United States General Accounting Office

GAO Testimony

Before the Committee on Veterans’ Affairs

U.S. Senate

For Release

on Delivery

Expected at

2:15 p.m. EST

Tuesday, March 24, 1998

THE PUBLIC SERVICE

Veterans’ Preference in

Hiring and

Reductions-in-Force

Statement of Michael Brostek, Associate Director

Federal Management and Workforce Issues

General Government Division

GAO/T-GGD-98-88

Summary 

The Public Service: Veterans’ Preference in

Hiring and Reductions-in-Force

By law, federal agencies are to provide preferential hiring consideration to

veterans and others as a measure of national gratitude and compensation

for their military service. The proposed Veterans Employment

Opportunities Act of 1997, S. 1021, is to amend title 5 of the United States

Code to provide that consideration may not be denied to veterans who are

eligible for preference when applying for certain positions in federal

service and for other purposes. Although GAO is not taking a position on

the proposed legislation, it is providing information that is based on a body

of work it has done since 1990 on veterans’ hiring preference and on

reductions-in-force (RIF) at three military installations (in 1991) and at the

U.S. Geological Survey (in 1995).

From 1990 through 1997, preference-eligible veterans represented a larger

portion of the federal workforce than veterans did of the civilian

workforce, and from 1993 through 1997, veterans with preference have

represented about 21 percent of all new career appointments to federal

service. In each year from 1990 through 1997, the percentage of

preference-eligible veterans in the federal workforce was about twice as

large as that of veterans in the civilian workforce.

For a random sample of hiring certificates from 1990 and 1991 that GAO

reviewed, both the awarding of veterans’ preference and the placement of

veterans on hiring certificates were done properly in nearly all cases.

However, hiring officials more frequently returned unused those

certificates headed by the names of preference-eligible veterans than those

without the names of veterans at the top.

When agencies reduce their workforces through RIFs, veterans also have

certain retention rights. For each of three RIFs at military installations in

fiscal year 1991, GAO determined that employees lacking veterans’

preference were from about two to seven times more likely to have lost

their jobs than were employees with veterans’ preference. GAO found that

during the U.S. Geological Survey’s 1995 RIF, as required by law and Office

of Personnel Management regulations, employees with veterans’

preference were consistently given higher retention standing than

competing employees without such preference. GAO also found that

preference-eligible veterans were just as likely to be affected in some

manner during the RIF—reassigned, moved to another position, or laid

off—as were employees without veterans’ preference. However, those

without veterans’ preference were four times as likely to lose their jobs

than were employees who had veterans’ preference.

Page 1 GAO/T-GGD-98-88
Statement 

The Public Service: Veterans’ Preference in

Hiring and Reductions-in-Force

Mr. Chairman and Members of the Committee:

I am pleased to be here today to assist the Committee in its consideration

of the proposed Veterans Employment Opportunities Act of 1997, S. 1021,

which is to amend title 5 of the United States Code to provide that

consideration may not be denied to veterans who are eligible for

preference1

 when applying for certain positions in federal service and for

other purposes. By law, federal agencies are to provide preferential hiring

consideration to veterans and others2

 as a measure of national gratitude

and compensation for their military service.

As agreed, my comments today are primarily based on our body of work

since 1990 on veterans’ hiring preference and work we did on

reductions-in-force (RIF) at selected military installations and at the U.S.

Geological Survey (USGS) that occurred in 1991 and 1995, respectively.3

As requested, we also are providing certain statistics on the percentage of

preference-eligible veterans among new federal career employees and in

the existing federal workforce from 1990 through 1997. The information

we present today, although relevant to consideration of S. 1021, does not

reflect a current, complete analysis of whether veterans’ preference

requirements are achieving their intended purposes. We are not taking a

position on the proposed legislation.

My testimony today will cover the following major points:

• Preference-eligible veterans represent a larger portion of the federal

workforce than veterans do of the civilian workforce, and from 1993

through 1997 veterans with preference represented about 21 percent of all

new career appointments to federal service.

• The assignment of veterans’ preference and the placement of veterans on

federal hiring certificates were properly done in nearly all cases we

reviewed from July 1990 through June 1991. However, hiring officials more

frequently returned unused those certificates headed by the names of

1

Preference for veterans is defined in 5 U.S.C. 2108(3).

2

Veterans’ preference also applies, in certain circumstances, to veterans’ dependents, whose

preference is derived from the military service of veterans who are not using the preference. This facet

of veterans’ preference is not discussed in this testimony.

3

Federal Hiring: Does Veterans’ Preference Need Updating? (GAO/GGD-92-52, Mar. 20, 1992); Federal

Personnel: The EEO Implications of Reductions-in-Force (GAO/T-GGD-94-87, Feb. 1, 1994); Federal

Hiring: Reconciling Managerial Flexibility With Veterans’ Preference (GAO/GGD-95-102, June 16,

1995); Veterans’ Preference: Data on Employment of Veterans (GAO/GGD-96-13, Feb. 1, 1996); USGS

and OPM RIFs (GAO/GGD-96-83R, Mar. 21, 1996); and USGS Reduction in Force (GAO/GGD-96-155R,

Aug. 1, 1996).

Page 2 GAO/T-GGD-98-88
Statement 

The Public Service: Veterans’ Preference in

Hiring and Reductions-in-Force

preference-eligible veterans than those without the names of

preference-eligible veterans at the top.

• In three RIFs conducted at military installations in fiscal year 1991, our

review showed that those without veterans’ preference were much more

likely to have lost their jobs than were preference-eligible veterans.

Similarly, during an October 1995 RIF at the USGS, those employees

without veterans’ preference were much more likely to have lost their jobs

than employees with such preference.

Veterans’

Representation in the

Workforce and Among

Total New Career

Appointments

From 1990 through 1997, preference-eligible veterans represented a

significantly higher percentage of the federal workforce than did veterans

overall in the total civilian workforce. As figure 1 illustrates,

preference-eligible veterans represent a gently declining portion of the

federal workforce, and veterans also represent a declining portion of the

total civilian workforce. However, in each year from 1990 through 1997,

the percentage of preference-eligible veterans in the federal workforce

was about twice as high as that of veterans in the civilian workforce.

Page 3 GAO/T-GGD-98-88
Statement 

The Public Service: Veterans’ Preference in

Hiring and Reductions-in-Force

Figure 1: Percentage of

Preference-Eligible Veterans in the

Federal Workforce and Veterans in the

Civilian Workforce

1990 1991 1992 1993 1994 1995 1996 1997

0

10

20

30

40

Percentage of workforce

Fiscal year

Federal workforce

Civilian workforce

Note 1: Civilian workforce data are as of December 30 of each year; federal workforce data are as

of September 30 of each year.

Note 2: Civilian workforce data are for men and women age 20 years and over.

Source: GAO analysis of Office of Personnel Management data and data from the Department of

Labor’s Bureau of Labor Statistics.

Figure 2 shows that preference-eligible veterans increased as a portion of

those attaining new career appointments4

 in the federal government

between 1990 and 1997. However, their portion of such appointments held

virtually steady for fiscal years 1993 through 1997.

4

A career appointment in the federal civil service is employment that leads to career tenure, generally

after 3 years of substantially continuous service.

Page 4 GAO/T-GGD-98-88
Statement 

The Public Service: Veterans’ Preference in

Hiring and Reductions-in-Force

Figure 2: Preference-Eligible Veterans

as a Percentage of Total New Career

Appointments

1990 1991 1992 1993 1994 1995 1996 1997

0

5

10

15

20

25

Percentage of new career appointments

Fiscal year

Note: New career appointments include new career hires and conversions to career positions.

Conversions generally entail temporary or term employees moving to career status.

Source: GAO analysis of Office of Personnel Management data.

Veterans’ preference is applied when agencies use competitive hiring

authority5

 to fill positions, as is generally the case for employees who

attain career appointments in the federal government. The increase in the

portion of new career appointments over this period who were preference

eligible was most significant between fiscal years 1992 and 1993.

Adherence to

Veterans’ Preference

Rules for Hiring

Under the Veterans’ Preference Act of 1944, as amended, when qualified

veterans apply for federal jobs, they may claim 5 or 10 veterans’

preference points, depending on such factors as period of service; length

and place of service; and, in certain instances, the extent of a

service-related disability. Veterans with service-related disabilities may

generally claim 10 points. These points are added to points that veterans

and all other candidates for federal employment receive for education,

5

Competitive hiring authority is the legal authority to hire after free and open competition.

Page 5 GAO/T-GGD-98-88
Statement 

The Public Service: Veterans’ Preference in

Hiring and Reductions-in-Force

work experience, and/or the passing of a written examination. The

preference points they receive result in veterans being placed higher on

federal hiring lists, giving veterans an advantage over other job applicants.

In the last several years, we have not done work on agencies’ adherence to

veterans’ preference during the hiring process. However, in nearly all

cases we reviewed in the early 1990s, agencies followed basic veterans’

preference requirements leading up to the actual selection decision.6

 At

that point, hiring officials returned unused hiring certificates that were

headed by the names of preference-eligible veterans more often than they

did those headed by the names of individuals lacking such preference.

Preference Procedures

During Hiring

When agencies want to fill positions, several hiring alternatives are

available. Agencies can promote, transfer, or reassign a current federal

employee; reinstate a former federal employee who has career status;

make a new appointment from a hiring list, or hiring certificate (i.e., use

competitive authority); or use noncompetitive appointment authorities. Of

these hiring alternatives, veterans’ preference applies only to competitive

hiring.7

 When agencies hire individuals from outside the federal

government through competitive means, they can use the following

methods: certificates from OPM or either of two authorities delegated

from OPM (i.e., delegated examining authority or direct hire authority).

Under the first method, OPM receives and examines applications for

federal employment, which can include reviewing a written test and/or

reviewing qualifications, and determines whether an applicant is qualified

for a specific occupation or related occupations. If an applicant is rated as

qualified, then the applicant is assigned a score that is used to place the

individual in rank order on a federal employment register. As part of this

ordering process, OPM is responsible for ensuring that veterans receive all

preference points that are due them. When OPM receives and examines

applications from veterans, it is to (1) verify veterans’ preference points

that are claimed by applicants, (2) add the preference points to the

veterans’ scores, and (3) rank all applicants by score. Qualified veterans

with service-related disabilities are to be placed at the top of hiring lists, or

certificates.

6

Federal Hiring: Does Veterans’ Preference Need Updating? (GAO/GGD-92-52, Mar. 20, 1992) and

Federal Hiring: Reconciling Managerial Flexibility With Veterans’ Preference (GAO/GGD-95-102,

June 16, 1995).

7

The Veterans Readjustment Appointment (VRA) authority allows agencies, at their discretion, to hire

an eligible veteran directly, without competition. VRA employees are initially hired for a 2-year period,

after which they are eligible for a permanent appointment.

Page 6 GAO/T-GGD-98-88
Statement 

The Public Service: Veterans’ Preference in

Hiring and Reductions-in-Force

Agency hiring officials can then request a certificate from OPM containing

the top-rated candidates from the register. Agencies are generally required

to select from among the top three available candidates on a certificate.

However, they cannot select a nonveteran if a higher placed

preference-eligible veteran is available on the list unless the selecting

official obtains approval for passing over the higher ranked veteran.

Justifications for passing over a higher ranked preference-eligible veteran

must be based on qualifications or suitability. Only OPM is authorized to

grant such approvals.

Under the second method, rather than use certificates developed by OPM,

agencies may receive delegated examining authority from OPM to prepare

their own certificates. Under such authority, agencies are to follow the

same scoring, ranking, and selection rules that OPM follows. In addition,

when shortages of qualified candidates exist, OPM provides agencies with

direct hire authority, which permits agencies to directly receive

applications, examine applicants, and make selections. Effective

January 9, 1992,8

 OPM directed agencies to apply regular scoring and

ranking procedures, including application of veterans’ preference,

whenever more than three candidates apply for a job or whenever both

veterans and nonveterans are available. Until that date, direct hire

authority, which accounted for almost one-third of all competitive hiring in

fiscal year 1990, did not always provide for qualified veterans to receive

preference.

Veterans Received

Appropriate Preference

Points and Placement on

Fiscal Year 1990 and 1991

Hiring Lists We Reviewed

In 1992, we reported that for nearly all of the federal job applications that

we reviewed for fiscal years 1990 and 1991, the veterans’ preference points

due applicants matched the points given to them on hiring certificates

prepared by OPM or other executive agencies.9

 We randomly selected

1,136 hiring certificates from OPM and executive agencies, excluding the

Postal Service, and examined the 1,862 available job applications

associated with those hiring certificates. For the 1,862 applications that we

reviewed, 99.7 percent, or for all but 6 applications, agencies had provided

the correct veterans’ preference points on hiring certificates.10 Also, we

reported that the placement of veterans on certificates of eligible job

8

See 56 Federal Register 64,469 (1991).

9

GAO/GGD-92-52, March 20, 1992.

10In addition, OPM or agency review of candidate applications resulted in veterans being credited with

points they had earned but not claimed.

Page 7 GAO/T-GGD-98-88
Statement 

The Public Service: Veterans’ Preference in

Hiring and Reductions-in-Force

candidates was also correct. Veterans were properly placed on all but 1 of

the 1,136 certificates that we reviewed from OPM and executive agencies.

Certificates We Reviewed

From 1990 and 1991 That

Were Headed by Veterans

Were Returned Unused

More Often Than Those

Headed by Nonveterans

Although veterans may receive additional points because of their military

service and be highly placed on certificates, they are not assured of

selection for jobs. Under existing civil service laws and regulations, hiring

officials have the option of using a variety of methods to identify and

recruit potential candidates for a position. These officials may also leave a

position vacant rather than fill it with a candidate who is qualified for the

position but with whom they are not satisfied. Therefore, certificates of

eligible job candidates may be requested but not used if federal managers

are dissatisfied with the choices presented to them.

In our 1992 report on federal hiring, we reported that 57 percent of all

certificates were returned unused. We found that a greater chance existed

that hiring officials would return certificates unused to OPM or the

personnel office of their agencies when the name of a preference-eligible

veteran was at the top of the hiring list.11 We reported that of the 1,136

certificates of eligible job candidates we reviewed, about 71 percent of

certificates had been returned unused if they were headed by a veteran.

About 51 percent of certificates were returned unused if they were headed

by a nonveteran.

One explanation for this difference is that managers in executive agencies

may have less flexibility in selecting from a certificate if the name of a

veteran is at the top. For example, if a certificate lists nonveterans in the

top three positions, a manager can select any of the three. However, if a

certificate is headed by a preference-eligible veteran and nonveterans are

in the next two positions, the manager generally has no choice but to

select the veteran or return the certificate unused, unless the manager

receives approval from OPM to pass over the veteran.

In addition, federal managers may request multiple hiring certificates for

the same job and ultimately not use some or all of them. We reported in

1992 that officials from OPM and other agencies frequently cited

managers’ desire to maximize the number of candidates from which to

choose as the reason for requesting (1) multiple hiring certificates if a

position could be filled at more than one grade level or (2) certificates to

supplement their internal lists of candidates. Although OPM regulations

required agencies to explain why no appointment was made from a

11GAO/GGD-92-52, March 20, 1992.

Page 8 GAO/T-GGD-98-88
Statement 

The Public Service: Veterans’ Preference in

Hiring and Reductions-in-Force

certificate, OPM did not enforce this requirement. When agencies did

provide reasons for not selecting a candidate, OPM did not collect data on

or analyze those reasons to determine their legitimacy, the possibility of

antiveteran bias, or whether certificates met managers’ needs. In our 1992

report on federal hiring, we recommended that the Director of OPM

establish a tracking system to monitor the use of federal hiring certificates.

We also recommended that the Director use the data gathered by this

system to analyze veteran hiring patterns. By February 1994, according to

OPM, OPM developed a tracking system for evaluating unused certificates

and automated portions of it. We have not reviewed this tracking system.

Federal Employees

With Veterans

Preference During

RIFs

When agencies reduce their workforces through RIFs, veterans also have

certain retention rights that are derived from the 1944 Veterans’

Preference Act. We have reviewed RIFs at three military installations and

at one division within the USGS in sufficient detail to have statistics on

how preference-eligible veterans fared in the RIF process. In each of these

RIFs, preference-eligible veterans were more likely to have retained their

jobs than were employees lacking veterans’ preference.

Veterans’ Preference

During RIFs

Under OPM regulations, RIFs are accomplished in two phases. First,

management determines the number and types of positions that are to be

abolished and the “competitive areas” affected by the decision. Second,

management identifies the employees within a competitive area and their

relative status in the competition for retention. Employees’ retention

status and assignment rights to other positions are essentially determined

by their tenure, veterans’ preference, and length of service, with additional

years of service credit provided based on how well they did on their

performance ratings.

When the identified positions are abolished, incumbents of those positions

may have assignment rights to other positions that are not being abolished,

depending on their retention status and qualifications. Once the initial

decisions are made that define the numbers, types, and locations of

positions to be abolished, determining the retention status of employees

and their exercise of assignment rights is a relatively mechanical process

with little flexibility. During a RIF, employees are separated from federal

employment starting with those having the lowest retention status and

continuing with those having increasingly higher retention status until RIF

separation targets are met.

Page 9 GAO/T-GGD-98-88
Statement 

The Public Service: Veterans’ Preference in

Hiring and Reductions-in-Force

How Veterans Fared

During Selected RIFs

In 1994, we testified on the impact on certain groups covered by equal

employment opportunity laws of RIFs that occurred in fiscal year 1991 at

three Department of Defense installations.12 We testified that the RIFs

resulted in separations of minorities in numbers disproportionate to their

numbers in the workforce at the three locations reviewed. Women were

separated in disproportionate numbers at two of the locations. In some

cases, disproportionate numbers of separations occurred largely because

minorities and women did not have the retention factors—tenure,

veterans’ preference, or performance-adjusted seniority—of nonminorities

or men. Our analysis of the retention factors for civilian workers employed

by the military services at the end of fiscal year 1991 showed that

minorities and women ranked lower than their nonminority counterparts

in all retention factors, including veterans’ preference.

For purposes of this hearing, we analyzed the data from our 1994

testimony to determine how well preference-eligible veterans fared during

the RIFs at the three installations. Overall, we found that those without

veterans’ preference were from about two to seven times more likely to

have lost their jobs during the RIFs than were those employees with

veterans’ preference. At the Alameda, California, Naval Aviation Depot,

those without veterans’ preference were seven times more likely to have

lost their jobs in the RIF than were those who had the preference. At Kelly

Air Force Base in San Antonio, Texas, those without veterans’ preference

were about twice as likely to have lost their jobs. And at the Watervliet,

New York, Army Arsenal, those without veterans’ preference were six

times more likely to have lost their jobs.

In 1996, we reported on a RIF conducted at the USGS during October

1995.13 This RIF took place within the U.S. Geological Survey’s Geologic

Division and was somewhat unusual in that the overwhelming majority of

Geologic Division employees were each placed in competitive levels that

included only one employee. Employees within a single-person

competitive level have less opportunity to move into another position

during a RIF. Thus, such employees would be more likely to be separated

from an agency.

We found that during the USGS’ RIF, as required by law and OPM

regulations, employees with veterans’ preference were consistently given

higher retention standing than competing employees without such

preference. We also found that preference-eligible veterans were just as

12GAO/T-GGD-94-87, February 1, 1994.

13GAO/GGD-96-83R, March 21, 1996 and GAO/GGD-96-155R, August 1, 1996.

Page 10 GAO/T-GGD-98-88
Statement 

The Public Service: Veterans’ Preference in

Hiring and Reductions-in-Force

likely to be affected in some manner during the RIF—reassigned, moved to

a lower graded position, or laid off—as were employees without veterans’

preference. However, those without veterans’ preference were four times

as likely to lose their jobs than were employees who had veterans’

preference.

Although you were interested in our updating and adding to these

RIF-related retention statistics, we were not able to obtain comparable

data on the retention rates for preference-eligible veterans for a wider

number of more recent RIFs in the limited time we had to prepare for this

hearing. Data are available from OPM’s Central Personnel Data File on the

total number of veterans who have lost their jobs during RIFs over the

past several years. However, these data alone do not indicate whether

preference-eligible veterans were separated as a result of a RIF at rates

disproportionate to others. Determining whether veterans have been

disproportionately affected during RIFs would require data on the full

population that was at risk of losing their jobs during a RIF. This is the

population of the competitive area that would have been established by

agencies for each specific RIF. Such data are not available from any

central database that we were able to identify.

In summary, Mr. Chairman, preference-eligible veterans remain a larger

portion of the federal workforce than veterans overall in the general

civilian workforce. In those job applications we reviewed for fiscal years

1990 and 1991, agencies properly followed veterans’ preference

procedures in the hiring process in virtually all cases. However, selecting

officials were more likely to return certificates unused if they were headed

by the names of veterans than they were if veterans did not head those

certificates. Finally, in four specific RIFs we reviewed, employees who did

not have veterans’ preference were much more likely to lose their jobs

during a RIF than were their colleagues who had veterans’ preference.

This concludes my prepared statement. I would be pleased to respond to

any questions that you or other Members of the Committee may have.

(410309) Page 11 GAO/T-GGD-98-88
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