly. I was pleased to learn 

that they agreed and that after a hasty start, implementation was 

to proceed with much greater deliberation. 

Secretary England was given a lead role and I had the chance 

to meet with him yesterday to discuss his progress. For the sake 

of continuity I am pleased that he is committed to leading the initial implementation of NSPS regardless of what secretariat he 

holds in the Defense Department. 

I suspect there is room for improving the regulations in the days 

ahead, and I have my own recommendations. For example, there 

are differences between the final regulations for the Department of 

Homeland Security and the proposed regulations for the Department of Defense in areas such as labor participation. I am interested to learn why DOD has chosen a different path in some of 

those instances. I am certain my colleagues here today have similar 

observations and suggestions. I know the witnesses here today, 

representing employees of the Department, have their own concerns and suggestions for improvement. I look forward to discussing these regulations and their responses with them. 

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

Akaka, and I want to thank you publicly for your commitment to 

human capital issues of the Federal Government, Senator. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. Thank you very much, Mr. Chairman. I, too, am 

happy to work with you, my good friend and a champion leading 

this movement. 

I welcome our distinguished panelists this morning. 

DOD had a rocky start when first rolling out NSPS last year. I 

am pleased the Department started over after listening to concerns 

expressed by many of us. Although there is wide disagreement over 

the regulations, I very much appreciate the time and effort that 

has gone into working with employees and their unions and their 

representatives. 

As the Ranking Member on this Subcommittee and the Armed 

Services Readiness Subcommittee, I am disappointed with this proposal, which I believe strips meaningful employee rights and protections and raises serious questions of fairness and collective bargaining and employee appeals. My concerns today are the concerns 

I voiced in 2003, when I was one of three Senators voting against 

4

NSPS. I am not alone in my concerns and, Mr. Chairman, I do not 

recall a single issue in my 28 years in Congress that has generated 

more anxiety among Federal workers in Hawaii than NSPS. 

There are nearly 16,000 civilian DOD employees in Hawaii, 

many of whom work at Pearl Harbor Naval Shipyard. I was particularly moved by one shipyard worker’s letter that detailed how 

union and Metal Trades Council representatives completed successful negotiations on a number of occasions, resulting in improved efficiency and furthering labor management relations. His fear of 

NSPS was stated clearly when he wrote, ‘‘The respect and trust developed and nurtured over the years through formal discussions 

will be thrown out and discarded.’’

I know DOD and OPM are listening to these concerns, and I am 

pleased that coalition meetings are continuing. These meetings 

should be more than just exchanging concepts around vague and 

general policy statements. NSPS will bring significant changes. For 

example, collective bargaining on many issues, such as deployment, 

will be curtailed. I find this particularly egregious because DOD 

failed to prove during congressional testimony that bargaining over 

deployment was a problem. I know of no instance where union 

members have refused reassignment of deployment; rather, the opposite is true. At Pearl Harbor, the unions negotiated a long time 

ago on an orderly process for job site mobilization. There are no 

grievances over assignments, but there are grievances over not 

going. 

I am concerned with internal review boards, such as the National 

Security Labor Relations Board, which are fundamentally inconsistent with needed checks and balances on government decisionmaking. Such boards lack credibility, blur the relationship between 

the career civil service and elected and appointed officials and 

could foster a back-door patronage system. 

The NSPS was intended to provide managers with workforce 

flexibility not reduce the rights and protections of the civil service. 

I have other very fundamental problems with the proposed regulations, the first of which is the lack of detail. In congressional testimony, David Chu noted, ‘‘It is often said that the devil is in the 

details, that best intentions may be overcome by wrong-headed implementation. We—‘that is DOD’—welcome scrutiny of the details 

of our implementation.’’

I agree the devil is in the details, but the proposed regulations 

lack details especially in critical areas like the compensation system. 

My second concern is DOD’s inability to assess accurately the 

workforce needs. As the Chairman knows from last month’s hearing on the GAO High-Risk List, DOD has more programs on the 

list than any other agency. The Department does not have a Strategic Human Capital Plan in place, and no single document identifies DOD’s recruitment and retention strategy or goals for its future workforce. 

My third concern is over how DOD will implement the policy directives embodied in the proposed rules especially when this country is at war. The need to develop and fund the many implementation programs, especially the training of managers and employees, 

is a costly undertaking. Without a meaningful and fully funded 

5

process, no policy directive can be effective. GAO took almost 15 

years to bring all of its employees under a pay-for-performance system. DOD plans to do it in 3 to 4 years without increasing the 

training budget or funds to reward good performance. NSPS will 

require managers to make meaningful distinctions when making 

appraisals and evaluations. Without adequate training, this process 

is doomed. 

DOD must also provide for transparency, accountability, and 

fairness in its pay system. There is no process for challenging a 

performance pay decision. I also urge DOD to reconsider the virtual 

wholesale elimination of employee union bargaining rights and the 

inability of DOD employees to have their appeals impartially adjudicated. 

Last, I urge flexibility and communication in carrying out these 

regulations. DOD, by its organizational nature, operates in a command and control environment. Employee input is critical to the 

success of NSPS. And without union participation, not just consultation, there will be no winners. Limiting opportunities for employees to join unions and minimizing or curtailing the ability of 

labor unions to organize and bargain over issues that will have a 

direct and sometimes adverse impact on how employees will do 

their jobs guarantees failure. 

Mr. Chairman, we have much to learn from today’s hearing and, 

again, I thank our witnesses and look forward to their testimony. 

Thank you very much, Mr. Chairman. 

[The prepared statement of Senator Akaka follows:]

PREPARED STATEMENT OF SENATOR AKAKA 

Thank you, Chairman Voinovich. Today’s hearing focuses on the regulations for 

the National Security Personnel System (NSPS) proposed by the Department of Defense (DOD) and the Office of Personnel Management (OPM). I join our Chairman 

in welcoming our panelists. Given the rocky start that DOD had when first rolling 

out the NSPS a little more than a year ago, I am pleased that the Department 

began anew after heeding the concerns that I and other members of Congress expressed, along with those voiced by employees and OPM. Although there is wide disagreement over how successful the process turned out, I very much appreciate the 

time and effort that has gone into working with employees and their union representatives. 

As the ranking member on this Subcommittee, as well as the ranking Democrat 

on the Armed Services Readiness Subcommittee, I am disappointed with the proposed regulations, which I believe significantly strip key rights and protections of 

employees and raise serious questions of fairness in collective bargaining and employee appeals. The concerns I have today are the concerns I voiced in 2003 when 

I was one of three Senators who voted against the underlying bill creating the 

NSPS. 

I am not alone in my concerns, and Mr. Chairman, I do not recall a single issue 

in my 28 years in Congress that has generated more anxiety among federal workers 

in Hawaii than the NSPS. My state is home to over 16,000 civilian DOD employees, 

many of whom work at the Pearl Harbor Naval Shipyard. I was particularly moved 

by one shipyard employee’s letter that detailed how union and Metal Trades Council 

representatives in the Shipyard completed successful negotiations on a number of 

occasions that resulted in improved efficiency and furthered labor-management relations. His fear of the NSPS was simply stated when he wrote, ‘‘The respect and 

trust developed and nurtured over the years through formal discussions will be 

thrown out and discarded.’’

I know that DOD and OPM are listening to the concerns voiced by employees, and 

I am pleased that the meetings with the United DOD Workers Coalition are continuing. However, these meetings must be more than the exchange of concepts developed around vague and general policy statements. I know everyone who is providing input on the final regulations understands just how significantly the NSPS 

will change the way DOD hires—fires—pays —assigns—and works with employees. 

6

As examples, the regulations would create an internal panel to adjudicate labormanagement disputes. Panel members would be appointed and removed solely by 

the Secretary of Defense. Collective bargaining on a number of issues, such as deployment, which has great impact on employees and their families, will be curtailed. 

—MORE—I find these examples particularly egregious because DOD failed to 

prove during congressional testimony that such new flexibilities were needed. I 

know of no instance where union members have refused reassignment or deployment. Rather, the opposite is true. Approximately 5,000 federal civilian workers 

have been mobilized and serve in Afghanistan and Iraq. At Pearl Harbor, the unions 

negotiated a long time ago on an orderly process for mobilization to a job site. There 

are no grievances over assignments—but there are grievances over not going! Deployments are all-volunteers. The Shipyard boasts an all-volunteer fly away team 

that is able to change out nuclear submarine batteries in seven days, a job that normally takes anywhere from 15 to 21 days. 

I also know of repeated instances where DOD has refused to consider transfer applications by civilian employees because they did not live in the geographic area of 

the opening. 

The creation of internal review boards is fundamentally inconsistent with the Federal Government’s long-held practice of providing checks and balances in ensuring 

the integrity of government decision-making. The Federal Labor Relations Authority 

(FLRA) was created in 1978 by the Civil Service Reform Act (CSRA) to separate the 

adjudication of labor-management disputes from the entity charged with managing 

the federal workforce. It provides a stable and independent forum to ensure an efficient and effective government. In my mind, internal adjudication panels do not foster independence. They lack credibility, blur the relationship between the career 

civil service and elected and appointed officials, and could foster a backdoor patronage system. 

The NSPS was intended to provide managers with workforce flexibility, not reduce the rights and protections of the civil service. The NSPS is required to be 

based on federal merit principles and provide for collective bargaining. Recombining 

the responsibilities of employee protections and program management within DOD, 

while limiting the power of independent agencies that oversee the Department’s activities, brings the Department’s policies in direct conflict with the fundamental 

principles of the federal civil service and could substantially erode the rights and 

protections of federal employees—both DOD and non-DOD employees. 

For example, the regulations place time limits on the MSPB to adjudicate cases 

which—given the size of DOD—will have a significant and substantial adverse impact on MSPB’s ability to timely adjudicate the cases of non-DOD employees. 

In addition, the regulations severely limit the discretion of MSPB judges to mitigate penalties or award attorney fees, and requires decisions to made in deference 

to DOD’s national security mission. Even more shocking is the fact that the regulations provide DOD with wide discretion to review and reverse a MSPB administrative judge’s initial findings of fact. Therefore, the NSPS is comparable to a system 

that would allow prosecutors to overturn the factual findings of a jury or a district 

court, replace it with the prosecutor’s determination of facts, and require the appellate courts to be deferential to that finding. The proposed changes undermine the 

MSPB’s effectiveness for serving as a neutral decision maker. 

How credible can a system be that allows the employee’s agency to reverse the 

findings of a neutral decision maker? 

These proposed NSPS rules will only lower employee morale, impair DOD’s recruitment and retention efforts, and impede—not aid—agency mission. 

I want our first panel to explain why they believe the regulations are both fair 

and perceived as fair by employees, which is a stated goal of DOD, and will promote 

agency mission. 

I have other very fundamental problems with the proposed regulations, the first 

of which is the lack of detail. In congressional testimony, David Chu, Under Secretary of Defense for Personnel and Readiness, noted, ‘‘It is often said that the devil 

is in the details, that best intentions may be overcome by wrongheaded implementation. We welcome scrutiny of the details of our implementation.’’ I agree the devil 

is in the details, but the proposed regulations lack details. Modern organizations recruit and retain employees through pay, benefits, and improvements in work-life 

conditions. One of the most important benefits to all employees is pay, which is why 

I am troubled by the lack of detail given to the proposed NSPS compensation system. 

My second concern is DOD’s inability to assess accurately its workforce needs. As 

the Chairman knows from our hearing last month on the GAO High-Risk List, DOD 

has more programs on the list than any other agency. The Department does not 

7

have a strategic human capital plan in place. No single document identifies DOD’s 

recruitment and retention strategy or goals for its future workforce. 

My third concern is over how DOD will implement the policy directives embodied 

in the proposed rules, especially when this country is at war. The need to develop 

and fund the myriad of implementation programs, especially the training of managers and employees, is a costly undertaking. Without a meaningful and fully-funded process, no policy directive can be effective. GAO took almost 15 years to bring 

all of its employees under a pay for performance system. DOD is planning to do it 

in three to 4 years without increasing the training budget or funds to reward good 

performers. 

The NSPS is a performance-based system that will depend on managers making 

meaningful distinctions when making appraisal evaluations. Without adequate 

training, this process is doomed. Employees will be grouped into occupational pay 

clusters that will be based on market based compensation surveys. Getting these 

surveys and performance appraisals right the first time is critical and not cheap. 

Given the fact that most agencies fail to adequately fund training programs to begin 

with, I question the decision by DOD not to increase resources dedicated to training. 

In addition, I believe that in order to be successful, DOD must ensure that any 

pay for performance system has adequate funding. A zero-sum reallocation of salaries and salary adjustments will guarantee failure by rewarding a select few at the 

expense of the majority of employees who do good work, thereby creating an atmosphere of distrust among the workforce and lowering morale. 

DOD must also provide for transparency, accountability, and fairness in the system. The current regulations provide for an internal process to challenge a performance evaluation and no process for challenging a performance pay decision. Given 

the wide flexibility granted to the Department to establish this new system, it imperative that DOD uses this authority responsibly. Providing fair and transparent 

systems to make pay and performance decision-makers accountable is necessary. 

I also urge DOD to reconsider the virtual wholesale elimination of employee union 

bargaining rights and the inability of DOD employees to have their appeals impartially adjudicated. 

Last, I urge flexibility and communication in carrying out these regulations. DOD, 

by its organizational nature, operates in a command and control environment. Employee input is critical to the success of the NSPS, and without union participation—not just consultation—there will be no success. Limiting opportunities for employees to join unions and minimizing or curtailing the ability of labor unions to organize and bargain over issues that will have a direct and sometimes adverse impact on how employees will do their jobs will guarantee failure. There must also be 

defined roles for managers who under the NSPS will be more accountable for agency 

performance. 

Mr. Chairman, I believe we have much to learn from today’s hearing. I look forward to hearing from our distinguished witnesses who I hope will rejoin us for future hearings as we continue our oversight responsibilities of the NSPS.

Senator VOINOVICH. Thank you, Senator Akaka. Senator Coburn. 

OPENING STATEMENT OF SENATOR COBURN 

Senator COBURN. Mr. Chairman, thank you for holding the hearing. I want to welcome our guests. I look forward to hearing your 

comments. I am excited about putting better management into 

every level of the Federal Government. That has two basic principles: One is it accomplishes the tasks that the Congress has set 

out for the bureaucracies and, two, that it treats employees the 

way they would want to be treated. I think, if we follow those two 

guidelines, we are going to have effective management and effective Federal employees. 

And with that, I would yield back. 

Senator VOINOVICH. As is the custom before this Subcommittee, 

I am going to ask the witnesses to stand up and be sworn in. 

[Witnesses sworn en masse.] 

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

8

1The prepared statement of Mr. Walker appears in the Appendix on page 42. 

I would like to ask all the witnesses to limit your oral statement 

to 5 minutes and remind you that your entire written statement 

will be entered into the record. 

I would like to welcome the Hon. David Walker, Comptroller 

General of the United States. Joining Mr. Walker on the first panel 

are the Hon. Charles Abell, Principal Deputy Undersecretary for 

Personnel and Readiness, Department of Defense, and George 

Nesterczuk, Senior Advisor to the Director, Office of Personnel 

Management. 

Also, available for questions are Mary Lacey, Program Executive 

Officer for the National Security Personnel System, and Dr. Ronald 

Sanders, Associate Director for Strategic Human Resource Policy, 

Office of Personnel Management. 

Would Ms. Lacey and Mr. Sanders identify themselves. 

Mr. Sanders, thank you. 

Ms. Lacey, I had a nice talk yesterday with Secretary England, 

and he tells me that you are doing a yeoman’s job on this whole 

issue. He is relying on you for a lot of good work. I am sure that 

Mr. Abell is appreciative of all the effort and time that you have 

put into this. I understand you are a 31-year employee of the Department. It is reassuring to know you are there. 

Thank you all for the time you have invested in developing the 

system. I commend you for your dedication to this important job, 

and I know you have much to talk about. 

We will start with Mr. Walker, who has been here time and time 

again. David, nice to see you, again. 

TESTIMONY OF HON. DAVID M. WALKER,1 COMPTROLLER 

GENERAL, U.S. GENERAL ACCOUNTABILITY OFFICE 

Mr. WALKER. Good to see you, Mr. Chairman. Mr. Chairman, 

Senator Akaka, and Senator Coburn, it is a pleasure to be back 

with you. Thank you for entering my entire statement into the 

record, and I will hit some highlights for you. 

As you know, Mr. Chairman, Senators, I, as well as GAO, as an 

organization, have been longstanding proponents of modernizing 

our human capital policies and practices in the Federal Government and are strong believers in the fact that you need to have 

reasonable flexibility, at the same point in time, appropriate safeguards to prevent abuse of employees. 

The NSPS is of critical importance not just for the Department 

of Defense, but, also, for the overall civil service reform process. It 

is critically important they get it right not just for the benefit of 

DOD and its employees, as well as our Nation’s national security, 

but, also, to try to make sure that we can continue to modernize 

our human capital policies and practices consistent with that balancing of interests throughout the Federal Government. 

As you mentioned, Mr. Chairman, the NSPS did not get off to a 

great start. It did not represent a model process of collaboration 

with the Congress, initially, nor at the initial stages of attempted 

design and implementation. I must, however, state that, in my 

opinion, there has been significant change that occurred in the 

tone, the tenor, and the approach that the Department of Defense 

9

has taken on this issue since Secretary of the Navy Gordon England was designated as the point person by Secretary Rumsfeld. I 

believe that Secretary England is a capable and caring individual 

who wants to do the right thing. 

I think we all need to recognize that the NSPS is now the law 

of the land and, as a result, it is important that all parties work 

together to try to help assure that it is implemented both effectively and fairly. To do so, both management and labor must work 

together in a good-faith manner. Reasonable people can, and will, 

differ with regard to the individual proposals under NSPS, but it 

is absolutely critical that meaningful communications and consultations take place in order to maximize the chance of success and 

minimize the possibility of disruption. 

These communications and consultations are a two-way street, 

and we are entering a particularly important period, as you mentioned, Mr. Chairman and the other Senators, namely the meetand-confer period, which will begin in the very near future. It is 

very important that all parties take that seriously and act constructively. 

In my view, Mr. Chairman, both management leaders and labor 

leaders will need to possess three key characteristics in order for 

this to be successful: 

Firest, they will have to have the courage to speak the truth and 

to do the right thing, even though it may not be popular; 

Second, they will have to have the integrity to lead by example 

and practice what they preach; 

And third, they will have to be innovative enough to think outside the box and help others see the way forward. 

Both labor leaders and management leaders will have to possess 

these three critical attributes. We at GAO, as you mentioned, have 

been in this business for many years. We have had broadbanding 

since 1989. We have had pay-for-performance since 1989, although, 

as Senator Akaka mentioned, we brought it out in phases. Now all 

but about 10 of our employees in GAO are subject to broadbanding 

and pay-for-performance. We are happy to share our knowledge 

and experiences. Our way is not the way, but it is a way, and we 

do believe that we can help others see their way forward here and, 

hopefully, avoid some pitfalls. 

Now, I would like to mention one positive, one concern and one 

point on the way forward. 

The framework, I believe, that relates to these proposed regulations does provide for a more flexible and modern human capital 

system, and that part is a step in the right direction. 

Second, an area of concern, there are many details that have not 

been defined. The details matter. How these details are defined can 

have a direct bearing on whether or not the ultimate system is 

both reasoned and reasonable. And the meet-and-confer period is 

critically important to try to help make sure that both parties recognize that and come to the table in good faith to try to deal with 

some of these details—details in the areas of performance management, compensation, reductions in force, appeal rights, transparency provisions, training aspects, these are all critically important details. 

10

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

And last, but not least, as I have said before, and as Senator 

Akaka mentioned, DOD has 14 of 25 high-risk areas, up 2 from 2 

years ago. DOD does many things right, including fighting and 

winning armed conflicts, where it is unparalleled. Nobody is even 

close. DOD is a ‘‘D’’ on economy, efficiency, transparency, and accountability. It needs a chief management officer or a chief operating officer to be in charge of the overall business transformation 

effort, to take a strategic, integrated, and persistent approach to a 

whole range of business transformation issues, of which NSPS is 

but one, but a critically important one. 

Thank you, Mr. Chairman. 

Senator VOINOVICH. Thank you, Mr. Walker. Mr. Abell. 

TESTIMONY OF HON. CHARLES S. ABELL,1 PRINCIPAL DEPUTY 

UNDER SECRETARY FOR PERSONNEL AND READINESS, U.S. 

DEPARTMENT OF DEFENSE 

Mr. ABELL. Thank you, Mr. Chairman, and Members of the Subcommittee. 

The National Security Personnel System is a key part of a DOD 

transformation. We will create a total force, uniformed military and 

civilian employees, who share a common vision, who recognize common strategic and organizational objectives and who operate as one 

cohesive unit. DOD civilians are unique in government in that they 

are an integral part of an organization that has a military mission, 

a national security mission. DOD civilians are at work side-by-side 

with our uniformed military personnel around the world in every 

time zone every day. NSPS will bring 21st Century human resource management to these dedicated public servants. 

NSPS has been designed to meet a number of essential requirements. Our guiding principles, as we designed this, were mission 

first; respect the individual; protect the rights guaranteed by law; 

value talent, performance and leadership, and commitment to public service; be flexible, understandable, credible, responsive, and 

executable; to balance the HR system interoperability with the 

unique mission requirements; and to be competitive and cost effective. We have key performance parameters that implement these 

guiding principles with measurable metrics. 

As you noted, Mr. Chairman, NSPS was enacted on November 

24, 2003. And since January 2004, we have been engaged in a process to design the HR appeals and labor relations system in an 

open, collaborative environment, in consultation with our employees, the unions, and other interest groups. 

Since January 2004, we have met face-to-face with employees, 

unions, and interest groups in many settings, as well as maintaining two-way communications via written correspondence, conversations and exchanges of documents. Based on feedback from the 

unions and congressional committees in March 2004, as you noted. 

Sir, the Department adjusted the process, established a different 

governance and enhanced our partnership with OPM. 

The proposed regulations published in the Federal Register on 

February 14, 2005, reflect the result of this adjusted process. We 

are currently in the public comment phase, which will formally 

11

close tomorrow, March 16. We anticipate comments will come in 

after the March 16 deadline, and we will certainly review those 

comments as well. The Federal Register notice is the formal notice 

required by the statute. Following the 30-day comment period, we 

will review the comments, and then we will engage in a meet-andconfer process for a minimum of 30 days. 

Mr. Chairman, I stress the word ‘‘minimum.’’ We will devote the 

time necessary to adequately discuss and confer on every issue 

raised during the comment period, and this is where the details 

that so many long for will begin to emerge. We have asked the Federal Mediation and Conciliation Service to assist us in this meetand-confer process. At the conclusion of the meet-and-confer period, 

we will report the results to our congressional oversight committees. 

I suspect that we will spend some time today talking about what 

NSPS does, but let me take a minute to talk about what NSPS 

does not do. It does not change the merit system principles that are 

the foundation of the civil service system. It does not change prohibited personnel practice rules. It does not change whistleblower 

protections nor anti-discrimination laws. It does not modify or diminish veterans preference. It does not change employee benefits, 

such as health care, life insurance, retirement and so forth. It does 

preserve due process for employees, and it does not reduce opportunities for training and professional development. 

On the other hand, the National Security Personnel System will 

provide a streamlined, more responsive hiring process, simplified 

pay banding structure, which will allow us flexibility in assigning 

work, performance-based management that is linked to strategic 

and organizational goals and includes accountability at all levels, 

pay increases based on performance rather than longevity, efficient, 

faster procedures for addressing performance and disciplinary 

issues, while protecting due process rights, and a labor relations 

system that recognizes our national security mission, while preserving collective bargaining rights of employees. 

Although we plan to implement the labor relations system DODwide, we intend to phase in the HR system beginning as early as 

July of this year. We expect full implementation by late 2007 or 

perhaps early into 2008. 

We recognize that the National Security Personnel System is a 

significant change, but these are necessary changes. We will meet 

the challenge of change and change management willingly. 

Senator Akaka talked to the value of training. We agree. We are 

committed to training employees, managers, supervisors. We are 

committed to the collaborative approach that we have used to get 

to this point. We understand the concern and the anxiety of our 

employees. It would be unnatural if they were not concerned or 

anxious. We will address those concerns. 

NSPS is the right system, based on the right philosophy, at the 

right time in our history. The Department, in partnership with the 

Office of Personnel Management, the unions, interest groups, and 

our employees will implement it with efficiency, effectiveness, 

transparency, and sensitivity. 

Mr. Chairman, before I close, I would like to recognize the great 

contributions of my partner, George Nesterczuk, Dr. Ron Sanders 

12

1The prepared statement of Mr. Nesterczuk appears in the Appendix on page 89. 

and Mary Lacey. As you mentioned, they have been invaluable in 

helping us get to where we are, and they are going to be part of 

the team that takes us all the way home. 

Thank you, Mr. Chairman. 

Senator VOINOVICH. Thank you, Mr. Abell. Mr. Nesterczuk. 

TESTIMONY OF GEORGE NESTERCZUK,1 SENIOR ADVISOR TO 

THE DIRECTOR ON DEPARTMENT OF DEFENSE, OFFICE OF 

PERSONNEL MANAGEMENT 

Mr. NESTERCZUK. Thank you, Mr. Chairman, and Members of 

the Subcommittee. I want to thank you for holding this hearing at 

this particular time. It comes at a critical time in the process of developing the NSPS regulations. 

As you mentioned, we recently published the proposed regulations, and we are coming to conclusion on an initial 30-day comment period. It is an important part of our regulatory process, getting input from various constituencies, employees, and the general 

public, as well as the employee representatives of the Department. 

We are looking forward to analyzing, and assessing those inputs as 

we proceed in developing final regulations over the coming weeks 

and months. 

I would like to thank DOD for the collaboration that we have engaged in. After an initial rough start, as you mentioned, we have 

had a year’s worth of excellent cooperation, leading to what I think 

is a fairly decent proposal in our initial stab at the regulations. 

As we developed the proposal, we kept in mind the importance 

of keeping balance before everyone; balancing the interests of the 

Department, the vital mission that it has to accomplish, while, at 

the same time, not compromising the core principles of the civil 

service, and that is the principles of merit and fairness to our employees. That is the backbone of having the type of democracy and 

respect for government that we enjoy. 

We have, also, had to maintain a balance between the operational imperatives and employee interests in all of the specific 

components of the NSPS: Performance-based pay, staffing flexibilities, employee accountability and due process, as well as the reforms in labor-management relations. 

In striking those balances, we paid particular attention, as Mr. 

Abell mentioned, to protecting merit system principles, making 

sure that prohibited personnel practices are adhered to, that due 

process for employees is guaranteed, veterans preference is fully 

protected, and that employees do enjoy the right to representation 

and collective bargaining. I believe we have achieved those balances properly in our proposal. 

As we have mentioned, the outreach that we engaged in over the 

past year has been very instrumental in promoting credibility and 

acceptance, ultimately, of the NSPS regulations. DOD arranged a 

number of focus groups and town hall meetings throughout its installations around the world. Thousands of employees were directly 

engaged. DOD created an interactive website which provided access 

to a far greater audience, interactive in that questions could be 

13

raised and responded to while information was disseminated about 

the process. 

We were, also, well-informed by the DHS experience, the Department of Homeland Security, which was ongoing at the time and 

which provided some valuable input on labor-management relations and the perspectives of unions on some of these proposals. We 

were able to feed that into our development process. 

DOD, also, brought 25 years’ worth of direct hands-on experience 

with alternative personnel systems and alternative pay systems 

through their demonstrations that they have been running. OPM 

has done extensive analysis of those. We provided that analysis to 

the working groups and teams and shared those with the unions 

in the course of our engagement. 

The meet-and-confer process that is upcoming is critical to the 

continued development process. There are a number of issues that 

have not been defined in great detail, specifically, because we are 

looking for the input from the unions on ways to go. Some of the 

proposals are necessarily general to provide DOD with the flexibilities that they will need at the implementation level and subsequent evolution of the pay systems and the performance systems. 

So we have left those as enabling regulations purposely. 

There is a level of detail that we can still get to for clarification 

in the meet-and-confer process. And we recently met with the 

unions to try to start to define that process, and to coordinate 

schedules. We do look forward to constructive comment from the 

unions. Should we fail to reach those, that would be a lost opportunity, and I think the members of the unions would be shortchanged in the process. We have reached out, and we will continue 

to reach out, and the meet-and-confer process, I think, will be the 

proof of the pudding in that. Thank you. 

Senator VOINOVICH. Thank you very much. We will have 6-

minute rounds of questions. I will begin. 

DOD has laid out an aggressive implementation strategy. It is 

my understanding that implementation will occur in 3 phases, or 

spirals, and that Spiral 1 will take approximately 18 months. According to Secretary England, DOD will begin implementation with 

60,000 employees. How did the Department decide which organizations will be in that first spiral? What steps has the Department 

taken thus far to prepare employees transitioning into NSPS this 

summer? And as Senator Akaka mentioned, I share his concern regarding training of managers and the Department’s communication 

strategy with employees? 

The biggest issue is employee training and budget. How do you 

anticipate initiating implementation of this new system? 

Mr. ABELL. Yes, sir. I will try to address those in the order that 

you asked them, sir. 

First, how did we identify the folks to be in Spiral 1. We went 

out to the services and to the Defense agencies and asked for those 

who felt they were ready, those organizations that had a desire to 

move to NSPS, but, also, with a caveat that these ought to be organizations that we would evaluate these organizations who volunteered as to where were they in performance management, did they 

have a strategy where their work could be linked to the organizational and, ultimately, strategic goals of the organization. 

14

So we asked for input from the units themselves, from the major 

commands and the units. We also said that at the end of Spiral 1 

we wanted an organization to be—we wanted it to be an entire organization it was in. For instance, Air Force Materiel Command or 

an Army unit or a Navy systems command, so that we did not have 

people everywhere. 

We exempted in Spiral 1 wage grade and NAF employees because they present unique challenges, and we did not want to try 

and take on all of those challenges in the first round. So the units 

came in, the organizations came in volunteered at the service and 

OSD level, we evaluated against our criteria, and that is how they 

were selected. 

The transition is one that will be managed. It is a change management process. It involves training. It involves mock payouts, if 

you will, so that we can tell whether or not our training has taken 

effect. 

Senator VOINOVICH. Have you included in your budget funding 

for training? Will it be conducted in house or with contractor assistance? 

Mr. ABELL. The answer is, yes, sir. We are going to do both. The 

PEO’s office has a modest budget and is doing training development. The actual execution will be done in the services. It is difficult to look at a budget and see the training lines in there because there is money in those budgets every year for training, and 

it is an O&M account, which is a fungible account, as you know 

well. So the components will pay for that. There is not an NSPS 

training line, per se. 

Senator VOINOVICH. Well, I would like to see in writing what you 

allocated in the budget for the training of these individuals. 

Mr. ABELL. OK, sir. We will send that to you, 

You mentioned a communication strategy—we have also begun 

that. Ms. Lacey hosted a meeting for the commanders and the senior leaders of the organizations that are going to be in Spiral 1. 

Secretary England came down and spent a day with those folks. 

This began the orientation process. We have done, as you have 

heard reported here, focus groups, nd town hall meetings. We intend to continue that. We have command information programs. 

We have informal e-mails from the PEO’s office out to the commands that keep them up-to-date, and we have a very active 

website that keeps everyone up-to-date. 

Senator VOINOVICH. What I hear is that the Department has not 

done well with that. However, once the meet and confer process is 

over, you will have more details to answer the questions of the employees. 

Mr. ABELL. Yes, sir. We see two types of training: First, what we 

call the soft skills, which is management, change management, and 

performance management, how one does that. And then the second 

type of training does follow the more—once the regulations have 

been fluffed up with the details, that is when the specific HR management training can occur. So it is a two-sided training system. 

We are already in the first part. 

I am just about out of my time. I think what I will do is I will 

turn this over to—well, Mr. Walker, you are probably going to have 

to answer these questions from some of the other Senators here. In 

15

past hearings, you highlighted the importance of an internal DOD 

infrastructure to incorporate human capital planning process that 

is integrated with its mission, develop the internal workforce capable to develop and implement a human resource system and a validated performance appraisal system. The real issue is, yes or no, 

have you watched the system enough that you can answer these 

three questions? 

Mr. WALKER. What I have said, Mr. Chairman, is that we believe 

it is critically important that an adequate infrastructure be in place 

that has been designed, tested and where appropriate training has 

been provided with regard to that system before the additional 

flexibility should be operationalized. 

I would imagine that the Department of Defense plans to do 

that. I think it is critical that they do, if they do not, it will likely 

not be successful. But there is a lot of work that is going to have 

to be done to get them to that point. I don’t know who their Spiral 

1 entities are, but I think the other thing they ought to think about 

is there are two ways to look at roll-out. 

One way to look at roll-out is by organization, which is very 

vertical, and that is, obviously, relevant to consider. But another 

way to look at roll-out is horizontal, which is by functional area of 

responsibility, which cuts across a bunch of silos, many of which 

are hardened at DOD, silos such as the various services and other 

functional units, and I would hope they would think about the horizontal dimension as well. When you develop core competencies 

many times you will find that there are some that go throughout 

the organization, but there are others that very much lend themselves toward horizontal application across many different organizations. 

Senator VOINOVICH. Thank you. Senator Akaka. 

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

Undersecretary Abell, it is good to see you again. I want to sincerely thank you and Mr. Nesterczuk for your efforts in developing 

a new personnel system for the Department of Defense. 

And, Mr. Walker, it is good to have you with us again. GAO has 

had a great deal of experience in developing and reporting on best 

practices and implementing new personnel flexibilities, and I truly 

value your input. 

Undersecretary Abell and Mr. Nesterczuk, George Washington 

said, ‘‘The willingness with which our young people are likely to 

serve in any war, no matter how justified, shall be directly proportional to how they perceive the veterans of earlier wars were treated and appreciated by their Nation.’’

This is especially true for veterans preference in Federal employment. However, DOD’s proposed regulations do not guarantee veterans preference rights in regard to the bump and retreat options 

that preference-eligible employees have. 

Is it DOD’s intent to circumvent veterans preference under bump 

and retreat by offering temporary employment that is not guaranteed and not an appropriate intermediate step before subjecting a 

veteran to separation through a reduction in force? 

Mr. NESTERCZUK. Senator, the veterans preference was always 

foremost in our minds in the staffing area, both on RIF and on the 

16

intake side in the hiring flexibilities we provided, where veterans 

preference has been fully protected. There are no changes to that. 

On the RIF side, we also make no changes to the hierarchical retention of veterans in a reduction in force. They get exactly the 

same protections that they currently do. The one change that we 

have implemented or are proposing to implement is to build the retention registers within each of these categories, veterans preference eligibles, the disabled veterans, and the nonveterans, within 

each of those categories, retention lists would be done on the basis 

of performance first and then seniority within the performance 

groupings. That is the one change. 

But otherwise the veterans protections are the same. 

Senator AKAKA. Thank you. 

Mr. Nesterczuk, Congress intended OPM to be a full partner in 

the development and implementation of the NSPS. However, the 

regulations state that OPM may review and comment on proposed 

DOD implementing issuances, but that in cases where the Director 

of OPM does not concur with the proposed action of DOD, the Department may implement it anyway. 

What recourse does the Director of OPM have in cases where 

OPM does not concur with the actions of the DOD? 

Mr. NESTERCZUK. On implementing issuances, we have permitted 

the Department a great deal of flexibility so that they can tailor 

the issuances to the various structures and organizational components of DOD. DOD is a complex organization. 

That is why we consciously regulated, in the areas of pay and 

performance, at the level of enabling regulations, to give DOD 

those flexibilities. We will be maintaining oversight on a regular 

basis. We do on a government-wide basis and NSPS is not precluded from the same oversight in the future. 

So we will be working with DOD in its application of its internal 

regulations to make sure that they comport with government-wide 

standards and the mission requirements of the Department. We do 

not anticipate any difficulties, as there is nothing here that we do 

not currently deal with in civil service. 

Senator AKAKA. Mr. Walker, the proposed regulations allow pay 

pool managers to make final decisions for performance pay allocations, but there is no process to challenge this decision. What is 

your opinion of the lack of appeals? And what does GAO do to ensure fairness and transparency in the allocation of performance 

awards? 

Mr. WALKER. First, I think any system that provides for additional flexibility has got to have adequate safeguards to prevent 

abuse. I think part of that includes having a reasonable degree of 

transparency with regard to the results of key decisions, whether 

it be pay, whether it be promotions or other types of actions, while 

protecting personal privacy. 

Another aspect of it is to be able to have both informal and formal appeal mechanisms within the organization and outside the 

organization if individuals feel that there has been an abuse or a 

violation of the policies and procedures or otherwise the protected 

rights of the individual. 

I believe that it’s important, when you are talking about performance management, that you not just have the supervisor dealing 

17

with it. You have to have a reviewer look at it. You also have to 

have other institutional mechanisms within the department or 

agency. For example, the Human Capital Office, which is not a line 

organization, is a supplement, not a substitute, for the line, the Office of Opportunity and Inclusiveness, to be able to look to try to 

provide reasonable assurance that there has been consistency and 

nondiscrimination. 

And then in the end, to have reasonable transparency and appropriate appeal rights if people believe they have been aggrieved in 

some way. 

Mr. NESTERCZUK. Can I add to that? Because it is an important 

consideration for us, too, transparency and making sure that there 

is a sense of fairness and employee buy-in. If employees do not 

think that it is fair, they are not going to buy in, particularly in 

the performance appraisal area. They have to buy in. 

We did build in an appeal process. There is a built-in administrative review, a departmental review, proposed. That is something 

that we are willing to flesh out in the course of meet and confer. 

If that is not sufficiently credible, we are willing to talk about that. 

But the idea is to have an appeal process in there, a review process, that lends credibility to the system. 

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

Senator VOINOVICH. Senator Coburn. 

Senator COBURN. Thank you, Mr. Chairman. 

My questions really go back to what you have been talking 

about, and I would ask the Secretary and Mr. Nesterczuk to just 

outline—the whole basis for controversy over this is the lack of confidence that it is going to be handed out fairly, that it is trustworthy, that there will not be individual bias in the management 

above somebody, that they will use something other than a standard of performance and work to measure somebody’s performance 

in the long run, which, i.e., will become their basis for earning a 

living—outline for me, both in a positive sense and a negative 

sense, the steps that are in the implementation of this that will assure the employees of DOD that you are going to build the confidence into the system, so that they know that their questions and 

their openness to abuse is going to be answered. 

I would like for you to just detail that. I think that will give us—

and thinking, put their hat on for a minute, and if you were in that 

position, what would you like to see in terms of fairness. And I 

would like for you just to summarize quickly, if you would. I will 

not have any other question. Here are the positive things that we 

are doing to assure that. Here are the penalties if somebody violates that. In other words, just go through it, if you would, in a systematic fashion, to list both the positive and negative incentives 

that are in this system that will assure people who work for DOD 

that they are going to have a fair system. 

Mr. ABELL. I will start, sir, and then I will defer to my colleague. 

This whole system, as many have said, is predicated on being 

credible and being respected. And we will demonstrate, through 

communications, and our actions, and our regulations, to the workforce that all the safeguards that they would want are there. They 

are going to participate in the training. They are going to participate in the setting of their goals, their performance standards, and 

18

they will participate in the quarterly or semi-annual evaluations 

with their supervisors. 

The supervisor’s decision is not one of total discretion. It is reviewed by a board of the supervisor’s peers. The supervisor’s pay 

raises are contingent upon the success of the work unit and not his 

personal production or performance, so it is the supervisor’s incentive to have his work unit do well. Thus, he would be incentivized 

to reward those who perform. And the overriding thing I think is 

that the Department of Defense is an institution that values, cherishes, demands success, and success only comes from a cohesive 

workforce. So those are the positives. 

The negative incentives, if you will, there will be, there is, accountability at all levels. Our commanders watch our supervisors. 

Our supervisors watch those managers below them. It is an open 

process. It is transparent. There are avenues for those who feel 

they have not been treated fairly, and our union partners are, also, 

watching, helping us identify areas where we need to do better. 

Mr. NESTERCZUK. Although the proposal for the NSPS is a new 

personnel system, and there is a lot of newness about it in the payfor-performance system and some of the classification system 

changes. Yet from an employee’s perspective, their rights, their 

rights to contest any of the processes or procedures really don’t 

change. The prohibited personnel practices have not changed. So, 

if there are any decisions that are arrived at in the course of NSPS 

on pay, on performance, on adverse actions that an employee feels 

are not fair or not right, whether it is nepotism, favoritism, political performance, whatever, none of those have changed. 

So the safety net, from an employee’s standpoint, is that the avenues for appeal are still the same, and those are familiar to them. 

Senator COBURN. So that means, if I am an employee at DOD, 

and I outperform and I produce, I am going to make more? 

Mr. NESTERCZUK. Yes. 

Senator COBURN. I am going to hold you all to that because that 

is the only way this works for those employees. You cannot say 

here is the carrot and not give the carrot. 

Mr. Walker. 

Mr. WALKER. Senator, a couple of comments. 

First, if the system is not credible, it won’t be effective. You have 

properly pointed out the need to balance flexibility with safeguards 

to prevent abuse. 

The other thing I think we have to keep in mind is there is nothing probably more complex and controversial in the human capital 

area as classification and compensation issues. These are the closest to the bone you are ever going to get in any organization. We 

have to keep in mind where we are coming from as well. 

Right now, we have an overly complex, very hierarchical classification system that also includes compensation ranges that, in 

many cases, are not reflective of the current market. 

Second, we have a system whereby, for a typical Executive 

Branch agency, 85 percent-plus of the pay raises have nothing to 

do with skills, knowledge, and performance. 

They are on autopilot. So, by definition, that means to the extent 

that you end up moving to a system that is more market based and 

performance oriented, that is a huge change. And to the extent that 

19

it involves more management discretion and more meaningful performance appraisal systems, there is understandable apprehension. 

If there is not trust in management, if there is not an understanding of the system, if there are not adequate safeguards and 

transparency mechanisms, you are going to have big problems. 

They are at the beginning of a long road, and one of the things 

that has to happen is for the meet-and-confer process to be meaningful, for a lot of these details to be worked out because these details do matter. DOD needs to continue to take this in a phased approach, learning as they go along to be able to continuously improve as they move forward. 

Senator COBURN. Thank you, Mr. Chairman. 

Senator VOINOVICH. Senator Levin. 

OPENING STATEMENT OF SENATOR LEVIN 

Senator LEVIN. Thank you, Mr. Chairman. 

I would like to go right to that issue of employee confidence, 

credibility, acceptance, and apprehension. Before you have even 

gotten to the proposal in the draft regulation before us, we have 

a pay-for-performance issue which is very current. 

We have a law that says that performance has got to be the basis 

for pay increases, and yet on July 12 of this year the director of 

administration and management, in the Office of the Secretary of 

Defense, directed across-the-board pay raises of 2.5 percent, which 

is the maximum increase allowable for senior executives who are 

political appointees. For nonpolitical senior executives who got the 

same performance rating, they get a 2-percent pay increase. 

Now, on February 4, Senators Warner, Collins, Lieberman, and 

I wrote Secretary Rumsfeld, pointing out that the decision to use 

the career or noncareer status of an employee as a factor in the 

awarding of a pay raise is inconsistent with the law and with the 

Department’s stated intent to pay employees on the basis of performance. We asked the Secretary to take appropriate steps to ensure that the pay raise for DOD senior executives is implemented 

in a manner that is consistent with the requirement of law and policy, but the Department has not yet taken those steps. 

So, Mr. Abell, are you going to take those steps or not? 

Mr. ABELL. Senator, we are going to take those steps. It is prospective at this point. We have a performance plan that is currently with our colleagues at OPM, SES performance plan with 

OPM, that will comport with the spirit and intent of the law for 

performance management for our Senior Executive Service going 

forward. We anticipate that we——

Senator LEVIN. ‘‘Going forward’’ is not enough. We have a law 

that is in place now——

Mr. ABELL. Yes, sir. 

Senator LEVIN [continuing]. For current pay increases. Why is 

that law not being abided by? And why would employees have confidence in the future in your pay-for-performance proposal, when 

you have got a law now that says performance has got to be the 

basis for pay increases, but you have a 2.5-percent across the board 

for political senior executives and 2 percent for nonpolitical senior 

executives. Why does that engender confidence, and why is it legal? 

20

In other words, not just promises about what you are going to 

do in the future. You have got an existing law, why is that not 

being abided by? Why are not this year’s pay increases based on 

that law and on the same premise and principle that you just laid 

out for the future? 

Mr. ABELL. The January sequence of events, the performance 

evaluation was based on a legacy system, an old system, that was, 

essentially, a pass/fail system—is, essentially, a pass/fail system. 

The DOD general counsel has reviewed the actions that were reported in the letter from the director of Administration and Management and has opined that they were legal. I am not a lawyer. 

I do not practice law in the Department of Defense, so I leave that 

to the general counsel, but that is a report from there. 

Senator LEVIN. Putting aside the law, is it a coincidence that 

every political appointee gets a 2.5-percent increase and the nonpolitical appointees get 2 percent? Is that a coincidence for the 

same performance improvements? 

Mr. ABELL. Sir, as I recall, the director of Administration and 

Management letter, the noncareer folks could fall into a category 

of 2.5, 2.3, or 2—I am recalling that off the top of my head—depending, again, on how their performance was rated. 

The noncareer folks were rated as well. Their performance was 

evaluated, although not in the same system as the career SES, and 

that was the basis for those decisions. 

Senator LEVIN. Are you saying there was individualized appraisal of the noncareer employees? Mr. Abell, you are proposing 

a system here which is based on an important premise. You are not 

living by that premise right now, despite the law’s requirement 

that you abide by the pay-for-performance rule now. 

There are a lot of other issues that these regulations raise, and 

my time is almost up, but I have to tell you it goes right to the 

heart of questions which have been raised here—pay-for-performance. You are not abiding by the current law. Why would people 

have confidence that the discretion which is being given is going 

to be used fairly, when it is not being used fairly right now under 

current law? It is not being used individually. It is a pattern. It is 

based on your political or nonpolitical appointment status. 

I think, and this is a letter which the Chairman of this Subcommittee, the Ranking Member of this Subcommittee, Senator 

Warner and I have raised with the Department. It seems to me we 

are entitled, and more importantly the people of the United States 

and the employees are entitled to an answer on a very fundamental 

question which has been raised by this letter. And it is not good 

enough to simply say the lawyers have approved it. 

I hope you would reconsider it because it goes to the heart of 

what you are proposing here. 

My time is up, Mr. Chairman, unless he wants an opportunity 

to respond. 

Mr. ABELL. Senator, I understand. I will report your concern 

about not responding to the letter. I am sure the Secretary will 

give you a comprehensive response. 

Senator LEVIN. Thank you. 

Mr. WALKER. Senator Levin, we have not been asked to look at 

this issue from a legal standpoint, but as you know, yourself and 

21

others being lawyers, the law represents the minimum standard for 

acceptable behavior. You do not want to just do what is arguably 

legal, you want to do what is right, and, hopefully, you will get a 

response. 

Senator VOINOVICH. Senator Pryor. 

OPENING STATEMENT OF SENATOR PRYOR 

Senator PRYOR. Thank you, Mr. Chairman. 

Mr. Walker, I want to ask you just a big-picture question. And 

that is, in the 107th Congress, we acted to create a new personnel 

system for the Department of Homeland Security, and that was 

created through legislation. Last year, Congress passed legislation 

that allowed fairly significant changes in the DOD personnel system. Are we getting to the point where it no longer makes sense 

to go through this agency-by-agency, that we ought to look more 

globally at our civil service system across the board? I would like 

to hear your comments on that. 

Mr. WALKER. I do think that, ultimately, the Congress is going 

to want to look at the entire civil service system because what has 

happened over the years is that we now have a situation where, 

through the individual initiatives of various departments and agencies, and in the interest of full and fair disclosure, including GAO, 

over 50 percent of the Federal workforce is now covered by new 

systems, systems that provide for broadbanding, that provide for 

more market-based and performance-oriented compensation systems, that, also, provide for certain other flexibilities. 

I think over time we are going to need to try to make sure that 

there is more consistency throughout the Federal Government. By 

that I mean not that there should be one broadbanding system or 

one pay-for-performance system, but that these types of flexibilities 

apply broadly throughout government. I think it is very important 

that we make sure that certain values, certain principles, and certain safeguards should apply throughout the Federal Government 

in order to maximize the chance of success and minimize the possibility of abuse. 

Senator PRYOR. So do you think we ought to continue going agency-by-agency or even department-by-department or is it time now 

to really look at the entire system collectively? 

Mr. WALKER. I think, at a minimum, you need to look at what 

type of principles and safeguards should be in place throughout the 

Federal Government. These can serve to provide the glue that 

binds us together and can help to provide reasonable assurance 

that any flexibilities that exist would be both effective, credible, 

and nondiscriminatory. 

Senator PRYOR. Mr. Abell, in your opening statement you said, 

‘‘We,’’ meaning the Department of OPM, ‘‘We take this task seriously and recognize the responsibility we have to balance our vital 

national security mission with protecting the interests of the people.’’

I am curious about that statement. Could you explain some specific instances in the past where you believe the ‘‘interests of the 

people’’ have differed from the ‘‘national security mission’’ of the 

Department. 

22

Mr. ABELL. Senator, as the many instances of testimony over the 

proposal to approve the National Security Personnel System, this 

type of question came up over and over again. And I think the answer is that, moving forward, we do not want to do that. We do 

not want to have one get out of balance with the other. I do not 

think that implies that it is currently out of balance——

Senator PRYOR. Or it has been out of balance in the past. 

Mr. ABELL. Or it has been out of balance. As I said earlier to 

Senator Coburn, it is an organization that does succeed, the Department of Defense is. Failure is not an option, and so our employees, and our managers, and our commanders collaborate to 

make sure that occurs. 

Senator PRYOR. Yes, I heard your answers to Senator Coburn’s 

questions, which I thought were very good questions. Maybe I misunderstood that sentence or that phrase from your opening statement, but I wanted to just clarify, for the Subcommittee’s purposes, 

that you are not saying that it has been out of balance in the past. 

Mr. ABELL. No, sir, I am not implying that is a change. 

Senator PRYOR. Now, Mr. Abell, my understanding is that performance expectations are not required to be put in writing; is that 

right? 

Mr. ABELL. No, sir, that is not correct today, and it will not be 

correct in the new one. Supervisors and employees will sit down together. They will lay out at the beginning of a performance cycle, 

an evaluation cycle, what the objectives are, what the standards 

are. There will be periodic reviews during that cycle, and then at 

the end of the cycle will be the evaluation. 

Senator PRYOR. I am just asking how is that going to be documented? Is all of this required to be in writing? 

Mr. ABELL. Yes, sir. There will be instances during the evaluation period where changes occur, as mission changes, as production 

needs change. It depends on the organization. Not all of those may 

be necessarily in writing, but the initial one certainly would. 

Senator PRYOR. Well, my experience in matters relating to personnel in my private law practice or as the attorney general of my 

State, is that it is important to be consistent. And you are probably 

much better off in the long term to take the time to get as much 

in writing as possible because people’s memories get hazy over 

time, and they have different understandings of what was said or 

what was implied. So I would think that the Department needs to 

try to make sure they have a good, concise way to document this, 

otherwise I think you are asking for trouble. 

Thank you, Mr. Chairman. 

Senator VOINOVICH. Thank you, Senator Pryor. 

I am going to have a short 2-minute question period. 

I hope that you are tracking what the Department of Homeland 

Security is doing in designing their personnel system. Please clarify 

for me why some aspects of the NSPS rules will be different from 

those at the Department of Security. For example, the Homeland 

Security Labor Relations Board has a process for participation by 

the unions in selecting the members of the Board. From my 

pespective, the Defense Department needs a good reason for differences between its personnel system. 

23

The other question I have concerns certification of NSPS. For 

more than 300,000 employees to be covered by NSPS it has to be 

certified. Who is going to certify the system. Is that the Office of 

Personnel Management, Mr. Nesterczuk? 

Mr. NESTERCZUK. We have talked to the Department about that. 

We will set up some evaluation criteria. The PEO is in the process 

of doing that, setting up an evaluation program as part of the implementation. We will work with them on that, and we will help 

them achieve that certification. 

Senator VOINOVICH. I am going to be very interested in making 

sure that process—I want to understand what it is, I want to know 

what the metrics are and so on because 300,000 is a lot of people, 

but at least we have got an opportunity then to go back and review 

how the system has worked. 

Senator LEVIN. Thank you, Mr. Chairman. 

Mr. Abell, as you know from your past experience, the Senate 

Armed Services Committee has had a lot of dealings with a broad 

range of actions that are taken in personnel actions involving military personnel. These issues come up in the context of confirmation 

hearings for senior officers, and we see cases that range from misuse of government property, abuse of authority, to drunken driving, 

to retaliation against whistleblowers. Nonetheless, even in those 

cases where there are shortfalls, human failings, we have officers 

that are recommended for promotion and, as far as I am concerned, 

rightly so. 

I do not need to tell you, because of your experience, just how 

many letters we get from the Department that will identify an offense committed by a nominee, but reach a conclusion that it was 

an isolated incident in that officer’s career, and it should not preclude promotion to a higher rank. But the draft regulation provides 

that a proposed penalty against a DOD civilian employee may not 

be reduced on appeal unless ‘‘the penalty is so disproportionate to 

the basis for the action as to be wholly without justification.’’

And even in those cases where the penalty is reduced, the draft 

regulation states that ‘‘the maximum justifiable penalty must be 

applied.’’

That is pretty draconian, and it is not consistent with the promotion policy for our uniformed military officers. For instance, the 

draft regulation does not even allow the reviewing authorities to 

take into account a lot of factors that could reduce the penalty, 

such as the employee’s past record, whether the offense was intentional or inadvertent, consistency of the penalty with those imposed 

on other employees for the same or similar offenses. Instead, it just 

simply says that the MSPB—the Appeal Board—should apply ‘‘the 

maximum justifiable penalty.’’

Now, would it not make more sense to recognize, in the case of 

DOD, civilian employees, as we do for senior military officers, that 

there is a whole range of penalties that may be appropriate for a 

given offense, depending on its context? And should not the regulations reflect the full range of factors that could be considered in determining an appropriate remedy? 

Mr. ABELL. Sir, I believe that you are referring to what prerogatives accrue to an administrative judge who is reviewing an appeal, 

MSPB administrative judge. And it is true that the proposed reguVerDate 0ct 09 2002 10:33 Aug 10, 2005 Jkt 020176 PO 00000 Frm 00027 Fmt 6633 Sfmt 6601 C:\DOCS\20176.TXT SAFFAIRS PsN: PHOGAN
24

lations would limit the administrative judge’s ability to mitigate 

the punishment. He may—he or she—may recommend mitigation 

back to the Secretary of Defense, but does not have, under our proposed regulations, the ability to direct that mitigation. 

I think that is entirely consistent with the military side that you 

described in that the military side is done solely within the Department of Defense. All of those same leaders and those same concerns for due process exist prior to the case getting to the administrative judge, and then the administrative judge sends back his 

findings to the Secretary, who again can review it and take one of 

three actions, as I understand it. 

Senator LEVIN. Is the DOD allowed to consider those factors or 

must the maximum justifiable penalty be applied? This is not a 

question of whether it is a recommendation or not. This is a question of whether or not the maximum justifiable penalty has to be 

applied or whether you can take into consideration, whoever makes 

that final decision, the full range of factors which are normally considered in employment cases, whether it is promotion or punishment. 

Mr. ABELL. Senator, my understanding of the regs is that they 

are not intended to direct a supervisor, manager or commander to 

employ the maximum penalty possible. If it says that, we will review it and look at it. 

Senator LEVIN. But the MSPB, on its decision, must do that. 

Mr. ABELL. Yes, sir. The ability of the MSPB to change the finding of the leadership of the Department of Defense from the individual through the Secretary is limited, and that is to consider the 

national security mission and the impact on the national security 

mission, but that does not imply that the line of supervision from 

the individual through the Secretary is somehow limited. 

Mr. NESTERCZUK. Let me make a comment here, if I may, Senator, since we had some input on this as well. 

Our concern was that the statute permits the Department to establish new standards in the area of appealing decisions. The reason is there are many instances of AJs second-guessing first-line 

managers who make a penalty decision in the context of mission, 

in the context of operational requirements. Managers are subsequently second-guessed in an entirely different context, may be 

based on the AJ’s experience with an agency with a less-vital mission, where a similar transgression could call for a less-severe penalty. 

So this is an attempt to give more weight to the mission requirements of the Department, the operational needs of the Department, 

in achieving——

Senator LEVIN. You can give presumptive weight. You do not 

have to direct that an appeal body apply the maximum justifiable 

penalty. You can give a presumption to a decision without being 

this inflexible, rigid and draconian on the appeal of that decision. 

Thank you, Mr. Chairman. 

Senator VOINOVICH. Senator Akaka. 

Senator AKAKA. Senator Pryor can go first. 

Senator VOINOVICH. Any other questions, Senator Pryor? 

Senator PRYOR. No questions. 

Senator VOINOVICH. Senator Akaka. 

25

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

Following on Senator Voinovich’s question, and this is to Undersecretary Abell, the proposed regulations state that the internal 

National Security Labor Relations Board will consistent of members selected by the Secretary, except for one appointed by the Secretary upon consultation with OPM. 

Why have Federal employees been left out of this process? 

Mr. ABELL. Senator, there are a number of ways that we could 

have done this. As Senator Voinovich points out, DHS used a different model. This is something that we can, and will, review during the meet-and-confer process, but this is the model that we selected to put in our proposed regulations. 

Senator AKAKA. Undersecretary Abell, the regulations state that 

DOD will issue implementing issuances on premium pay and compensatory time, including compensatory time off for travel. As author of the new governmentwide compensatory time for travel provision, I am interested in learning what changes DOD plans to 

make to this provision, and what are some changes being considered to the compensatory time for travel provisions of Title 5? 

Mr. ABELL. Senator, I do not know that we have any changes to 

that in mind at this point. 

Senator AKAKA. Let me, also, follow up on the line of questioning 

of Senator Levin. Could you provide us with examples of AJs disregarding agency mission. 

Mr. ABELL. Yes, sir. I have several here if you would like them 

or I can give them to you for the record, whichever way you choose. 

Senator AKAKA. Thank you very much. For the record is fine. , 

Mr. Chairman, my time has expired. 

Senator VOINOVICH. Obviously, there are a lot more questions. 

We will submit them for the record and give you an opportunity 

to answer them. 

We thank you very much for the work that you have put into 

this. Mr. Walker, thank you for staying on top of this whole area. 

We hope that the period that the meet and confer process will be 

fruitful. I am glad, Mr. Abell, you said that you would be willing 

to extend it beyond the minimum 30 day requirement, as was the 

case with the Department of Homeland Security. It is really important that the regulations be vetted and everybody feels that they 

have had an opportunity to discuss concerns. So I hope you remain 

committed because I think the commitment of senior leadership 

will determine whether or not NSPS is going to be successful. 

Thanks very much. 

Mr. WALKER. Thank you, Senator. 

Senator VOINOVICH. Testifying in our second panel is Richard 

Oppedisano, the National Secretary of the Federal Managers Association. Testifying on behalf of the United DOD Workers Coalition 

are John Gage, President of the American Federation of Government Employees, and Gregory Junemann, President of the International Federation of Professional and Technical Engineers. 

Thank you for coming. I know that all of you have invested much 

time and energy on this issue. I also know that you have many concerns, and I look forward to your testimony. 

If you will all stand, I will swear you in. 

[Witnesses sworn en masse.] 

26

1The prepared statement of Mr. Oppedisano appears in the Appendix on page 106. 

The record will indicate that the witnesses answered in the affirmative. 

We will begin with Mr. Oppedisano. 

TESTIMONY OF RICHARD OPPEDISANO,1 NATIONAL 

SECRETARY, FEDERAL MANAGERS ASSOCIATION 

Mr. OPPEDISANO. Thank you, Mr. Chairman. 

Chairman Voinovich, Ranking Member Akaka, and Members of 

the Subcommittee, I sit before you today as the National Secretary 

of the Federal Managers Association, FMA. I was recently retired 

as the chief of staff and the operations officer for the U.S. Army 

Watervliet Arsenal in Watervliet, New York. I have been involved 

in human resource management and labor relations for the better 

part of my 30 years of Federal civil service before retiring last May. 

On behalf of the nearly 200,000 managers, supervisors, and executives in the Federal Government whose interests are represented 

by FMA, I would like to thank you for allowing us to express our 

views regarding the proposed personnel regulations outlining the 

National Security Personnel System, NSPS, at the Department of 

Defense. 

Managers and supervisors are in a unique position under the 

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

also be subjected to its requirements. As such, managers and supervisors are pivotal to ensuring the success of the 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 on-theground functions of the civilian DOD workforce. 

The proposed rules that were provided in the Federal Register

were not all-inclusive. The proposal indicates that detailed instructions will be provided in DOD’s implementing regulations. Without 

these detailed regulations, it is difficult to have a complete understanding of the regulatory requirements. Therefore, we recommend 

that the implementing regulations be made available for review 

and comment prior to being issued as final. 

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 an intensive training program and budget proposals 

that will lend credibility to the intent of the new personnel system. 

We, also, need the consistent oversight and appropriations 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 be 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 critical that this happens in the implementation of these regulations. Training of managers and employees on 

their rights, responsibilities and expectations, through a corroboraVerDate 0ct 09 2002 10:33 Aug 10, 2005 Jkt 020176 PO 00000 Frm 00030 Fmt 6633 Sfmt 6601 C:\DOCS\20176.TXT SAFFAIRS PsN: PHOGAN
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tive and transparent process, will help to allay concerns and create 

an environment focused on the mission at hand. 

Managers have often been given additional authority under the 

final regulations in the area of performance review and pay-for-performance. We must keep in mind that managers will, also, be reviewed on their performance and, hopefully, compensated accordingly. 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 cannot do this 

alone, cooperation between management employees must be encouraged in order to debunk myths and create a performance and 

a results-oriented culture that is so desired by these final regulations. Managers have also been given greater authority in the performance review process that more directly links employees’ pay to 

their performance. We believe that transparency leads to transportability, as interdepartment drop 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 regulated 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 maintaining a cooperative and 

congenial work environment. Title 5 CFR 251 and 252 allows FMA, 

as an example, to come to the table with DOD 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 critical to its long-term vitality. 

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

and DHS to hold close to merit systems principles, and we cannot 

stress adherence to these timely standards enough. However, we 

also believe that there is a need to be additional guiding principles 

that link all organizations of the Federal Government within a 

framework of a unique and a single civil service. OPM should take 

the current systems being implemented at DOD and DHS and create a set of public principles that can be guided for all other agencies and their efforts to develop new systems—systems that parallel one another to allow for cross-agency mobility and evaluation 

instead of disjointed ones that become runaway trains. 

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

system at DOD 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 systems roll-out, the willingness of 

OPM and DOD to reach out to employee organizations such a FMA 

is a positive indicator of cooperation and transparency. 

We look forward to continuing to work closely with the 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 important matter. Should you need addiVerDate 0ct 09 2002 10:33 Aug 10, 2005 Jkt 020176 PO 00000 Frm 00031 Fmt 6633 Sfmt 6601 C:\DOCS\20176.TXT SAFFAIRS PsN: PHOGAN
28

1The prepared statement of Mr. Gage appears in the Appendix on page 126. 

tional feedback or have any questions, we will be glad to offer our 

assistance. 

Senator VOINOVICH. Thank you very much. Mr. Gage, welcome 

back. It is nice to see you, again. I compliment you on developing 

a union coalition, on whose behalf you are testifying today. I understand there are 27 unions in the coalition? 

Mr. GAGE. I think there are 36 unions. 

Senator VOINOVICH. I stand corrected. I thought that I had a lot 

when I was mayor of Cleveland. We had 27. 

Mr. GAGE. That does not make it easier. That is for sure. 

Senator VOINOVICH. We look forward to your testimony. 

TESTIMONY OF JOHN GAGE,1 PRESIDENT, AMERICAN 

FEDERATION OF GOVERNMENT EMPLOYEES 

Mr. GAGE. Thank you, Mr. Chairman and Members of the Subcommittee. 

I want to focus my remarks on the broad outline of a pay-for-performance scheme that was included in the proposed NSPS regulations. Our unions’ objections are detailed in our written testimony 

and formal comments in response to the February 14, 2005 Federal 

Register notice. 

Today, I want to emphasize that DOD’s proposed pay system is 

nothing more than an elaborate and costly mechanism to reduce 

salaries and salary growth for the vast majority of DOD workers. 

It is interesting to note that in response to the outpouring of workforce opposition to NSPS, DOD has launched an effort to convince 

its employees that they will do better under the new system. They 

are trying to sell it as market-sensitive pay rather than performance pay. But our members seem to know that no matter what 

name is attached, the NSPS is no more about market sensitivity 

than it is about performance. It is not about improving their pay. 

After all, the general schedule and locality pay component are 

both supposed to be market-based system. The GS is supposed to 

combine periodic performance-based raises called within-grade increases with market-based adjustments to the entire schedule. 

FEPCA’s locality raises are, also, supposed to be entirely marketbased. Likewise, blue-collar Federal employees are supposed to receive market-based prevailing rates, but neither the GS nor the 

blue collar FWS system ever actually uses the market data because 

of budget constraints. 

DOD’s scheme, whether it is market sensitive or market based, 

does not even promise market rates on paper. Instead, it admits 

that budget neutrality will be the primary principle guiding pay 

raises. Despite the fact that DOD has not revealed anything close 

to the detail necessary to evaluate its plan properly, we know 

enough to be strongly opposed to it as both a tremendous waste of 

time and money and a guaranteed way to introduce corruption, cronyism and chaos into a workplace that should be focused on national security and troop support. 

First, no one whose performance is judged fully satisfactory will 

receive any raise at all unless DOD decides to adjust the bottommost level of his or her pay bands. DOD will be able to use any 

29

one of numerous factors to justify a decision not to raise the bottom 

of the pay band, factors that will include, but not be limited to, its 

own interpretation of data it buys from consultants. One year it 

might refuse to adjust the bottom because its consultants say it is 

not necessary. Another year it might refuse to adjust the bottom 

because it is not recruiting at the entry level and, thus, there is 

no need to make any adjustment. Any reason will do. 

But in the meantime, when entry rate is frozen, every other rate 

in the band will be frozen as well. And it is my suspicion that the 

market rate will be used to lower entry rates rather than to raise 

them. Movement within a band, a so-called performance raise, will 

be worth less and less in terms of purchasing power if the rates 

are not adjusted due to a freeze on the entry level. 

These performance raises will also be a moving target. Even if 

your supervisor recommends you for a raise based on your performance, you end up competing against everyone else whose name is 

placed in that performance pay pool. Whether you are a winner or 

a loser in that contest has nothing to do with performance. It will 

be all about which component is a priority that year, and there will 

be no uniformity regarding the size of a performance raise. An employee rated outstanding in one place may get 2 percent, while another working elsewhere, with the identical job and an identical 

outstanding rating, might receive 1 percent or nothing at all. 

An individual’s performance rating in the DOD scheme will be a 

crucial factor in deciding salary level, salary adjustments and vulnerability to reduction in force. However, in the proposed regulations, these evaluations will not be subject to challenge through the 

union’s negotiated grievance and arbitration process. This last is 

perhaps the system’s fatal flaw. DOD management has decided to 

base the two most critical aspects of an employee’s job—his pay 

and whether he keeps his job in the face of RIFs—on his performance evaluation. Yet it is not willing to allow those evaluations to 

be held up to scrutiny by an impartial third party. It is not willing 

to require that the documentation justifying a performance evaluation be made available to the employee and not willing to let the 

employee have a real opportunity to challenge the evaluation. This 

absence of accountability on the very mechanism that DOD intends 

to place at the heart of its new personnel system makes a mockery 

of its promise to uphold the merit system principles and is simply 

not credible. 

If employees cannot appeal performance ratings to an impartial 

third party, how will they or the public know that salaries in the 

Defense Department are based upon factors other than politics? If 

employees cannot appeal performance ratings to an impartial third 

party, how will they or the public know that getting or keeping a 

job in the Defense Department is based upon who you know, rather 

than what you know. There will be no way to verify this. The hubris on the part of the DOD will doom its system. The only question is how much damage will be done before the scandals amount 

to such a level that Congress is forced to enact new legislation that 

constrains the power of the Agency to act without accountability to 

any outside authority. 

Pay-for-performance schemes, even those not plagued with the 

DOD’s fatal flaws, have never been shown to deliver improved perVerDate 0ct 09 2002 10:33 Aug 10, 2005 Jkt 020176 PO 00000 Frm 00033 Fmt 6633 Sfmt 6601 C:\DOCS\20176.TXT SAFFAIRS PsN: PHOGAN
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1The prepared statement of Mr. Junemann appears in the Appendix on page 140. 

formance in either the public or the private sector. Indeed, they do 

not improve performance of either individual workers or organizations. And unless substantial additional resources are made available to fund pay-for-performance, these schemes inevitably end up 

lowering pay for the majority of workers and diverting enormous 

resources to bureaucracies rather than mission. 

Professor Jeffrey Pfeffer of Stanford University’s School of Business summed up the research on pay-for-performance by saying 

that it eats up enormous amounts of managerial resources and 

makes everyone unhappy. Thank you, Senator. 

Senator VOINOVICH. Thank you, Mr. Gage. Mr. Junemann. 

TESTIMONY OF GREGORY J. JUNEMANN,1 PRESIDENT, INTERNATIONAL FEDERATION OF PROFESSIONAL AND TECHNICAL ENGINEERS 

Mr. JUNEMANN. Thank you, Mr. Chairman. I would like to thank 

the Subcommittee of the Oversight of Government Management, 

the Federal Workforce and the District of Columbia for holding today’s hearing. I would also like to extend a special note of appreciation to Chairman Voinovich and Ranking Member Akaka for giving 

me the opportunity to testify here. 

Before I begin my personal remarks, I would like to join my good 

friend John Gage in submitting the official record of the comments 

of the United DOD Workers Coalition, the UDWC, of which IFPTE 

is a member. The document represents the official testimony of the 

UDWC, a coalition of 36 unions working together on this NSPS 

issue. I would like to directly associate myself with the UDWC document, which was delivered to this Subcommittee last week. 

Although I would be happy to engage in discussion on pay-forperformance, I will restrict my remarks to the Department’s regulation subparts on appeals and labor relations. The features of 

these two sections are critically important if we want to preserve 

fairness and equity for the civilian workforce of the Department of 

Defense and the accountability of management. The Department 

has insisted that it requires flexibility in its personnel system, and 

this is necessary to better our Nation’s security. But so far we have 

seen no evidence that this system, despite its title, was developed 

with our national security in mind. 

DOD states that the current appellate system is complex, legalistic and slow. But gutting the current personnel system and effectively starting over simply will not work. 

First, it strikes at the heart of a system of justice that is crucial 

to assuring employees that they work in an environment where 

their side of the story can be heard and not ignored. 

Second, in some ways, it will not streamline the system, but will 

make it more complex. 

Finally, it will push good employees out of government service 

and discourage qualified employees from applying. 

At every juncture in these regulations, the Department is seeking to avoid being held to any objective standards. Even third parties, like the Merit System Protections Board, are required to afford DOD great deference in interpretation of these regulations. 

31

This creates an entirely new legal standard which an established 

body of law, under MSPB, already exists and is yet another loophole for managers to escape accountability for their actions. 

DOD has not even provided evidence as to why MSPB’s authority 

to provide impartial review should be usurped. We do not think it 

is required to protect our Nation’s security since, under the current 

personnel system, separation or removal already may be effective 

rapidly, if in the interests of national security. 

Finally, DOD claims that the complexity of the existing system 

deters managers from taking the necessary action against poor performers and those engaged in misconduct. We have long maintained that the proper training and resource management within 

the existing personnel system would allow managers to maintain 

discipline, ensure efficiency and good performance, while maintaining fairness and esprit de corps within the workforce. Certainly, it 

would be cheaper than creating an entirely new and untested system. 

As to the issue of labor relations provisions the goal of the Department says it seeks to accomplish may be achieved, as it has always been, by the continued adherence to the provisions of Chapter 

71 of Title 5. The Department has not pointed to a single instance 

in which the Department has ever failed to carry out its mission 

swiftly and authoritatively due to the existence of Chapter 71 requirement. 

Congress provided the Department with new tools to increase efficiency, bargaining above the level of bargaining unit recognition 

and new, independent third-party review of decisions. The Department needs only to use these new tools properly and train managers and supervisors properly to use the authority that the current law provides. 

Despite the plain meaning of the statute, the Department is attempting to eradicate existing labor law protections. Again, the sole 

purpose appears to be avoid accountability not to protect national 

security. The regulations drastically limit the subjects of bargaining, expand management’s right to act unilaterally and to restrict and/or eliminate the rights of employees. 

By far, the most outrageous feature of Subpart 1 of the regulations is the creation of what can only be described as a kangaroo 

labor board, the National Security Labor Relations Board. Board 

members are to be appointed by the Secretary and will essentially 

replace the Federal Labor Relations Authority, which just celebrated 25 years of success in the Federal labor relations business. 

In conclusion, every successful civil service system ensures a few 

basic critical concepts—flexibility, yes, but also fairness, consistency, and accountability. The Department has taken a straightforward mandate from Congress and abused it. It has reserved for 

itself a great deal of flexibility while shedding accountability and 

fairness. 

We strongly urge Congress to step in. Any new personnel system 

should preserve, at the very least, the following attributes: 

It should provide, as does the current system, for a choice between Merit Systems Protection Board and negotiated grievance/arbitration procedures for all serious adverse actions. 

32

It should provide impartial review of labor relations disputes by 

an independent entity like the Federal Labor Relations Authority. 

We recommend that the FLRA’s current role be preserved in its entirety. 

It should, as the law requires, protect the due process rights of 

employees and provide them with fair treatment. 

Employees must have the right to a full and fair hearing of adverse actions appeals before an impartial and independent decisionmaker, such as an arbitrator or MSPB. 

DOD should be required to prove, by the preponderance of evidence, that adverse actions imposed against employees promote the 

efficiency of the service. 

An impartial and independent decisionmaker must have the authority to mitigate excessive penalties. 

This concludes my remarks, Mr. Chairman, and again thank you. 

Senator VOINOVICH. I would like to thank the panel for your testimony. 

Senator WARNER. Mr. Chairman, would you indulge me, I have 

a remark or two? 

Senator VOINOVICH. Senator Warner, of course, I will. 

OPENING STATEMENT OF SENATOR WARNER 

Senator WARNER. Thank you very much. I conducted a hearing 

of the Armed Services Committee this morning, otherwise I would 

have attended the session from the beginning. 

Mr. Chairman and Members of the Subcommittee, I was privileged to serve over 5 years, 4 months, and 3 days in the Department of the Navy during some of the most intense years of Vietnam, and I saw an almost seamless working relationship between 

a civilian component of the Department of the Navy and a uniform 

component of Naval and Marine Corps officer and men and women. 

And it was magnificent in that very stressful and difficult period 

in our history. And unlike other departments and agencies of the 

Federal Government, there is an extraordinary camaraderie between these two groups of individuals. 

And while I do not pretend to know all of the specifics of this, 

I would urge that this Subcommittee and, indeed, the Congress 

carefully evaluate the honest, forthright petitions that have been 

presented to us this morning by both panels and see whether or 

not we can reconcile the differences in such a way as to even make 

a stronger team—and certainly I will speak for the Department of 

Defense at this time—between the uniform and civilian individuals. 

I thank each of you for your contributions today. 

I might add, at that time, I had over 600,000 in the Department 

of the Navy, alone, of civilians, and many of them were taking 

risks commensurate with the men and women of the Armed Forces 

in the far-flung places of the world. I thank the Chairman. 

Senator VOINOVICH. Thank you, Senator Warner. 

Mr. Gage, I heard your testimony with respect to performance 

evaluations. You said that they do not make a difference. From my 

own personal experience, performance evaluations make a difference in the performance of employees. I was mayor of the City 

of Cleveland for 10 years, and I was governor of Ohio for 8 years, 

and I can assure you that it does make a difference if undertaken 

33

in a proper way. I think that Mr. Walker’s testified that 85 percent 

of the employee pay currently is on auto pilot. 

For example, I will never forget having dinner one night with 

one of our ambassadors. His wife and I talked about Federal workforce issues. She told me that she had 15 workers. She had five 

superperformers, five that were pretty good, and five that are not 

performing. They all earned the same pay, and she saw how it was 

demoralizing to the people that are doing a better job. 

Second, Mr. Oppedisano discussed training. I agree with your 

concerns. I think you heard the question I asked of Mr. Abell regarding the Department’s budget for training. I would like to hear 

your view of the Department’s training budget. Also, the Defense 

Department has operated alternative personnel systems for 25 

years. 

Are you familiar with any of those, Mr. Oppedisano? 

Mr. OPPEDISANO. You are probably referring to China Lake. 

More than likely you are talking about the Naval China Lake program. 

As you stated before, sir, the monies that are going to be necessary for training, we honestly feel that there should be an appropriate line item for actual NSPS training. If it is not, there is no 

guarantee that the individual installations are going to receive the 

monies to be able to do the training for their managers and their 

employees. And without that proper training, there is no way that 

the system is going to be successful. There is going to be no credibility on either side of the aisle, without both of those parties sitting down together and saying, ‘‘OK. This is how we work it out.’’ 

And without the proper funding, it is not going to happen, sir. 

Senator VOINOVICH. Do you believe that experts need to be 

brought in to help with training should it be conducted in house? 

Mr. OPPEDISANO. My personal experience is with the Department 

of Army right now. Over the past few years, since 1997 or so, we 

have been under the Civilian Personnel Operations Center versus 

the Civilian Personnel Administrative Center. And I do not believe, 

at the present time, within the Department of Army at least, that 

there is enough sufficient resources at the installation level that 

will be able to give the training that is necessary. 

They are going to go out, and they are going to say, ‘‘OK. We are 

going to train the trainers, and then go take it back to the site, and 

then they are going to train at the site level.’’ The credibility is not 

going to be there. 

Senator VOINOVICH. In other words, the system right now is inhouse. You train the trainers, and then the trainers go back and 

train the individuals to do performance evaluations. 

Mr. OPPEDISANO. That is correct. Now, also, the fact that they 

say the Human Resource Offices is the——

Senator VOINOVICH. Who is going to train the trainers? 

Mr. OPPEDISANO. Well, that is the question. I do not have an answer for you. I do not know. I do not think that has been resolved 

yet, although, from what I am hearing, it is going to come from the 

Civilian Personnel Operations Center for the Department of Army 

folks. 

So I am not sure whether that is finalized yet, Mr. Chairman. 

Senator VOINOVICH. Then it is unclear? 

34

Mr. OPPEDISANO. I know there is going to be training. How 

much, to what degree, and who is going to be involved has not been 

specified yet, to my knowledge. 

Senator VOINOVICH. Then your recommendation is for a dedicated training line item in the budget? I have asked agencies for 

this, for the last several years. I will never forget when I first became a Senator, I asked all the departments how much money they 

spent on training. I think 11 departments came back and said, ‘‘We 

do not know what we spend for training,’’ and one said, ‘‘We know, 

but we will not tell you.’’

The point is for NSPS to be successful, the Departments needs 

additional money for training. 

Mr. OPPEDISANO. There is no question about that, Mr. Chairman. 

Also, the fact that it just cannot be a one-time application. It has 

got to be continuous as the system grows. Will the system work? 

It will work. We will make it work. That is the way we do things 

in the Department of Defense. And what will happen now is the 

fact that you just cannot do one set of training and expect that to 

just be it and go your merry way. It is not going to happen. You 

have to have a continuous training operation as the system is implemented. 

Senator VOINOVICH. Do you have experiene with demonstration 

projects? 

Mr. OPPEDISANO. I have not at my own installation, no, sir. 

Senator VOINOVICH. Are you aware of them? 

Mr. OPPEDISANO. Yes, I have, sir. 

Senator VOINOVICH. Do you think they offer appropriate benchmarks for NSPS? 

Mr. OPPEDISANO. I think there are some benchmarks, yes. Do I 

think they still need improvement? Yes, I do. I think there is always room for improvement in any system that we establish. I 

think some of the benchmarks are out there. I think some of the 

systems have some very good results, but there has been some dissatisfaction with them, also. 

So depending on how they are implemented, and the degree of 

implementation, and the degree of training that is given to the 

managers and the employees, that is what is going to make the 

system successful or not. 

Senator VOINOVICH. I can tell you this, it is a big job. Anybody 

that has done performance evaluation knows that it takes time, 

and supervisors and managers need to be trained. 

Senator Akaka. 

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

Mr. Gage and Mr. Junemann, you heard my question to Mr. 

Nesterczuk about whether veterans preference is protected in the 

bump and retreat options during a reduction in force. Do you agree 

with Mr. Nesterczuk’s response? 

Mr. GAGE. I think that the performance, the weight on the performance, the last performance evaluation of an employee, overweighs or outweighs what currently veterans enjoy on their preference. I think, in that way, it lessens veterans preference. 

Senator AKAKA. Do you have any comment, Mr. Junemann? 

Mr. JUNEMANN. Essentially, I agree with what Mr. Gage is saying. But it just seems without knowing, because we heard this 

35

morning, and I am hearing this for the first time, that there are 

some parameters set up on pay-for-performance and that there are 

some metrics that DOD has. So I do not know what is in them. 

Without knowing that, there may be something in there about 

veterans preference. There may not. Again, it would be nice to have 

them. We just met face-to-face last Thursday. 

So again, essentially I agree. It sort of seems up in the air. But 

they do not have, again because of this unilateral scrutiny by frontline management on an employee’s performance, it does not seem 

that veterans rights are protected as much as they are now. 

Senator AKAKA. Mr. Oppedisano. 

Mr. OPPEDISANO. Senator, can I respond to that question, also? 

I have had some experience in reductions in force. Over the period of a 10-year period from 1991 to 2001, I was a director of 

human resources and my office and my staff ran nine reductions 

in forces. So I know about reductions in force. 

Under the current system, there is a process where you do get 

certain amounts of time added for performance. It is over a 3-year 

cycle. And that was more accepted by the unions at the time. 

And to sit back and say that 1 year of performance adequately 

shows how that individual will perform in the future, we do not 

necessarily agree with. There is something in the system already 

that establishes the fact that you do get recognition for a performance in the reduction in force process. 

To that matter, I am not too much in disagreement with our 

union counterparts. 

Senator AKAKA. Mr. Oppedisano, you and Senator Voinovich discussed the importance of training. In your opinion, on how much 

money do you believe will be needed by DOD to adequately train 

employees on NSPS? 

Mr. OPPEDISANO. Senator, I do not have an answer for that because I really just don’t have that kind of knowledge. But I know 

there has got to be a lot. 

Senator AKAKA. This is something that we must pay attention to. 

Chairman Voinovich has been a champion of human capital because we know that in a few years we will be facing the retirement 

of the baby boomers. Without training, we are going to have a huge 

problem with employees and passing on institutional knowledge. 

Mr. Oppedisano, following up on your earlier comments, what 

about a manager who is specifically charged with overseeing training, just like a chief human capital officer? 

Mr. OPPEDISANO. Well, I do not see where it would hurt anything. I think it would give some credibility. 

However, it depends on how that position is actually written to 

say what their duties and responsibilities are. What influence will 

they have in Congress with the idea of funding and so on and so 

forth? How much influence are they going to have within the Department, would be another point. 

Do I think it is necessary? I do not think it would hurt anything. 

I think probably it would be a good point for us to be able to start. 

Senator AKAKA. Mr. Gage and Mr. Junemann, the DOD Workers 

Coalition made suggestions to DOD and OPM for NSPS. Would you 

please describe some of the proposals that were offered to protect 

36

employees while still meeting the Department’s national security 

mission. 

Mr. OPPEDISANO. Well, Senator, I think that we offered commonsense, realistic proposals for every concern that management had. 

But I want to say something to Senator Voinovich. I never said 

that performance evaluations were not necessary or good things. 

They are. My problem is with this particular pay-for-performance 

scheme. 

Senator the one thing I would like you to watch is to make sure 

the bottom does not fall out of Federal pay where they can hire at 

localities for whatever they can get an applicant, money that they 

would take. That is the real concern I have on it, not at the top 

rewarding good employees. I am all for that. 

I am afraid with this scheme and the way they have it, they are 

going to drop the bottom out of Federal pay to reduce it across the 

board. 

Mr. JUNEMANN. I would tell you that in the meetings that I attended with DOD and management, we talked specifically. Some of 

their problems are our problems, as well. Some of the current practices under current law are a bit cumbersome to us as well as they 

are to management. And, certainly, there needs to be continuous 

reform of these processes. 

So we offered ideas on streamlining the process under labor-management appeals, under such things as if decisions take too long, 

we can have expedited arbitrations. We can have expedited decisions where the arbiter is mandated by statute to say you will 

issue a decision within 30 days, 60 days, what have you. You can 

even issue bench decisions in cases where that is appropriate. So 

we offered these as some of the suggestions. 

Under pay-for-performance, we really never got past the title 

pay-for-performance. We never really got into a give and take on 

that. My union represents private sector and State, county and municipal workers as well as DOD and other Federal employees. So 

as Chairman Voinovich pointed out that he has experience, I have 

experience in this, as well. 

And I offered that. We have represented a lot of engineers and 

scientists, they are not new to pay-for-performance. We have a tremendous amount of experience, and when it works, when it does 

not work. Certainly training, not only on the front end but continuous ongoing training of front-line management as well as employees, is part of all of that. 

But employees have to have the assurance that it is going to 

work. Right now our local in Portsmouth, New Hampshire, at the 

shipyard up in Portsmouth, they are supposed to be reviewed annually, every employee within—we have a local up there of about 

1,200 workers. They have not had an evaluation, a performance 

evaluation, in the year 2003 or the year 2004. 

So I cannot go to them and say I am confident that this new 

thing will work because they are saying to me we have not had an 

evaluation since 2002. How can this new system possibly work? 

And that is really the gist of it. No matter how much training 

you put into it, how much you put into the budget, if the employees 

are not confident that it is going to work, I think it is going to fail. 

Senator AKAKA. Thank you. My time has expired. 

37

Senator VOINOVICH. Thank you, Senator Akaka. 

As I indicated in my opening statement, there are some elements 

of the DHS personnel system which are not included in NSPS. For 

example, the internal Homeland Security Labor Relations Board 

establishes a process whereby employee organizations may recommend nominees to the Secretary. This process has not been replicated for the National Security Labor Relations Board. The Department of Homeland Security establishes a process for employee 

involvement on matters such as pay. No similar process exists 

under NSPS. 

How do you feel about having consistency between the Department of Homeland Security and the Department of Defense? 

Mr. GAGE. Well, as you said, or one of the panelists said, I do 

not see any reason why they would not be consistent, and I hope 

they would be consistently good. 

Senator VOINOVICH. You have got members in both organizations. 

Mr. GAGE. We do. And, Senator, DOD went much farther than 

DHS. For instance, even on the pay-for-performance, on your evaluations, in DHS, you can arbitrate it. In DOD, you can only go to 

a board or some type of management review board, but even if they 

say, ‘‘Yes, employee, you are right. Your evaluation should be higher,’’ it still goes into the management chain so that they can say, 

‘‘But you do not get the commensurate money for that new review.’’

Now, there is no credibility with that type of system with employees, and I think they should just let us arbitrate these evaluations—they mean so much to an employee—and have an impartial 

third party. As DHS is saying, we can arbitrate employee evaluations in DHS, and I think DOD ought to follow that line. 

Senator VOINOVICH. Mr. Junemann. 

Mr. JUNEMANN. We do not have employees within the Department of Homeland Security, but just looking at it, it makes nothing 

but sense that the board should be a compilation of some members 

appointed by management representatives, some members appointed by labor representatives. Otherwise what you have got is 

two parties meet and eventually reach disagreement, and you end 

up going to a board consisting of representatives from only one 

party to say who is correct in their argument. Well, obviously, it 

is going to be towards management in just about every case. I 

mean, that is just common sense. 

Senator VOINOVICH. Mr. Oppedisano, do you have any comment 

on that? 

Mr. OPPEDISANO. Again, we are talking a training issue, and we 

are talking a monetary issue. We are into the pockets of the employees at this particular time. And for the employees who will be 

dissatisfied with their ratings, it is going to happen, we know that 

right up front, but now it is going to be more adversarial than ever 

before because now you are talking actual money into my pocket 

for a day-to-day operation, my weekly salary. You are also talking 

my retirement entitlements, and so on and so forth. 

Should there be an appeal process in place somewhere that can 

be relied on as being fair? Yes, we do believe in that. 

Senator VOINOVICH. So you all agree that consistency would be 

beneficial? 

38

Mr. JUNEMANN. Absolutely, sir. 

Mr. GAGE. Senator, except in one area, of course, the mitigation 

of penalties. DHS is not much better than DOD when it comes 

down to restricting an arbitrator or a third party from mitigating 

a penalty. I think both of them have to be really liberalized on that 

point. 

Senator VOINOVICH. Well, you are all have an opportunity during 

meet-and-confer. I did speak to Secretary England yesterday. We 

spent a half an hour together because I wanted to find out who was 

going to be leading NSPS implementation. He assured me that he 

was going to continue to play a leadership role. 

I will say this, since Secretary England has taken over NSPS has 

progressed in a much better manner. He understands implementation will take a long time and that substantial resources are needed if it is going to be successful. But I would like to recommend 

that you take this period of time and sit down and come up with 

your top priorities. 

Because there are many unions within the Department of Defense, I think it would be in your best interest if you collaborated 

and prioritized your top concerns. 

I would like to be informed, as I am sure Senator Akaka would 

as well, on the progress of meet and confer. If you do not think it 

is going well—not just differing opinions but the process itself. 

NSPS must be done right. I want to make sure that your rights 

are preserved. As you know, I supported binding arbitration on developing the regulations. I think that if that had been the case, 

progress would be a lot further today. Everybody would have been 

forced to compromise. 

What happens at DOD is significance if the Administration 

wants Congress to consider extending these flexibilities governmentwide. My feeling is that we need a better sense of this process. 

It is easy to talk about this implementing an effective performance 

management system, but it is a lot more difficult to actually implement. 

I will confer with Senator Akaka, and some of our other colleagues to discuss NSPS funding, to guarantee that money is there 

to train the people. 

Senator Akaka, do you have anything else that you would like 

to say? 

Senator AKAKA. Yes. Thank you, Mr. Chairman. I want to thank 

you for convening this hearing today. I am sorry that our witnesses 

from DOD and OPM were unable to stay to hear our exchange with 

our second panel. However, I would like to note how pleased I am 

that Dave Walker stayed until the very end of this hearing. And 

I want you to know I am with you on this. It is so important that 

we have a training program and have money for it. 

And in light of what we are expecting in the future, of retirements, we are really going to need training programs to take care 

of our Federal programs. 

So I thank you very much for this hearing. 

Senator VOINOVICH. Thank you very much. The meeting is adjourned. 

[Whereupon, at 12:13 p.m., the Subcommittee was adjourned.] 

(39)

A P P E N D I X 

PREPARED STATEMENT OF SENATOR LAUTENBERG 

Mr. Chairman: Thank you for convening this Subcommittee hearing to review the 

recently published rules for the new personnel system of the Department of Defense—the National Security Personnel System (NSPS). 

Like the new personnel system of the Department of Homeland Security, the centerpiece of NSPS is ‘‘pay-for-performance’’ and the virtual elimination of Federal 

workers’ right to bargain collectively. 

The Administration ‘‘sold’’ both personnel systems to Congress using the argument that the post 9–11 era somehow required senior executives and managers to 

disregard the concerns of rank-and-file workers. 

To this day, I fail to understand the Administration’s reasoning. In fact, I believe 

that one of the most important lessons to be learned from the tragedy of 9–11 is 

that there must be better communication between the senior levels of management 

and the rank-and-file. 

The notion that the right to bargain collectively and to appeal personnel decisions 

somehow threaten national security, and that Federal employees who are members 

of a union are somehow suspect, is deeply offensive.

Frankly, I have grown sick and tired of attacks on organized labor. 

The first responders who rushed up the emergency stairwells in the World Trade 

Center on 9/11—while civilians filed past them on the way down—were union workers. 

I challenge anyone to question the commitment, professionalism, or bravery of the 

union members who dies on 9/11 as they did their jobs and saved the lives of others. 

I’m a strong believer in treating our Federal workforce fairly. As someone with 

extensive experience in the private sector, I know that workers are most productive 

when they receive fair pay and benefits, and when they can make their ideas heard. 

I can also attest to the unique commitment, talent, and spirit of public service 

exhibited by our Federal employees. 

With regard to NSPS—the new DOD personnel proposal—I’m particularly concerned that the plan could be subject to political manipulation. 

Doing away with the normal General Schedule (GS) system—which has served 

Federal employees and the American people well—probably creates more problems 

than it solves. 

Given the importance of the Defense Department’s mission, we need to attract the 

‘‘best and brightest’’ to work in its civilian workforce. Beating people down and taking away their rights and union protections isn’t going to create the DOD workforce 

we need to keep America safe. 

I hope we can work together to fix the problems with this new plan. I welcome 

our witnesses and look forward to hearing their testimony about it. 

Thank you, Mr. Chairman.

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