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[Joint House and Senate Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 107-133

     THE NATIONAL SECURITY IMPLICATIONS OF THE HUMAN CAPITAL CRISIS

=======================================================================

                             JOINT HEARING

                               before the

                  OVERSIGHT OF GOVERNMENT MANAGEMENT,
              RESTRUCTURING, AND THE DISTRICT OF COLUMBIA
                              SUBCOMMITTEE

                                 of the

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                                AND THE

         SUBCOMMITTEE ON CIVIL SERVICE AND AGENCY ORGANIZATION

                                 of the

                     COMMITTEE ON GOVERNMENT REFORM
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 29, 2001

                               __________

                            Serial No. 107-5

                               __________

 Printed for the use of the Committee on Governmental Affairs and the 
                     Committee on Government Reform

  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform

                                 ______

                  U.S. GOVERNMENT PRINTING OFFICE
72-497                     WASHINGTON : 2001

____________________________________________________________________________
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                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman
            JOSEPH I. LIEBERMAN, Connecticut, Ranking Member
TED STEVENS, Alaska                  CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine              DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio            RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico         ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi            MAX CLELAND, Georgia
JUDD GREGG, New Hampshire            THOMAS R. CARPER, Delaware
ROBERT F. BENNETT, Utah              JEAN CARNAHAN, Missouri
             Hannah S. Sistare, Staff Director and Counsel
     Joyce A. Rechtschaffen, Democratic Staff Director and Counsel
                     Darla D. Cassell, Chief Clerk

                                 ------                                

SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT MANAGEMENT, RESTRUCTURING, AND 
                        THE DISTRICT OF COLUMBIA

                  GEORGE V. VOINOVICH, Ohio, Chairman
              RICHARD J. DURBIN, Illinois, Ranking Member
TED STEVENS, Alaska                  DANIEL K. AKAKA, Hawaii
SUSAN M. COLLINS, Maine              ROBERT G. TORRICELLI, New Jersey
PETE V. DOMENICI, New Mexico         THOMAS R. CARPER, Delaware
THAD COCHRAN, Mississippi            JEAN CARNAHAN, Missouri
                  Kristine I. Simmons, Staff Director
   Marianne Clifford Upton, Minority Staff Director and Chief Counsel
                     Julie L. Vincent, Chief Clerk
                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida         EDOLPHUS TOWNS, New York
JOHN M. McHUGH, New York             PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California             PATSY T. MINK, Hawaii
JOHN L. MICA, Florida                CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia            ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
BOB BARR, Georgia                    ROD R. BLAGOJEVICH, Illinois
DAN MILLER, Florida                  DANNY K. DAVIS, Illinois
DOUG OSE, California                 JOHN F. TIERNEY, Massachusetts
RON LEWIS, Kentucky                  JIM TURNER, Texas
JO ANN DAVIS, Virginia               THOMAS H. ALLEN, Maine
TODD RUSSELL PLATTS, Pennsylvania    JANICE D. SCHAKOWSKY, Illinois
DAVE WELDON, Florida                 WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   ------ ------
ADAM H. PUTNAM, Florida              ------ ------
C.L. ``BUTCH'' OTTER, Idaho                      ------
EDWARD L. SCHROCK, Virginia          BERNARD SANDERS, Vermont 
------ ------                            (Independent)

                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
                     James C. Wilson, Chief Counsel
                     Robert A. Briggs, Chief Clerk
                 Phil Schiliro, Minority Staff Director

                                 ------                                

       Subcommittee on the Civil Service and Agency Organization

                   JOE SCARBOROUGH, Florida, Chairman
DAVE WELDON, Florida                 DANNY K. DAVIS, Illinois
CONSTANCE A. MORELLA, Maryland       MAJOR R. OWENS, New York
JOHN L. MICA, Florida                ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
C.L. ``BUTCH'' OTTER, Idaho          ELIJAH E. CUMMINGS, Maryland

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
                      Garry Ewing, Staff Director
                        Miguel Serrano, Counsel
                          Scott Sadler, Clerk
            Tania Shand, Minority Professional Staff Member

                                    
                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Voinovich............................................     1
    Representative Scarborough...................................     4
    Representative Morella.......................................     4
    Representative Davis.........................................     5
    Representative Norton........................................     7
    Senator Durbin...............................................    13
    Senator Akaka................................................    25
    Senator Carper...............................................    29
Prepared statement:
    Representative Cummings......................................    35

                               WITNESSES
                        Thursday, March 29, 2001

Hon. James R. Schlesinger, Commissioner, on behalf of the U.S. 
  Commission on National Security/21st Century, accompanied by 
  Admiral Harry D. Train, USN, Ret., Commissioner, on behalf of 
  the U.S. Commisison on National Security/21st Century..........     8
Henry L. Hinton, Jr., Managing Director, Defense Capabilities and 
  Management, U.S. General Accounting Office.....................    10
Robert J. Lieberman, Deputy Inspector General, Department of 
  Defense........................................................    11

                     Alphabetical List of Witnesses

Hinton, Henry L. Jr.:
    Testimony....................................................    10
    Prepared statement...........................................    43
Lieberman, Robert J.:
    Testimony....................................................    11
    Prepared statement...........................................    61
Schlesinger, Hon. James R.:
    Testimony....................................................     8
    Prepared statement...........................................    36
Train, Admiral Harry D., USN, Ret.:
    Testimony....................................................     8
    Prepared statement...........................................    36

 
     THE NATIONAL SECURITY IMPLICATIONS OF THE HUMAN CAPITAL CRISIS

                              ----------                              

                        THURSDAY, MARCH 29, 2001

        U.S. Senate, Oversight of Government Management, 
            Restructuring, and the District of Columbia 
            Subcommittee, Committee on Governmental 
            Affairs, joint with the House of 
            Representatives, Civil Service and Agency 
            Organization Subcommittee, Committee on 
            Government Reform,
                                                    Washington, DC.
    The Subcommittees met, pursuant to notice, at 10:12 a.m., 
in room SD-342, Dirksen Senate Office Building, Hon. George V. 
Voinovich, Chairman of the Senate Subcommittee, and Hon. Joseph 
Scarborough, Chairman of the House Subcommittee, presiding.
    Present: Senators Voinovich, Durbin, Akaka, and Carper; 
Representatives Scarborough, Morella, Davis, Cummings, and 
Norton.

             OPENING STATEMENT OF SENATOR VOINOVICH

    Senator Voinovich. The hearing will come to order. I would 
like to explain that the Members of the House and Senate will 
be going in and out during this hearing because of votes. 
Hopefully, we will have a few more Senators here after this 
vote is completed.
    We thank you all for coming. Today, the Senate Subcommittee 
on Oversight of Government Management, Restructuring, and the 
District of Columbia and the House Subcommittee on Civil 
Service and Agency Organization are meeting to examine how the 
human capital crisis in the Federal Government is affecting, 
and indeed endangering, the national security establishment and 
the ability of the Federal Government to defend our Nation and 
its interests around the world. This is especially true with 
the civilian workforce of the Department of Defense. Today's 
hearing is the Senate Subcommittee's eighth on the human 
capital crisis.
    The fact that Chairman Scarborough and I are co-chairing 
this hearing underscores the seriousness of this problem 
confronting our country, and Chairman Scarborough, I welcome 
you and the Members of your Subcommittee to the Senate. I know 
you share my belief that the human capital challenges of the 
Federal Government require our attention and I appreciate the 
opportunity for this bicameral and bipartisan discussion.
    Last year, Chairman Scarborough and I worked on an 
amendment to the Defense Authorization Act that provided 
critically needed flexibility to the Department of Defense to 
restructure its civilian workforce. Specifically, the amendment 
gave the Department of Defense expanded authority to offer 
voluntary separation incentive payments and voluntary early 
retirements to a total of 9,000 new employees through fiscal 
year 2003 for the purpose of reducing high-grade supervisory 
positions and correcting skills imbalances. The use of these 
authorities does not require the elimination of these 
positions, but rather allows the Defense Department to hire 
9,000 employees with the right skills for the future. This has 
given the Department of Defense extra flexibility to manage its 
civilian workforce and realign its human capital.
    Chairman Scarborough, I look forward to working with you 
this year on additional measures to address the challenges 
confronting not only defense civilians but the entire Federal 
workforce. The country is grateful for your leadership on this 
issue.
    As some of you may know, Defense Secretary Rumsfeld is 
currently conducting a comprehensive review of the Department 
of Defense strategy and force structure. When his review is 
completed, the debate in Congress will most likely revolve 
around the wisdom of deploying a national missile defense 
system, the militarization of space, and expensive weapons 
systems, such as aircraft carriers and fighter jets.
    However, a most vital factor in U.S. national security 
cannot be overlooked: Human capital, the men and women of the 
Federal workforce. It does not make headlines, but the Federal 
workforce is in crisis. The average Federal employee is 47 
years old. During the Presidential campaign, both candidates 
promised to reduce the number of Federal employees. It is going 
to be an easy promise to keep. By 2005, over half of the 1.8 
million non-postal civil employees will be eligible for early 
retirement or regular retirement. An even greater percentage of 
the Senior Executive Service, the government's core managers, 
will be eligible to leave.
    The amount of knowledge and experience that is literally 
going to walk out the door by the end of the decade is 
unquantifiable. Perhaps even more concerning, government 
service is no longer a career path of choice for young 
Americans for a variety of reasons. There is no governmentwide 
plan to reshape our workforce so that it can respond to the 
problems of today and the challenges of tomorrow.
    To some, the departure of so many Federal employees is 
welcome news. But it could bring paralysis to our government, 
and it has ominous implications for our national security. 
Current problems with the defense civilian workforce illustrate 
the point. Despite their critical role in supporting the Armed 
Forces, defense civilian employees are often overlooked. 
Throughout the 1990's, the workforce was downsized by 400,000 
positions, largely through attrition and retirements.
    Unfortunately, the process paid little heed to reshaping 
the workforce to meet changing requirements. As a result, the 
defense workforce faces serious skills imbalances in areas such 
as linguistics, acquisition, research and development. For 
example, Wright-Patterson Air Force Base in Dayton, Ohio, 
conducts vital scientific research for the Air Force, but 
workforce reductions threaten its ability to continue to 
develop cutting-edge technologies. Last year, Senator Cochran's 
Governmental Affairs Subcommittee examined the shortage of 
skilled linguists in the Foreign Service, law enforcement, and 
international trade agencies. And the Defense Department 
already faces a shortage of acquisition personnel, which will 
be exacerbated by anticipated retirements over the next few 
years. This could severely hinder the ability of the Department 
to purchase the equipment and supplies needed for our Armed 
Forces.
    As national defense is the first responsibility of the 
Federal Government, it is my hope that focusing on the human 
capital challenges in the national security establishment will 
highlight the need for prompt and comprehensive action, because 
the requirement for a well-balanced, robust civilian national 
security workforce is indisputable. If we fail to respond to 
these formidable human capital challenges in our national 
security establishment in a thoughtful and deliberate manner, 
then our best strategies and billion-dollar weapons systems 
will afford us little protection in an uncertain future.
    We have a distinguished panel of witnesses to discuss these 
issues today. The Hon. James R. Schlesinger was the Secretary 
of Defense under Presidents Nixon and Ford and the first 
Secretary of Energy under President Carter. Admiral Harry D. 
Train, U.S. Navy, Retired, served as Supreme Allied Commander--
Atlantic, Commander of the Sixth Fleet and Director of the 
Joint Staff during his 37-year naval career. Both of them 
served as Commissioners on the U.S. Commission on National 
Security in the 21st Century. The Commission, a bipartisan and 
independent group, was chartered by Secretary of Defense Cohen 
to provide Congress and the Executive Branch with the most 
comprehensive government-sponsored review of U.S. national 
security in more than 50 years.
    I was gratified to learn that the Commission's final 
report, which made dozens of recommendations for restructuring 
and revitalizing the national security establishment, includes 
the chapter, ``The Human Requirements for National Security.'' 
It states that, ``The excellence of American public servants is 
the foundation upon which an effective national security 
strategy must rest, in large part because future success will 
require the mastery of advanced technology, from the economy to 
combat, as well as leading-edge concepts of governance.'' I 
have asked the Commissioners to focus their testimony on this 
chapter of the report.
    Also joining us is Butch Hinton, the Managing Director of 
Defense Capabilities and Management at the U.S. General 
Accounting Office. This past January, GAO designated strategic 
human capital management across the Federal Government as high-
risk. Comptroller General David Walker has tasked all of GAO's 
teams to examine human capital challenges in their specific 
areas. Mr. Hinton will discuss GAO's evaluation of the 
Departments of Defense and State.
    Robert J. Lieberman is the Deputy Inspector General at the 
Department of Defense. Over the past 12 months, Mr. Lieberman's 
office has published eight reports which address personnel 
problems at the Department of Defense, most notably in the 
acquisition workforce. He will provide us an overview of the 
IG's findings.
    We thank you all for coming, and we look forward to your 
insights. Now I would like to yield to my Co-Chair for this 
hearing, Chairman Scarborough, for his opening statement.

           OPENING STATEMENT OF HON. JOE SCARBOROUGH

    Mr. Scarborough. Thank you, Mr. Chairman. Good morning. I 
would like to thank you for your leadership in examining human 
capital challenges facing the Federal Government today. The 
prominent attention human capital issues receive today is due 
primarily to the work of two men, Comptroller General David 
Walker and Senator Voinovich. Senator, I want to commend you 
for bringing this important issue to the forefront, and I also 
want to commend you for focusing the first of our series of 
hearings on national security.
    Like you, I agree that the Federal Government's primary 
responsibility is protecting this country, and defending the 
Nation from foreign threats is our first responsibility and it 
is hard to imagine another area in which the consequences of 
failing to meet the challenge of ensuring an appropriately 
sized and skilled civilian workforce would be so dire.
    In my district in Northwest Florida, we have got NAS 
Pensacola, Egland Air Force Base, Hurlburt Field, and several 
other military bases. Bob Sikes, in fact, has been accused by 
Trent Lott of turning my district into a glorified aircraft 
carrier. But I have seen firsthand down there, like you have at 
Wright-Patterson and other bases in your State, just how dire 
the situation is right now. My colleagues and I are very 
pleased to be able to join you, Ranking Member Durbin, and the 
other Members of your Subcommittee in examining this important 
issue.
    The Department of Defense has undergone a significant 
downsizing of the civilian workforce, and I have heard from 
many of my constituents in my district about the effect of 
civilian downsizing and what it has had on their morale. As we 
move forward in this process, I hope we will find solutions 
that reinforce our commitment to the individual employee while 
promoting a performance-based management and creating a 
civilian workforce that has the skills and the knowledge to 
provide critically important support for our military forces.
    To achieve true reform, sustained involvement and 
commitment by the administration, by Congress, Federal 
employees themselves, and interest groups is critical. I have 
enjoyed working with you, Mr. Chairman, on the human capital 
issues in the last Congress and I look forward to working with 
you and your Subcommittee in this one. Thank you.
    Senator Voinovich. Thank you. Mrs. Morella.

         OPENING STATEMENT OF HON. CONSTANCE A. MORELLA

    Mrs. Morella. Thank you. I want to thank you, Senator 
Voinovich, I want to thank you, Chairman Scarborough, and the 
Members who are here assembled for what I consider to be a very 
important joint hearing that we are having. It is very 
important that we come together and attempt to look at the 
human capital crisis that may beset many of our Federal 
agencies in the very near future.
    We are specifically looking today at how human capital 
concerns are affecting the national security establishment, but 
I think that the issues that we are raising today touch on all 
Federal agencies. A significant number of personnel are going 
to be eligible to retire in the next 5 years, and if there is 
nobody trained to replace them, then the crisis that we speak 
of today will become a catastrophe tomorrow.
    Before we hear the testimony from these very distinguished 
gentlemen, and I applaud you asking them to come and I 
particularly applaud them and salute them for coming to share 
with us, I wanted to raise another issue, and that is are the 
agencies and the President and Congress, for that matter, all 
on the same page in regard to the human capital issue?
    I know that you are going to discuss a number of issues 
here today in the number of personnel that may be leaving in a 
few years and the difficulty we are going to have to recruit 
and then to retain Federal workers that have the expertise. I 
know that you are going to be recommending some very 
significant ways to alleviate these problems, and I am just 
curious--that we will collectively have the resources to dole 
out the medicine that you will be prescribing.
    OMB, GAO, DOD, the President, and Congress all have to work 
together. But I keep hearing some mixed signals. The Director 
of OMB has said that he will be 100 percent faithful to the 
President's proposal to reduce middle management jobs in 
agencies. I also hear that the Director of OMB wants to have a 
very tight relationship with the Comptroller General at GAO, 
and from what I have read, GAO's recommendations for civil 
service reform differ from the President's. I also know that it 
is one thing to reduce the number of personnel, but if there is 
no reduction in the workload, then maybe we will exacerbate the 
problem.
    For example, while DOD reduced its workforce by about 50 
percent from 1990 to 1999, workload was not proportionately 
reduced. In fact, the number of procurement actions increased 
by about 12 percent.
    I just raise these concerns because I want to see civil 
service reform occur, but I do not want to reform simply to say 
good riddance to the Federal workforce that leaves and that 
everyone else must shoulder more of the burden. We do have a 
crisis on our hands. We do have also some very viable 
solutions, and many of which will be discussed today. I hope 
that we can honestly implement these solutions instead of 
demonizing or dismissing the very workforce that we will depend 
upon to ensure our national security.
    Those are a few of my very sincere concerns and I look 
forward to this discussion. I thank you both for having this 
joint hearing.
    Senator Voinovich. Thank you. Chairman Scarborough, would 
you like to introduce your Ranking Member?
    Mr. Scarborough. I would like to recognize the Ranking 
Member of the Subcommittee in the House, Representative Davis.

            OPENING STATEMENT OF HON. DANNY K. DAVIS

    Mr. Davis. Thank you very much, Mr. Chairman. Let me first 
of all compliment and commend you, Senator, on the outstanding 
leadership that you have given to this issue. It is also good 
to be here with other Members of the Senate and the House. This 
is my first hearing as the Ranking Member of the House Civil 
Service and Agency Organization Subcommittee and I look forward 
to working with you to ensure that the Federal Government has a 
thriving and knowledgeable Federal workforce.
    As a Member who has a large Postal and Federal civilian 
workforce in my district, I am very much concerned about the 
human capital crisis facing the Federal Government. The General 
Accounting Office added subcommittee workforce planning to its 
list of major management challenges confronting government 
today. Agencies should factor human resources decisions in 
their annual planning processes. Managers must know the number 
of people and the skills they will need to execute missions and 
goals of their agencies. Such decisionmaking is critical at a 
time when 35 percent of the fiscal year 1998 Federal workforce 
will be eligible for retirement by 2006. The loss of skilled 
and experienced staff will require the Federal Government to 
recruit and train new employees, two areas that have been 
negatively affected by downsizing and budget cuts.
    The Department of Defense is one of numerous agencies 
dealing with staff shortages and skill imbalances. NASA, which 
aggressively cut its staff in 1994, has a shortage of people 
with the technical skills needed to safely conduct space 
shuttle missions. At the Energy Department, employees lack the 
contract management skills to oversee large projects, such as 
the cleanup of radioactive and hazardous waste sites. DOD, 
however, is the largest employer of Federal employees, with 
over 700,000 civilians, 37 percent of non-postal civilian 
Federal employees. How DOD formulates and executes its 
workforce planning strategies will set an example for other 
Federal agencies.
    The witnesses before us today will help us to better 
understand the human capital needs as we face this crisis, but 
more importantly, their testimony, hopefully, will help us move 
aggressively toward finding solutions.
    Again, I thank you very much, Mr. Chairman, and look 
forward to hearing from the witnesses.
    [The prepared statement of Hon. Danny K. Davis follows:]

               PREPARED STATEMENT OF HON. DANNY K. DAVIS
    Chairman Scarborough, Senator Voinovich, and Senator Durbin, I am 
pleased to be with you today. This is my first hearing as Ranking 
Member of the House Civil Service and Agency Organization Subcommittee 
and I look forward to working with you to ensure that the Federal 
Government has a thriving and knowledgeable Federal workforce.
    As a Member who has a large Postal and Federal-civilian workforce 
in my district, I am very concerned about the human capital crisis 
facing the Federal Government.
    The General Accounting Office added work-force planning to its list 
of major management challenges confronting government today. Agencies 
should factor human-resources decisions in their annual planning 
processes. Managers must know the number of people and the skills they 
will need to execute the missions and goals of their agencies.
    Such decision-making is crucial at a time when 35 percent of the 
fiscal year 1998 Federal workforce will be eligible for retirement by 
2006. The loss of skilled and experienced staff will require the 
Federal Government to recruit and train new employees--two areas that 
have been negatively affected by downsizing and budget cuts.
    The Department of Defense is one of numerous agencies dealing with 
staff shortages and skill imbalances. NASA, which aggressively cut its 
staff in 1994, has a shortage of people with the technical skills 
needed to safely conduct space shuttle missions. At the Energy 
Department, employees lack the contract management skills to oversee 
large projects, such as the clean up of radioactive and hazardous waste 
sites.
    DOD, however, is the largest employer of Federal employees. DOD 
employs over 700,000 civilians--37 percent of non-postal civilian 
Federal employees. How DOD formulates and executes its workforce-
planning strategies will set an example for other Federal agencies.
    The witnesses before us today will help us better understand the 
human capital crisis facing DOD, but more importantly, their testimony 
will help us with the solution.
    Thank you.

    Senator Voinovich. We have Representative Norton and 
Senator Akaka with us. Would you like to make opening 
statements?
    Representative Norton.

        OPENING STATEMENT OF HON. ELEANOR HOLMES NORTON

    Ms. Norton. Senator Voinovich, I want to thank you and my 
own Chairman, Mr. Scarborough, for the initiative of this 
hearing. I regard your own work, Mr. Voinovich, as path-
breaking. The document and the work you have done is nothing 
less than a consciousness-raising document that I hope will 
become a policymaking document. We have the smallest government 
in many decades now, so it is very timely to look at it, even 
if we were not considering the kind of problems we are facing 
today.
    I am very concerned that the Federal Government has allowed 
itself to become terribly uncompetitive with the market sector, 
with the competitive sector, in a period when that sector has 
become increasingly more attractive. In past generations, 
people came into the Federal service because it was considered, 
and indeed is, a very high-quality workforce, a place to get 
training, but also because its wages, while not high, were made 
up for by the benefits and the longevity and the pension.
    The private sector now more than equals that, much more 
than equals that, and it is inherently more attractive to young 
people. I mean, it is far more sexy now to go to a dot.com or 
to the high-tech part of the economy than to come to the drab 
old Federal Government, as it is seen, especially since it is 
very uncompetitive. The skills these young people have are just 
the kinds of skills that the Defense Department needs.
    It is interesting that we are only now waking up to the 
importance of continuing to recruit for our volunteer service, 
as we see more and more of those young people, not the most 
highly-trained people in our country, shying away from service. 
We have not given the same kind of attention to the civilian 
side of the Department of Defense.
    Government has invested in a very high-quality workforce. 
We spent the last few years downsizing that workforce through 
buy-outs during the last administration. I supported that 
downsizing because there were many supervisors and others who, 
over time, had become, it seemed to me, a part of an excessive 
number of employees. We saved billions of dollars. Now we have 
got to face whether this is the time to not build up, but to 
learn how to retain and rebuild. That does not necessarily mean 
that we pile on more people. It does mean that we become very 
strategic in how we rebuild the workforce of the Federal 
Government. This is not the same government that we have had 
over the years. It is a government that must be rebuilt in a 
very competitive environment and with a radically changing 
workforce reality. I thank you, Mr. Chairman.
    Senator Voinovich. Thank you.
    We have a custom in this Subcommittee of swearing in our 
witnesses, and if you will all rise, we will swear you in.
    Do you swear that the testimony that you are about to give 
is the truth, the whole truth, and nothing but the truth?
    Mr. Schlesinger. I do.
    Admiral Train. I do.
    Mr. Hinton. I do.
    Mr. Lieberman. I do.
    Senator Voinovich. The record will show that all four of 
our witnesses answered in the affirmative.
    Dr. Schlesinger, we appreciate your being here today and 
appreciate the time that you spent on the Commission and we are 
eager to hear your testimony. I think you are familiar with the 
tradition that we have here, that we will submit your testimony 
for the record and we would hope that the witnesses, to the 
best of their ability, would hold their testimony to no more 
than 5-minutes. Dr. Schlesinger.

  TESTIMONY OF HON. JAMES R. SCHLESINGER,\1\ COMMISSIONER, ON 
    BEHALF OF THE U.S. COMMISSION ON NATIONAL SECURITY/21ST 
 CENTURY, ACCOMPANIED BY ADMIRAL HARRY D. TRAIN,\1\ USN, RET., 
  COMMISSIONER, ON BEHALF OF THE U.S. COMMISSION ON NATIONAL 
                     SECURITY/21ST CENTURY

    Mr. Schlesinger. Thank you, Mr. Chairman. Admiral Train and 
I are here on behalf of the Commission on National Security/
21st Century. The work that we did points to the personnel 
problem of the U.S. Government as at least amongst the most 
formidable facing national security, and in the judgment of 
some of the Commissioners, the single most important problem 
facing the United States.
---------------------------------------------------------------------------
    \1\ The combined prepared statement of Mr. Schlesinger and Admiral 
Train appears in the Appendix on page 36.
---------------------------------------------------------------------------
    The United States today is the dominant power in the world 
and, therefore, it is expected that its representatives 
overseas, its government officials here in the United States, 
and its military forces show high quality performance. In the 
absence of that, our position as international leader will 
deteriorate. It is, therefore, our concern that we have seen a 
steady deterioration in the ability of the government to 
attract the necessary personnel.
    The Commission first looked at the problem of political 
appointees, and while I do not want to go in any depth because 
that is not the focus of this particular panel, I should point 
out that The Brookings Institution has just published a new 
issue on the state of the Presidential appointment process and 
the bureaucracy, and the lead article--I read the first 
paragraph.
    ``The Presidential appointment process is a national 
disgrace. It encourages bullies and emboldens demagogues, 
silences the voices of responsibility, and nourishes the lowest 
form of partisan combat. It uses innocent citizens as pawns in 
politicians' petty games and stains the reputations of good 
people. It routinely violates fundamental democratic 
principles, undermines the quality and consistency of public 
management.''
    Mr. Chairman, the period taken to confirm a Presidential 
appointee has increased to 8\1/2\ months, and those who are 
required to spend that time are 1 in 3 Presidential appointees 
as opposed to 1 in 15 or thereabouts at the start of the 
Kennedy Administration.
    I turn now to the permanent government staff and our 
concern about the talent and the training of that staff. In the 
first instance, we look at the Foreign Service. The Foreign 
Service has seen a decline of 25 percent in applicants, and 
when it offers positions in the Foreign Service to potential 
new appointees, less than 10 percent now accept those jobs. It 
takes 18 months to 20 months for an individual to be approved 
as a potential recruit, and by that time, as Ms. Norton has 
indicated, they have moved on to other jobs in the private 
sector that are more competitive.
    With respect to the military forces of the United States, 
we see a steady decline in our ability to recruit and retain 
the necessary capabilities. For example, the U.S. Army in 1999 
lost 13.6 percent of its captains, who retired voluntarily. 
That hemorrhaging continues today, and one can simply 
extrapolate the impact on our ability to perform well 
militarily and to represent the country overseas when one sees 
a continued drain of talent of younger officers. That is 
perhaps the most glaring example, but it is typical of what is 
going on. The shortage of pilots and technicians is a growing 
problem for the Armed Forces.
    Finally, with respect to the civil service itself, we see a 
growing inability to attract the necessary talent to the civil 
service. As you have pointed out, Mr. Chairman, in the next 4 
or 5 years, we will see a departure of a very large percentage 
of the existing civil servants and of the senior membership of 
the service. That represents a pool of talent that was 
accumulated in past years. Our ability to replace it is 
diminishing at this time and we are in a position in which we 
will see fewer and fewer people that are available unless we 
change our ways.
    The Commission has strongly recommended that we look upon 
the recruitment and retention of talented people as a principal 
problem of the Federal Government, and we recommend three 
things. First, changes in the form of compensation; 
flexibility, second, and flexibility goes with compensation. We 
recommend education and training. That is a form of 
compensation. Happily, the U.S. military, one spends years in 
advanced education. We contrasted this with the Foreign 
Service, which Foreign Service officers told us was broken, and 
one of the things that is necessary to achieve an improvement 
in the Foreign Service, Mr. Chairman, is that we allow ample 
time for education so that it is competitive with other 
elements of the government.
    Let me pause there and turn to Admiral Train.
    Senator Voinovich. Thank you very much, Mr. Schlesinger. 
Admiral Train.
    Admiral Train. Mr. Chairman, thank you for this opportunity 
to appear with you and share with you, share with this 
distinguished Joint Committee the work that we have done over 
the past 2-plus years. And in those 2-plus years of studying 
all aspects of U.S. national security, it became clear that it 
was crucial for us to address our human capital needs as part 
of our work.
    Human capital, as has been mentioned here many times this 
morning, is the bedrock of all elements of our national 
security. Our personnel design, they build, operate, and 
maintain our weapons systems. Our personnel design and execute 
national security policies and our foreign policies. Meanwhile, 
the end of the Cold War, the recent economic surge, and the 
demographics of the baby boom are creating severe personnel 
strains on our national security structure. We are losing our 
ability to recruit and retain the high-quality personnel we 
require.
    It will do us precious little good to enjoy the finest 
warships the world has ever seen--and we do--if we cannot 
recruit and retain the top-quality personnel necessary to 
operate them. It will do us precious little good to enjoy the 
status of the world's only superpower if we cannot find the 
Presidential appointees, Foreign Service officers, civil 
servants, soldiers, airmen, marines, and sailors to keep our 
national security apparatus functioning effectively. And if our 
superpower structure must depend upon non-U.S. nationals for 
its scientific and technical brainpower, we clearly have an 
educational problem which needs addressing.
    These are the challenges which the Commission on National 
Security/21st Century addressed over the past several years. 
Our Phase III report provides our recommendations for dealing 
with these challenges. Thank you, Mr. Chairman.
    Senator Voinovich. Thank you. Mr. Hinton.

   TESTIMONY OF HENRY L. HINTON, JR.,\1\ MANAGING DIRECTOR, 
 DEFENSE CAPABILITIES AND MANAGEMENT, U.S. GENERAL ACCOUNTING 
                             OFFICE

    Mr. Hinton. Thank you, Mr. Chairman, for having us over to 
participate in this important hearing. As you have recognized, 
human capital is a pervasive problem across the Federal 
Government and has recently been designated by GAO as a 
governmentwide high risk area. Mrs. Morella, I want you to know 
that the Comptroller General and others of us in GAO are making 
every effort we can through our testimonies and discussions up 
on the Hill to get everybody on the same page, as well as the 
Comptroller General's outreach to the new members of the Bush 
Administration to make this issue apparent to them.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Hinton appears in the Appendix on 
page 43.
---------------------------------------------------------------------------
    The human capital issues facing Defense and State are not 
fundamentally different from those facing other Federal 
agencies, but I have got to tell you, I think they rise, Mr. 
Chairman, up on the scale. Threat does not wait, and the 
preparedness of our country rests with State and the Department 
of Defense. As Mr. Schlesinger just pointed out, it is very 
critical that we address them.
    Although the specific problems in each of these agencies 
are somewhat different, they all have a common origin, the lack 
of an overall strategic approach to the management of the 
workforce. A key problem at Defense, and it is very evident in 
the Defense Science Board's report, is the absence of an 
overarching framework within which the future DOD workforce is 
being planned. DOD needs to link its requirements for all 
elements of the total force, that is, the active, the reserves, 
the Federal civilians, and the contractors, to its long-term 
strategy.
    Primary human capital challenges on the military side 
include recruitment shortfalls, continued high first-term 
attrition, retention problems in certain occupational areas and 
skill levels--that would be mechanics, pilots, communications 
analysts, and the like--and the quality of life issues, from 
high personnel tempo to military housing and health care.
    On the civilian side, they include a workforce profile 
skewed toward high years in service with too few younger 
workers in the pipeline, insufficient professional development 
and training for civilian employees, and the need to consider 
the long-term shift to a greater reliance on private sector 
contractors as a larger component of the total force.
    I also want to add, Mr. Chairman, that these challenges are 
involved to some extent in each of the six high risk areas that 
we see in Defense on the business side--that is, financial 
management, information technology, acquisition, contracting, 
support infrastructure, and logistics.
    At State, several recent studies and our own work have 
identified a range of challenges: Recruiting new entrants into 
the Foreign Service, retention of Foreign Service and civil 
service personnel, career advancement opportunities, providing 
adequate staff training and development, and quality of life 
concerns at the overseas postings.
    In sum, our work and the many studies that have been done 
point to the same conclusion: Action is needed. It begins with 
strategic planning. Human capital needs to be viewed from a 
strategic standpoint across the government. While Defense and 
State have taken action, a lot more needs to be done, and we 
are willing to work with you, Mr. Chairman, to get on a path 
for a solution to addressing those problems.
    Senator Voinovich. Thank you, Mr. Hinton, and I sincerely 
appreciate the hard work that Comptroller General Walker, you 
and the other members of your team have done to address this 
issue.
    Mr. Lieberman.

TESTIMONY OF ROBERT J. LIEBERMAN,\1\ DEPUTY INSPECTOR GENERAL, 
                     DEPARTMENT OF DEFENSE

    Mr. Lieberman. Thank you. I guess I am the personification 
of the aging defense career civil servant. [Laughter.]
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Lieberman appears in the Appendix 
on page 61.
---------------------------------------------------------------------------
    The condition of the Department of Defense workforce is of 
particular concern to the Office of the Inspector General 
because our auditing and investigative work constantly 
reinforces awareness that a properly sized, well trained, and 
highly motivated workforce is by far the best defense against 
fraud, waste, and mismanagement.
    For DOD, of course, human capital issues extend beyond the 
civil service, affecting both active and reserve military 
personnel and many parts of the private sector on which we 
depend for national defense materiel and services. My office's 
recent work has focused, however, on problems caused mostly by 
DOD civilian workforce issues.
    The seven audit reports discussed in my written statement 
have a common theme, which is that 11 years of civilian 
workforce downsizing, without proportionate workload reductions 
or productivity increases, have created or exacerbated mission 
performance problems across a wide spectrum of DOD 
organizations and civilian personnel specialties. These seven 
reports contain several dozen specific descriptions of such 
performance problems.
    In an age when organizational agility is the watchword for 
successful businesses, DOD has been anything but agile when it 
comes to managing human capital. This is partially true to 
restrictive personnel management laws and regulations, although 
most DOD managers seem to underestimate the authority and 
flexibility that DOD already has. In my opinion, there has been 
a particularly marked reluctance to innovate, to spend money to 
improve the civilian workforce, and most of all, as Mr. Hinton 
says, a lack of strategic planning.
    Throughout the 1990's, the only strategic departmental goal 
related to the civilian workforce was to cut it. Four of our 
seven reports reflect the problems caused by reducing the 
acquisition workforce by over half without an understanding of 
workload trends or risks. Those performance problems cut across 
the full spectrum of DOD contracting and contract oversight 
functions.
    Another one of these reports pertains to the loss of 
inventory management control caused by inadequate staff and 
excessive workload at two supply depots. The other two reports 
discuss serious delays in the processes for granting initial 
security clearances or updating existing clearances, which a 
few days ago Chairman Goss of the House Permanent Select 
Committee on Intelligence termed ``an open wound'' from a 
national security standpoint.
    I would like to make two general observations. First, 
significant downsizing obviously was necessary to conform to 
post-Cold War budget realities. But it seems to me that the 
Department's performance in providing better tools to enhance 
employee productivity and in genuinely streamlining 
administrative processes to cut workload has fallen far short 
of the mark. Those failures to offset the impact of staffing 
cuts are widely evident. In my view, the Department needs to 
step back and reassess what is actually happening in terms of 
process changes, productivity improvements, and workload 
trends. Only then can meaningful strategic workforce planning 
be done. Such planning must apply to all segments of the 
Department, not just the acquisition corps.
    Second, the Department as a whole also lacks a 
comprehensive strategy in place for dealing with pending mass 
retirements of experienced managers and workers. Although some 
organizations, such as the Air Force, have begun moving 
aggressively over the past year, ways must be found across the 
DOD and in all disciplines to accelerate the normal on-the-job 
accumulation of experience and replace it with well crafted, 
just-in-time training.
    The Defense Leadership and Management Program is an 
excellent first start along those lines, as is the rapidly 
expanding use of Web-based technology for getting information 
to our knowledge workers. In addition, we need sustained 
executive level interest in retaining the best and brightest 
middle managers who will be tomorrow's senior managers, and 
skilled junior personnel with managerial potential. Otherwise, 
there will be a general drop-off in efficiency and productivity 
in many organizations toward the middle of this decade.
    One of the many statistics that has been brought to light 
over the past few months about the DOD workforce that I find 
most compelling is that the most common age of a DOD civilian 
worker right now is 54. I think that sums up the pending 
crisis.
    That concludes my statement, Mr. Chairman.
    Senator Voinovich. Thank you very much, Mr. Lieberman.
    The Ranking Member of our Subcommittee, Senator Durbin has 
joined us. Senator Durbin, would you like to make any statement 
or comments before we ask questions.

              OPENING STATEMENT OF SENATOR DURBIN

    Senator Durbin. Mr. Chairman, thank you for this continuing 
series of hearings on this problem that faces us. I think that 
some of the recommendations we are going to consider today are 
extraordinarily good, and I would like to follow up in the 
question period with specifics.
    Senator Voinovich. Thank you.
    Dr. Schlesinger and Admiral Train, both of you were 
national security practitioners and the demands on your time, I 
am sure, were formidable. Given all of his other 
responsibilities, what recommendations would you offer to 
Secretary of Defense Rumsfeld to ensure that the human capital 
issues are addressed in the Department of Defense?
    Mr. Schlesinger. Well, those recommendations, Mr. Chairman, 
are included in the report. We recommend that we broaden the 
activities of the people in the national security area by 
establishing the National Security Service Corps, which would 
permit people from the Department of Defense to move 
temporarily to the Department of State or to CIA and 
alternative movements, which gives a greater breadth of 
understanding of the overall national security problem as well 
as an understanding of the other departments or agencies that 
are working in this area.
    As I mentioned in my opening remarks, we look upon the 
training by the Department of Defense as a model that should be 
emulated by the Foreign Service. We recommend that the National 
Security Education Act be broadened to provide financial 
support for those who are prepared to enter into the civilian 
service or the military service, and particularly for those, as 
you indicated in your article of yesterday, who have expertise 
in foreign languages or in the sciences.
    Senator Voinovich. Admiral Train.
    Admiral Train. Another part of our work, and Secretary 
Schlesinger has mentioned all our recommendations are in the 
report, and they have been briefed to Secretary Rumsfeld. We 
were privileged to spend over an hour--the Commission was--with 
Secretary Rumsfeld and we shared our recommendations with him. 
That covered much more than the human capital piece of the 
Commission's work.
    But one of the specific objectives that we strive to 
achieve is to persuade the accountable authorities, such as 
Secretary Rumsfeld, to do for the civilian component of the 
Defense workforce the same thing that Goldwater-Nickles did for 
the military side and allow, or demand, that senior personnel 
in the civil workforce move between departments to enhance and 
broaden their experience base. If a civil servant, whether he 
be a low-ranking civil servant or an SES, has spent his entire 
career just inside the perimeter of the Department of Defense, 
then he is limited in his comprehension of the whole national 
security apparatus, which includes much more than the 
Department of Defense. It includes the Treasury, it includes 
State, it includes Commerce, and if they enact the legislation 
which will create the National Homeland Security Agency, it 
also will include that.
    We believe that civilians should be forced to move between 
departments as a condition of their promotion when they get to 
be of the point where they are aspiring to be a flag officer 
equivalent, namely SES employees. I think that very strongly.
    I was privileged to be a part of the proceedings that 
resulted in Goldwater-Nickles. I am very proud of the result of 
that. It has caused the subsequent directors of the Joint Staff 
after I left to enjoy much more talented personnel than I 
enjoyed when I was a director, because people have been forced 
to work outside their own service and in the joint arena. I 
think we can do that and should do that for civilian personnel, 
also.
    Senator Voinovich. There are many problems there. The issue 
is you get a new Secretary of Defense, and we have had some 
good Secretaries of Defense who have been interested in doing 
the best job that they can, but somehow, somewhere along the 
line, they have not identified the right mechanism to give this 
issue of human capital the attention that it deserves. I would 
really be interested in finding out how to make that happen.
    People often ask me, how can we get this to be a priority? 
And I have said, well, it has to start with the Office of 
Management and Budget. We need to have a good Office of 
Personnel Management. We need to upgrade the folks in the 
various departments that are involved with human capital 
managements.
    But what is the recommendation to Rumsfeld? You know the 
Department of Defense as well as anybody. How would you 
reorganize it or create something different that would 
guarantee that this very important issue gets the attention it 
deserves?
    Mr. Schlesinger. Mr. Chairman, there are no guarantees in 
this world. We simply have to continue to assert what the 
problem is, and in the absence of such assertions fertilizing, 
as it were, the minds of those who are currently in authority, 
there will not be improvement. But we cannot guarantee it.
    When you ran down that list, there is one element I want to 
bring to your attention that was included in the report of the 
Commission and that is the responsibility of the Congress to 
make adaptation in terms of these new requirements for 
recruiting technical people and the like. The responsibility is 
not only in the Executive Branch. The problem, as you hint, is 
that a head of a department is only in office for 4 years or 
thereabouts. He is concerned with his immediate problems. Few 
of them take the long view, and as a consequence, few of them 
have been willing to tackle what is becoming increasingly 
obvious, the slow deterioration of the capacity of the Federal 
Government to attract the talent and the skills that are 
necessary to our effective performance internationally.
    Senator Voinovich. Mr. Hinton.
    Mr. Hinton. Yes, sir. One of the things that I think is 
very important to this is to have a commitment that you are 
going to adopt the strategic view of human capital, seeing it 
not just as a cost but as an investment, and that will take 
priority in establishing what you set out for the department to 
do.
    No question, workforce planning is very key and we have got 
to marshal the right people together that can go through and 
take stock of what we need for the future and the 21st Century 
of the national security environment that we are looking at and 
see what the requirements and the knowledge, the skills, the 
abilities that we are going to need to face that, and then 
compare that to what we have in place and then start looking at 
what the gap is.
    I think one of the first things that should be done is that 
he directs his team to go out and really do the research, 
looking into all of the personnel legislation there, to seek 
out the flexibilities that are within that legislation. If they 
run into barriers and fully understand the barriers and 
legislation, they need to think about good business cases as to 
what we can do to overcome those barriers.
    I am really encouraged. GAO is encouraged from OMB's latest 
circular on what they are asking in the performance plans for 
2002, that they ask all the agencies to go through and identify 
recruitment, retention, training, appraisal that is linked to 
program performance as part of its goals. I think then, Mr. 
Chairman, if you have the commitment and we have that response 
to that expectation that sets out for the Congress, to include 
this Subcommittee and all of the committees of jurisdiction 
over Defense and State, as a good oversight tool to make sure 
that the dollars that we are allocating to the Department go 
after some of those key issues that we have.
    I think that is a good management framework, but it begins 
right at the top. That commitment has got to be there to 
marshal this, because if not, there is going to be a lot of 
competing policy issues, as Dr. Schlesinger just said, to 
decide, and I do not think that is intentional in any way, but 
we have got to get a framework going and then come back and 
revisit our progress against that framework.
    Senator Voinovich. You were saying that OMB has put out a 
circular on that?
    Mr. Hinton. Yes, sir, A-11.
    Mr. Schlesinger. Mr. Chairman, could I add something more? 
A critical point has not been addressed, and that is for the 
last 30 years or more, politics in this country has heaped 
scorn on the Federal service, on the bureaucracy. The 
Dictionary of Quotable Quotes says that the bureaucracy is a 
giant mechanism operated by pygmies. It reflects not only a 
widespread public attitude of declining respect and honor for 
those who serve in the Federal service, but it is something 
that we will have to cure if we are to begin to turn around 
what has been this deteriorating situation. It must start with 
the President, but it must be not just the Secretary of 
Defense, not just the Secretary of State, but the entire 
elected officialdom of the United States that points to the 
necessity and the good job that can be done for the country in 
this emerging era.
    Senator Voinovich. I agree with you. One of the things that 
I have resented during my career as a county commissioner, 
mayor, and governor is the negative way that some have 
characterized our workforce. I want to tell you, I would take 
our public workforce and put it up against any private sector 
workforce when those people have been empowered, trained, and 
given the tools to get the job done. And I really believe that 
this negative carping and criticism of the Federal workforce 
has had a substantial impact on the fact that so many young 
people today are no longer interested in working in the Federal 
Government.
    Mr. Schlesinger. Reinforced by what Representative Norton 
said, the enormous growth of the attractiveness of the private 
sector as compared to 20 and 30 years ago.
    Mr. Hinton. Mr. Chairman, if I might add, it is not the 
employees being the problem. The basic problem here is the lack 
of a strategic approach to this whole area that really puts 
that priority out there, and we need to put the resources 
behind it, and as Dr. Schlesinger says, we need to have a 
governmentwide approach to this so it is clear to everybody.
    Admiral Train. As we recruit people to replace those who 
will be leaving in large numbers in the next few years, we have 
a specific problem which has to be borne in mind by such 
accountable authorities as Secretary Rumsfeld, which is that 
our military today is in a situation where combat has become 
more agile, faster, more lethal than at any time in history and 
will continue to ride that vector up. We need to ensure that 
our hiring practices are agile enough to keep pace with their 
increases in technology, lethality, agility, and speed with 
which the military must fight, because that is what defense is 
all about. That is what national security is all about. If not 
fighting, the readiness to fight and the perceived capability 
to fight.
    So if we have arcane hiring practices in our civil service, 
for example, that were designed to mobilize a Nation in World 
War II and have not changed much since then, we have a problem, 
and somehow, through legislation and other methods, we have to 
ensure that we can hire people when they are available, when 
they come out of college at the full height of their 
intellectual powers, put them into jobs in the government and 
keep them there, and keep them there because they are satisfied 
with the work environment in which we place them.
    Senator Voinovich. Senator Durbin.
    Senator Durbin. Thank you, Mr. Chairman.
    I believe the year was 1958 when the Russians launched 
Sputnik.
    Mr. Schlesinger. In 1957.
    Senator Durbin. In 1957, thank you. I stand corrected. It 
was a galvanizing event, striking fear in the hearts of many, 
including the American people, about America's loss of 
superiority and our vulnerability.
    I guess the most important part of this galvanizing event 
is it galvanized Congress and the President, and as a result of 
it, many things were done, but one had a personal impact on me, 
the creation of something known as the National Defense 
Education Act. This was a low-cost, low-interest loan program 
available to young men and women like myself to go to college. 
I do not know that I ever could have attended the college that 
I attended, I am not sure I ever would have graduated, without 
that National Defense Education Act, and I am sure that there 
are thousands and thousands of stories just like my own.
    The decision was made by this Congress and this government 
that if we were going to compete, we had to have the people 
ready to compete and we needed more college graduates. What 
happened, of course, in the next few years is we saw a 
revolution in higher education. It was no longer just the 
province of the elite. Everybody had a chance, including kids 
from East St. Louis like me. And I sit here today because of 
that satellite, the response by Congress, the creation of that 
loan program, and the chance it gave me to go to school.
    I think about that in the context of our discussion today, 
because part of the recommendations that come from the 
Commission we are considering suggest that we need to talk 
about education in this country anew and how we increase the 
workforce of America in critical areas, not just obviously to 
serve the government needs--that is the nature of this 
hearing--but to serve our Nation.
    I think, frankly, that some of the recommendations are 
exceptional. In fact, I have gone so far as to incorporate them 
in proposed legislation that parallels the National Defense 
Education Act, known as the National Security Education Act. It 
goes particularly in the area of math and sciences, but beyond, 
to try to find ways to help young people move in the right 
direction, toward careers that are not only fulfilling to them 
but that we can help them attain.
    I would also say that if we are going to look to the here 
and now, that many of the young men and women, recent college 
graduates or about to be, have a lot of things on their mind as 
they finish school. But one of the things which most of them 
have on their mind is: ``How am I ever going to pay off that 
student loan?'' It is huge. It is not like the days when I went 
to school, where you could finish 7 years of education and have 
a student loan of less than $10,000. Kids all laugh at me when 
I tell them that on college campuses, but that was the fact in 
the early 1960's.
    These kids come out of school with $10,000, $20,000, 
$30,000, $40,000, $50,000, $60,000, and $80,000 in loans, and 
when they think about their career choices and whether they 
want to work for the Federal Government, I am sure one of the 
first things they say is, how in the world could I afford it? 
If I have to pay $1,000 a month for a student loan, I cannot 
take this job at a GS-7. It just does not work.
    We have programs already in place in the Federal Government 
that allow us to forgive student loans for those who will make 
commitments to service, Federal civil service, but Congress 
will not fund them. And the agencies, as a result, cannot use 
this valuable tool to bring good people in and say, give us 
your skills and we will help you pay your loans. We know the 
salary is not as great as the private sector, but you do not 
have to worry about your loans. We are going to help you pay 
them back. I think that would be an enormous incentive for 
recruiters out on college campuses, trying to attract people to 
the Department of Defense and to other critical agencies. And 
it is another area that I hope to work with the Chairman on in 
promoting more and more of these loans.
    It took Sputnik in the 1950's to finally move us as a 
Nation to realize this was a priority. Now post-Cold War, what 
is the galvanizing event? What is it going to take to trigger--
what is the catalyst that is going to bring us to the point 
where we not only agree with your findings, but have the 
political will to push them forward? Is there one? Mr. 
Schlesinger.
    Mr. Schlesinger. Well, you ask a very difficult question. 
The Japanese no doubt regret Pearl Harbor, that it awakened the 
United States. Sputnik was the momentary achievement of the 
Soviet Union which elicited a response that was overwhelming, 
and we do not have that anymore, given the fact that, at the 
moment, the United States is so formidable.
    The Commission points to the fact that other groups in the 
world, other nations are becoming more resentful of the United 
States because of our dominant position and sometimes our 
tendency to preach and that they are looking for asymmetric 
ways to attack us. That includes the use of possible biological 
or chemical attacks on the United States. We were concerned 
that over the next quarter-century, this country would be 
submitted to such attack. Regrettably, that would turn around 
attitudes immediately. There is also cyber warfare, which can 
attack our computer systems and affect our civilian economy. It 
can attack the computers that control electric power in this 
country. And those things would wake us up.
    Do we have, as your question suggests, the fortitude to 
anticipate that, and by taking prompt and corrective action now 
to avoid having the dramatic effect of a Pearl Harbor or a 
terrorist attack, massive terrorist attack in this country? It 
is a good question. I hope we have the answer.
    Admiral Train. One of the greatest threats to the American 
people today is the fact that the American people see no 
threat. That in itself is the greatest threat. I sincerely hope 
we do not have to experience an event such as Secretary 
Schlesinger has postulated to galvanize us into action. I would 
hope that we are bright enough to foresee the potential for 
these type of disasters and do those things that are necessary 
to deter those disasters from happening.
    Senator Durbin. Could I ask, Mr. Chairman, if I might, one 
last question of Mr. Hinton and Mr. Lieberman. I would like to 
have your thoughts on the forgiveness of student loans. Is this 
a fertile area for us to look to to attract the kind of people 
we need?
    Mr. Hinton. Yes, sir. In fact, I think that there is, as 
you mentioned some authorities that are already out there. I 
think it is up to the individual agencies to look and put the 
money there. I mean, it is up to the agencies, I think, to make 
some of that money available to help in that regard, and I 
think that is a tool. That is one of the tools we have got to 
really look at and give consideration to.
    Mr. Lieberman. I totally agree. We are, in fact, in the 
Office of the Inspector General, going to utilize the authority 
to help people pay off these loans. This is a painful choice, 
because the top line is fixed where it is, so we have to give 
up work-years in order to make that kind of choice. But it is 
definitely worth it.
    The same thing applies to up-front cash bonuses to 
recruits. When we hire entry-level auditors, we are giving them 
a $6,700 up-front bonus, which is the only way we can compete 
with private industry, because the industry entry salaries are 
higher. We have to be willing to spend money to improve the 
workforce, and I do think that is a problem, particularly 
because senior leadership has not made it a priority.
    I would like to go back to the question of, will there be a 
galvanizing event? Having just been through the Y2K crisis, I 
saw how all the wheels spun until there was a date certain, and 
then Congress and the Executive Branch and the private sector 
really did get in sync and do a marvelous job on a very 
difficult problem.
    There is not going to be anything like that involving the 
civilian workforce, unfortunately. The closest thing we are 
going to have to it, I think, is a constant stream of reports 
from the General Accounting Office and Inspectors General and 
committee oversight here on the Hill identifying management 
problems in the Federal Government. If one looks closely at all 
at those reports, you are going to find an overwhelming 
majority of the management problems relate back to workforce 
problems, either skills, deployment, motivation, numbers, or 
whatever.
    So the handwriting is there all over the wall, but 
unfortunately, I do not think there is going to be any defining 
moment.
    Senator Durbin. Thank you very much.
    Mr. Schlesinger. Senator, there is such a thing in 
appropriations bills called a line item.
    Senator Durbin. Yes. I am on the Appropriations Committee 
and familiar with the term.
    Senator Voinovich. When Comptroller General Walker 
testified before the Subcommittee, he said that the incentives 
that we have under existing legislative authority could take 
care of 80 to 90 percent of the problem, but the fact of the 
matter is that the agencies are not utilizing the incentives 
that they have. It might be helpful, Mr. Hinton, if you and Mr. 
Lieberman could provide a list of the current incentives so 
that we could see that and then perhaps another list of things 
that you think might be helpful in addition to that.
    Mr. Hinton. I would be happy to provide that for the 
record, if that will do.
    Senator Voinovich. Great.
    Senator Durbin. Thank you very much, Mr. Chairman. Thank 
you to the panel, too.
    Senator Voinovich. This is the first time I have chaired a 
joint Senate-House hearing, but I would like to turn at this 
point to Representative Davis, the Ranking Member of the House 
Subcommittee.
    Mr. Davis. Thank you very much, Senator. Let me apologize 
for having to miss some of the testimony, but I would like to 
pose a general question and ask if each one of you might be 
able to respond. It seems to me that we have been on a pattern 
for the last several years of privatizing, downsizing, and 
outsourcing in terms of Federal Government operation. I guess 
my question is, how impactful might we think this pattern has 
been on creating the crisis or the situation that we currently 
face, and can we turn it around if that is the case? Why do we 
not start with you, Mr. Lieberman?
    Mr. Lieberman. Well, I was always taught to defer to 
Secretaries of Defense, so I feel a little funny going first. 
[Laughter.]
    Certainly, there is a place for utilization of the private 
sector's vast talents, so outsourcing is often the most 
efficient way to get the job done and there is a place for 
that.
    I do think, though, that has to be done in the context of 
overall strategic planning in terms of what is the workload and 
what resources need to be applied against that workload. Some 
of those resources can be in-house and some of them can be 
contractor, but you have to go through a logical planning 
process. I think that kind of logical planning process has 
largely been lacking for the last 10 years. We have outsourcing 
goals for the sake of outsourcing goals as opposed to being 
part of a logical thought process. So I do think there are 
disconnects and things that need to be revisited in terms of 
what is being outsourced and what is not.
    Another problem that arises when we do a lot of outsourcing 
is that if we cut the in-house capability to control those 
contracts, we are creating vulnerabilities and risks. I do 
think that the acquisition workforce has been cut to the point 
where its ability to oversee these outsourced functions has 
declined past the point where anyone should be comfortable. I 
do not think we are doing a very good job of contractor 
oversight and we are not necessarily getting our money's worth 
when we contract out for some of those services and we do not 
know it. So I do think there is more work to be done along 
those lines.
    Can these problems be fixed? Yes. It is a matter of will to 
do so, good planning, and applying resources where they are 
really needed.
    Mr. Davis. Would anyone else care to respond to that?
    Mr. Hinton. Mr. Davis, I would agree wholeheartedly with 
what Mr. Lieberman is saying on the need on the strategic 
planning. It has got to be considered a part of the force that 
we are looking at and the use of contractors and how it fits 
into the big picture. At GAO, that has been one of the things 
that we have seen lacking throughout the government, not just 
at Departments of Defense and State.
    I will point out that during the 1990's, the acquisition 
workforce was reduced by about 47 percent, compared to about a 
37 percent decrease in the total DOD civilian workforce, and 
that compares to about 17 percent reduction governmentwide on 
the civilian workforce.
    But the concern is not necessarily the numbers, but really 
whether the resident skills remain in that workforce for 
getting the job done, and that is where we really have not 
focused to take stock of what we need for the future and what 
we have got today and what we need to fill that gap in, because 
we are moving to high-tech, a different type of skill needs, 
and we have not seen that plan coming forward as to what those 
real requirements are and what the approach for the government 
is going to be, particularly in Defense and State.
    Mr. Davis. Delegate Norton mentioned the inability of the 
Federal Government to compete. I wonder if any of you might 
think--yes, Mr. Secretary?
    Mr. Schlesinger. Well, Mr. Davis, the first point I would 
like to make is it is a lot easier to make the Federal 
workforce more attractive when the government is expanding, as 
it did after the Korean War, than when it is shrinking, and so 
downsizing and outsourcing has an impact. It is part of a 
broader impact of that decline in the respect for the Federal 
workforce.
    But there is another aspect that one must keep in mind, and 
I agree with what has just been said about outsourcing. It is 
important for the civil service to react competitively. One of 
the reasons that we have been driven to outsourcing is the 
feeling that the civil service has not reacted competitively 
compared to the private sector, and, therefore, the kinds of 
flexibility that the Chairman has referred to earlier will make 
in-house government service more effective and thus reduce the 
attractiveness of outsourcing. This is a problem that can feed 
on itself, or, hopefully, be reversed.
    Mr. Davis. Thank you very much. I think I will pursue the 
other question perhaps after others have had a chance.
    Senator Voinovich. Congresswoman Morella.
    Mrs. Morella. Thank you, Mr. Chairman.
    On the outsourcing, I am glad that the point was raised. I 
think we have a challenge in making sure that we have 
appropriate accountability built into it, too, because you 
sometimes remove--you are tiers removed from the person who 
understands fully the total mission and our own opportunity to 
do that. I think we have to be very cautious about resorting to 
outsourcing when we have people who have the commitment and 
understand the mission internally.
    I get very troubled, as I know my colleagues do, about the 
length of time, and I think you have addressed that in your 
written statement, about the long and complex application 
process for civil service applicants compared to the private 
sector and the non-profit sector. Would you like to comment on 
that? I am looking at it in terms of what the solution would 
be. I have had constituents who have said, ``I had my 
application in, and boy, going through the security clearance, 
I am going to have to continue to have a livelihood. And if the 
people for whom I work know that I am being considered, then I 
am treated differently on the current job that I have now that 
I need for my revenue.'' I just wondered if you might comment 
on what it is we can do and what you have found from your 
experience.
    Mr. Schlesinger. If the Federal Government cannot make 
decisions on personnel, and particularly critical personnel, 
those with technical skills, in, let us say, 60 days, it is 
inevitably going to suffer from a great disadvantage in dealing 
with others when you have a whole range of applicants.
    I mentioned earlier that in the Foreign Service, that by 
the time you get through that 18 months of consideration and 
the offers are made, that less than 10 percent were accepted. 
That strikes me as unacceptable. We must be able to move more 
rapidly just to compete with the private sector.
    Mrs. Morella. How do we do it?
    Admiral Train. We probably have too many people in jobs 
that require security clearances. Let me rephrase that. We 
probably have too many requirements for security clearances as 
opposed to the actual necessity for those clearances. The 
security clearance process certainly does slow down the hiring 
process, and if we can, in an enlightened way, decide certain 
jobs do not require that or they may ultimately require that in 
2, 3, or 4 years, then we can improve the rapidity with which 
we hire people. But as long as that security clearance is 
hanging out there, it is going to slow things down, plus which 
we are still using those World War II hiring practices, which 
do not necessarily apply in this high-tech world that we are 
living in today.
    Mr. Schlesinger. Congresswoman Morella, the former Speaker 
of the House of Representatives, Tom Foley, took almost a year 
in getting cleared. He was asked by various people whether his 
name had ever been in the newspaper--it had been, whether he 
had ever been referred to critically and questions of that 
sort. If Tom Foley takes a year to get clearance, it tells you 
something about what is now the congested process that we now 
enjoy.
    Mrs. Morella. I really want to be part of that solution 
with you, Mr. Chairman and Mr. Scarborough. I think it is 
important for the security positions. I think it is important 
for the other civil service positions, too. I think that it 
also has something to do with the difficulty of recruiting. It 
is like a lack of patience that is inordinately demanded.
    Do you want to comment on it, Mr. Lieberman?
    Mr. Lieberman. Yes, ma'am. We hire 100 to 150 people a year 
in my office and we have suffered all the frustrations of 
managers making offers to good people and then watching them 
lose patience with us after it takes months and months for them 
to get on board. We are doing better now than we used to, but 
it is a brute force-type effort to try to push personnel 
actions through a system that is not particularly responsive.
    There are a lot of nuts and bolts problems here, and 
ironically, we were talking about problems feeding upon 
themselves. One of our difficulties is we get very poor 
responsiveness out of the personnel office, which we do not 
own, because it is under-staffed, because its workforce was cut 
arbitrarily and the workload did not go down. They have as much 
workload as they ever did, and, therefore, their productivity 
output is far below what is needed to support us properly. We 
lose at least a month in the personnel process. That is the 
part of the chain that we do not control.
    I do not agree that there are too many positions that 
require security clearances. It is true that there is a 
terrible problem when you are talking about top secret 
clearances, because the Department's ability to process initial 
top secret clearance investigations quickly has basically 
collapsed and it is taking well over a year now.
    For secrets, though, you can waive the main part of the 
preemployment investigative process and bring the person in if 
you are willing to take that risk. If they can pass a credit 
check and if their security form does not indicate anything 
would be a red flag to investigators, you can waive that. We 
have done so, for instance, for virtually all of our entry-
level auditors, and that has saved us several months in the 
process.
    So if you are aggressive about it, you can cut the process 
delays down to tolerable levels, but they still do not match 
the private sector, and anything that could be done to help us 
speed up certainly would help us recruit.
    Mrs. Morella. We would look forward to working with all of 
you in trying to come up with a solution of that nature. Thank 
you, Mr. Chairman.
    Senator Voinovich. Chairman Scarborough.
    Mr. Scarborough. Thank you, Mr. Chairman.
    I wanted to ask Mr. Secretary and Admiral Train, you all 
present a portrait of a very bureaucratic process when it comes 
to the civilian workforce as far as recruitment and hiring and 
promotion, and I trust that I have probably already missed the 
part about recruiting. I want to talk about promotion, though, 
because we all hear constantly that we have to make the Federal 
workforce more competitive with the private sector.
    Well, in the private sector, if somebody that is 22 or 23 
years old goes into the private sector, there is a general 
belief that if you go in there and you are a rising star or a 
hotshot, you are going to be rewarded, and if you do not carry 
through, there is going to be a failure. Now, there is a 
general perception that that is not the case in the Federal 
Government, that somehow there is not this same reward and 
failure system, and that may not be--maybe that is a 
misperception, but I will guarantee you that 99 percent of 
those people that are applying for jobs in the Federal 
Government have that perception, that the market is a bit more 
aggressive in rewarding success and punishing failure in the 
private sector than it is in the Federal Government.
    Does the Federal Government, from what you all have seen, 
have a way to reward success? Do they have a rising stars 
program that I am sure most of the Fortune 500 has, from what 
you all have seen?
    Mr. Schlesinger. Well, it depends on the time period. One 
of the reasons the Federal service was so attractive, let us 
say, in the period of the Cold War right after World War II was 
that it was exciting to be in the center of the fray and to be 
able to participate in making important decisions. Many people 
who were at the junior level felt that they had as much 
influence as the CEO of a medium-sized company.
    We have lost some of that in recent years and it is partly 
a result of much greater limitations placed upon the latitude 
given to junior officers in various departments, and we can 
restore that, I think, if we work at it.
    Mr. Scarborough. I was going to ask, Mr. Secretary, if that 
would appear to be the case over most departments you have 
looked at, or if there are some departments specifically----
    Mr. Schlesinger. No, we are talking about the national 
security departments, Office of Management and Budget. I cannot 
speak to other departments of the Federal Government with which 
I am less familiar. But it is important, it seems to me, for us 
to recognize the excitement that used to come and which has 
diminished, but in the perception of those out there that we 
are trying to recruit has diminished even more.
    I recommend an article that was in the Naval Institute 
Proceedings just a year-and-a-half ago by Admiral Natter who 
interviewed junior officers in the Navy, surface officers, and 
10 or 12 percent of them then aspired to higher commands. If 
you go back 25 or 30 years ago, it is a shocking number; 40, 
50, or 60 percent would certainly have aspired to higher 
command. They looked at the commander of the ship and they 
discovered that he did not seem to be very happy in his job, 
that he had this long chain of command above him that nitpicked 
any decision that he made and so forth. He had greater 
responsibility and less authority.
    And these men are now married, by and large, on board ship. 
Seventy percent of our young officers are married. They are 
under pressure from their wives not to be at sea 180 days a 
year or whatever it is, and so they were getting out. They were 
not going to re-up. And it was not simply a question of salary, 
it was a question of all of the amenities, including how their 
families were treated, medical care, family housing, and I 
commend that article to you.
    Mr. Scarborough. And Admiral Natter would be an excellent 
person who obviously was with the Seventh Fleet, and I think he 
is running the Atlantic Fleet now----
    Admiral Train. He is.
    Mr. Scarborough [continuing]. And he would be an excellent 
man to do that.
    Let me ask you this, in followup to that, and then, 
Admiral, I would like your response to it. Is it possible, 
though? Are we being realistic? You talked about 20, 30, and 40 
years ago that people felt like they had more of an investment 
and more of a say so. Is it possible, though, that, say, in 
2001 compared to 1958, 1959, or 1960, after Sputnik and after a 
series of crises, is it possible for us to get that message to 
recruits?
    Mr. Schlesinger. The answer is yes. You may not restore the 
same degree of attractiveness of the Federal service in 1960 or 
1961, but you can certainly raise it very sharply from the 
level that it has been pushed down to by the attitudes that 
have been taken, elections, kind of the contempt of late-night 
humor that denigrates the Federal service.
    Mr. Scarborough. Admiral Train.
    Admiral Train. As we downsized over the past 10 years, 
there was a tendency on the civilian side for the people with 
seniority to stay in their jobs while the attrition went to the 
younger people. The other part of this equation was that the 
younger people had the opportunity to gain employment in 
corporate America, whereas the older folks did not. So now we 
have this old, aging civilian workforce which is going to 
disappear over the next few years and create a crisis that we 
have to deal with by attempting to attract people at the 
bottom. We have very, very few younger folks among our civil 
servants, at least in the Department of Defense with which I am 
familiar.
    We also have the problem of the dual-income families. 
Admiral Natter, when he was interviewing people and writing 
this article, was probably talking to officers whose wives also 
worked and they were not as mobile, and because they were not 
as mobile as their predecessors had been, they had less job 
satisfaction. They could not move, they could not be 
transferred from San Diego to Norfolk because the wife had a 
job in San Diego. Of course, there are other officers that are 
married to officers. My daughter is a commander married to a 
commander, and that creates another type of problem.
    So these are situations we did not have to deal with 10 or 
15 years ago. They are new. We have to adapt to them. We have 
to create a recruiting climate where we can offer a job to a 
civilian, if it is a civilian job we are trying to fill, that 
gives him job satisfaction, that allows him to deal with 
questions like dual-income families, and is not so bureaucratic 
that he has to wait around a year before he knows whether he 
has actually gotten that job or not. We are competing with 
industry, no question about it.
    Mr. Scarborough. Thank you, gentlemen. And let me just say 
in closing this round, I will tell you another thing that does 
not help an awful lot, and I have seen it firsthand in my 
district, is when you have BRAC 1989, BRAC 1991, BRAC 1993, 
BRAC 1995, and then the administration asking for BRAC 1997, 
1999, now we are hearing 2001. There are an awful lot of people 
that are displaced by processes like that, also. I mean, I 
certainly understand the purpose of it, but it is something 
that somebody in the private sector does not have to worry 
about every 2 years, about whether they are going to lose their 
jobs, about whether they are going to be shipped across to the 
other side of the country. Thank you, Mr. Chairman.
    Senator Voinovich. Thank you. We have an early bird rule 
here in the Senate. According to my list, it is Senator Akaka, 
Representative Norton, and Senator Carper are the next in line 
to ask questions. Senator Akaka.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Thank you very much, Mr. Chairman.
    I want to thank our distinguished panel for your 
statements. It has been invigorating. As a matter of fact, I 
looked upon you as a quartet, singing the same song. That song, 
unfortunately, as our two Chairmen stated, who have devoted 
their political careers to ensuring the human capital side of 
government is not lost during debates on institutional reform, 
the song you sing is that there has been a collective failure 
in assuring that human capital is not at risk.
    As has been mentioned here, it is a complex problem. We are 
looking for answers. I do not know whether to start from the 
top or the bottom. We talk about promotions. When you think of 
a janitor who has become a good janitor, where does he go from 
there? How do you keep ensuring good people are joining 
government at the entry level and retaining good people at the 
senior level?
    And so these questions make it very complex, but we all 
agree that the personnel that we seek is very important to our 
system whether we are talking about space, or about defense 
personnel at Pearl Harbor. Our problems relate to money. I just 
hope the next crisis will not be financial, such as a 
depression.
    Because I am on the committee that deals with these issues, 
let me start off by asking a question to Robert Lieberman. In a 
recent interview, Philip Coyle, the Pentagon's last Director of 
Operational Tests and Evaluation, stated that it was penny-wise 
and pound-foolish for the armed services to cut their testing 
personnel by 30 percent and their testing facilities by 32 
percent over the past decade. That was a quote. The failure to 
test weapons properly resulted in flaws that often led to fatal 
accidents, and I have heard the Secretary mention some of those 
types of incidents in the past.
    My question is, do you agree that a thorough early testing 
of a weapons system is essential and do you have any comment on 
Mr. Coyle's statement concerning the cuts to testing personnel 
and whether his figures were accurate?
    Mr. Lieberman. I am not familiar with his figures, other 
than what I have read, but I presume they are supported. You 
asked me several questions there. Let me see if I can capture 
them.
    Should there be sufficient up-front testing? Yes, 
absolutely. It is critically important. I believe that Mr. 
Coyle's last annual report to the Congress, which was made 
recently, before he left the Department, pointed out that a 
very large percentage of weapons systems are failing their 
operational test and evaluations, which is testing that occurs 
sort of in the middle of the program as opposed to up front, 
and that it was very costly to go back and change system 
designs at that point. Had better up-front testing been done, 
it would have been much cheaper.
    I agree with that. I found the report that he produced 
quite troubling. I have actually used the example of the cut-
back in the testing workforce as one of the examples of a 
functional area that has been adversely impacted by downsizing. 
So I also agree with him that there has been too much cutting, 
that the cutting was not well thought out in that particular 
area.
    Senator Akaka. Thank you. I would like to come back to the 
human capital issue that we have been talking about and reflect 
on employee organizations. This question is to any one of you. 
As Federal agencies seek and implement personnel flexibilities, 
what steps do you believe agencies should take to ensure 
consultation with Federal employee organizations and collective 
bargaining units?
    Mr. Hinton. Senator Akaka, I think that they are a 
stakeholder in the process, and I think as the leaders of the 
agencies go through a strategic planning process where they 
look to the future workforce requirements and they do the 
necessary analysis to identify gaps in the skills that they 
need, they also need to consult all the stakeholders in the 
process, one of which is the group that you are considering.
    I found through all of my work that we have done that there 
are a lot of good ideas out in the workforce that can help us 
get to certain objectives when we work them, and I also think 
they can have some good ideas to help solve some of the 
workforce issues we see.
    But I think key to where GAO has been coming from in 
declaring the human capital area a governmentwide high risk 
area, it goes to skills, knowledge, and the abilities that we 
need in the future, and we just have not paid the level of 
attention to that whole area and we need to start focusing on 
that. We need to find champions who want to work the cause and 
make smart judgments in proceeding on how we will fill some of 
the real critical skills that we are going to need in the 
future. Naturally, that will have some impact, but they are 
also important stakeholders to consult in that process.
    Senator Akaka. Thank you, Mr. Chairman. My time is up and I 
thank you for the opportunity.
    Senator Voinovich. Representative Norton.
    Ms. Norton. Thank you, Mr. Chairman, and I want to thank 
all of these witnesses for the very important work you do, 
beginning with the Congress. I think that the work that Senator 
Voinovich has initiated and you have spoken to this morning 
really is a wake-up call for the Congress, except I think the 
Congress is asleep on it, and how to set off an alarm clock 
here becomes a major challenge for us all.
    You have described what politely speaking could be called a 
crisis, everything from recruitment to an aging workforce. I 
have read your recommendations. Many of them are very good 
recommendations. I have real concerns about the short term, 
however.
    First, I would like to ask a question that really befuddles 
me. I am aware what happens as young people get out of college. 
They often get out of college with quite good technology 
skills, just by having gotten a higher education. We know good 
and well that these folks do not run to their nearest OPM 
office to get hired by the Federal Government or to the nearest 
military station. We also know that civil service cannot, as I 
recall, hire foreign nationals. So both our military and our 
civil service are dependent upon our native-born workforce, or 
at least our native-born and naturalized workforce.
    With respect to the high-technology workforce, any time 
when private employers are having to throw money at people with 
technology skills, where they find themselves competing against 
one another and, therefore, going to foreign nationals, how is 
the Federal Government hiring people with advanced technology 
skills? Are we training them, and if so, are we simply 
investing in them and then they get hired away where they can 
get more money? How do we get a pool? How have we gotten a 
pool, assuming we have one, of people who can, especially in 
the DOD area, work the advanced technology economy?
    Admiral Train. One way is to use loan forgiveness----
    Ms. Norton. No, no, I am asking a here and now question.
    Admiral Train. This can be a here and now question.
    Ms. Norton. I am asking not how can we attract them, I am 
saying, do we have them? This government, and especially the 
DOD, has to have instantly people with certain very advanced 
technology skills. You describe a situation that says to me 
that those people would be out of their minds to come to the 
government. So I am trying to find out how the high-technology 
part of the Federal Government is being run now. Are we on the 
spot taking what employees we have and training them? I then 
have a follow-up question. When they get this training, what in 
the world is to keep them here, since the high-technology 
sector wants them? I am trying to find out where we are now 
with respect to the most advanced workers, how we are able to 
run this government, assuming that these workers, certainly in 
the DOD sector, would be as much a requirement as they are in 
the private sector.
    Admiral Train. We do not train our--the existing employees, 
we do not send through training. We do not give them----
    Ms. Norton. Well, where do we get them from?
    Admiral Train [continuing]. Scientific and technical 
education. We have to hire people with scientific and technical 
education and they are in short supply because the typical 
American college student, the typical American high school 
student does not go into science and technology. They go into 
other things. They are difficult to find. The industry depends 
upon, as you have already indicated, Ms. Norton, the non-U.S. 
national source for their science and technology needs. But if 
we can devise a system, and it has been indicated here today 
already that the authority is there, but to start funding the 
means of forgiving student loans for those that come out of the 
science and technology education process and hiring them to 
meet our needs, then perhaps we can do so in the very near 
future.
    Mr. Schlesinger. We are not grappling with the problem. The 
Federal Government does not have the requisite scientific and 
technical personnel and it is losing many of the people that it 
already has.
    Ms. Norton. Do we outsource when we need folks?
    Mr. Schlesinger. We have become dependent upon contractors, 
or in the case of the Department of Energy, we depend upon the 
ability of the DOE labs to hire people outside, and for a 
number of reasons, their ability to attract has diminished.
    Ms. Norton. Your recommendations are very important. If we 
were to start on them tomorrow, you yourself say that they 
would require some time to, of course, show results. Could I 
ask you whether or not, for example, government pensions still 
keep people working? I mean, what is there that we can do to 
keep people from retiring early, from simply giving up their 
pension because they get such a good deal, as it were, in the 
private sector? The government pension used to be part of that. 
So did health care, except we are way behind the private sector 
when it comes to the percentage we pay in health care.
    So I am trying to find out whether there are at hand, with 
the existing workforce, which, as the Chairman says, half of it 
could retire virtually within the next 3 or 4 years, with the 
existing workforce, what could we do pending the time that we 
can draw more people to rebuild our workforce to keep the 
people in whom we have invested working longer?
    Mr. Lieberman. Could I tackle that one?
    Ms. Norton. Yes, please.
    Mr. Lieberman. I could have retired last August. I am still 
here.
    Ms. Norton. Why?
    Mr. Lieberman. The main reason is, I love my job and I 
think it is really interesting. When we go out to recruit or we 
talk to our employees trying to retain them, on a strict dollar 
basis, everybody is absolutely right; we just cannot compete 
with the private sector. Certainly, we need the ability to pay 
people with critical skills more. I was monumentally 
disappointed with the very modest specialty pay increases that 
OPM came up with for the information technology work series 
last year. I think that was a pittance and really will not have 
much of any effect.
    The Federal Government has things going for it, however, 
that sometimes have enabled us to retain highly skilled people 
who could be making a lot more on the outside. We are a humane 
employer. We do not require people to work ridiculous hours. In 
my office, we have adapted the casual dress policy, which to 
young people is a very big deal, every day. I feel silly 
without a tie, but they like that.
    A lot of our work is inherently interesting. We have 
criminal investigators who are experts in computer crime 
forensics, very esoteric matters, very highly skilled agents, 
tremendous demand for them in both the public and private 
sectors. We can keep many of them because they are really 
interested in the cases they are working in, like catching 
hackers hacking into national security systems, and they really 
enjoy the work.
    So the stereotype of government bureaucrats doing nothing 
but pushing paper and being bored out of their minds really 
does not hold true. We have done a very poor job of advertising 
ourselves and explaining that to people. We have let the 
stereotype hold true, which is unfortunate. So I think we could 
do more immediately there. We put a lot of time, effort, and 
money hiring the best advertising firms for military recruiting 
and we have great looking ads on television. Nobody recruits 
for the civil service like that. Nobody recruits for the civil 
service at all, except with some print advertisement that is 
rather boring.
    So I think certainly more compensation would help, but we 
do have some strengths that we probably do not emphasize 
enough.
    Ms. Norton. Mr. Chairman, I would just like to say, the 
recommendation of the panel for a National Security Service 
Corps rather much imitates the notion of an honors program in 
the Justice Department. The notion of creating an elite corps 
early on, so that if you join this corps, you feel very special 
and you have been hired for very special reasons, is one I 
would want to heartily endorse.
    Mr. Hinton. Ms. Norton, can I just add one thing here, and 
I think that it goes across the government, is that we need to 
better understand the expectation folks coming out of school 
have for their work environment. I think the government can do 
a much better job and look in its tool bag to find ways to 
match up better with their expectations. The casual dress is 
one area, but there are other incentives that are out there 
that we can use, and I think there are a lot of those tools for 
which we do not fully understand the flexibilities across 
government, flexibilities that can be useful in drawing in new 
people and keeping some of the people that we have, in addition 
to the others that Mr. Lieberman just mentioned to you.
    Senator Voinovich. Senator Carper.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. Thanks, Mr. Chairman. To our witnesses 
today, welcome. We are delighted that you are here. We thank 
you for your testimony and for your service to our country. I 
want to thank the Chairman for inviting our friends from the 
other end of the Capitol to join us here today and give me a 
chance to hook up with Connie Morella, Representative Morella, 
who my wife and I met 15 years ago this year on our honeymoon 
in Jamaica. So it was nice to have that little reunion here, as 
well.
    I apologize for missing your testimonies. I have a couple 
of other hearings going on this morning and I am trying to 
attend all of them. I missed what you said. If you have already 
addressed this, I am going to ask you, just for me, to repeat 
it.
    Governor Voinovich and I used to be governors before we 
were Senators, and we are people who believe in the States as 
laboratories of democracy and the idea that we are actually 
interested in devolving some things back down to the States and 
figure the States can do better some things that we actually do 
here at the Federal Government.
    What I would ask, just to start off with, are you aware of 
some practices that some of the States are following with 
respect to attracting and retaining exemplary employees, 
whether it is in the technology fields that Ms. Norton was 
touching on or some others? Are you aware of any best practices 
out there in the States where we could look to those States as 
models that we might emulate? Any one of you?
    Admiral Train. It does not come to mind in our work.
    Senator Carper. All right.
    Mr. Hinton. Senator, I think that is part of the solution 
to the strategic planning process. I think part of that goes to 
once you know your requirements and your gaps, you need to 
learn the experiences of others and how they are tackling 
similar problems, and if they are having success, we in the 
government need to find ways to replicate that success across 
the different agencies, from a lessons learned standpoint, and 
I think probably the government has got some good lessons to 
share, the States too, and the local counties. We do not yet 
have a pretty good inventory of what those successes are. I 
think that effort is a positive. That is a good step that we 
need to be really conscious of.
    Senator Carper. Thank you. In the National Governors 
Association, we had a number of entities. The Governors 
Association existed in part to lobby the Congress and the 
President on behalf of the States. We also had a Center for 
Best Practices which we used to gather the best practices from 
the various States, whether it is dealing with increasing home 
ownership or whether the issue is trying to reduce recidivism 
or to encourage people to move off of welfare, to raise student 
achievement. We had our Center for Best Practices and gathered 
those good ideas and tried to make them available to the other 
States on a user-friendly basis.
    Do we have the ability--are you aware if we have the 
ability, whether it is in the Department of Defense or in the 
Federal Government, where we are able to gather best practices 
within not the States necessarily but within Federal agencies?
    Mr. Hinton. Yes, sir. In the----
    Senator Carper. And to share in a user-friendly way those 
best practices?
    Mr. Hinton. Yes, sir. In GAO, we have done that across a 
lot of our audit teams. An area that comes to mind is the 
acquisition of major systems, where we have gone out as part of 
our research and looked for those best practices, and then once 
we have those, go back into the executive agencies and compare 
them to their practices, and where we can see that there is 
merit in following the best practices, we have adopted some of 
those recommendations.
    In DOD's case, we think there are some good practices out 
there that they could use in acquiring weapons systems that 
they ought to follow unless there is a compelling national 
security reason not to do so. It will save money, it will get 
the job quicker, and I think that it will also let them know if 
the path they are going down will get them where they need to 
go. And we have used that technique widely in GAO.
    Admiral Train. We have a database that is called a Joint 
Unified Lessons Learned database where--but they are mostly 
operational and do not deal with administrative or policy 
matters. But yes, there is such a database. Whether or not that 
branches off into such matters as we are discussing today, how 
to better hire better civilians into the Department of Defense 
civilian structure, I am not sure whether that is covered. But 
there is a database for other things. It could be adapted to 
that, I suppose.
    Senator Carper. Thank you. Yes, sir?
    Mr. Lieberman. I believe a lot of that is done in clusters 
of organizations and managers who are in the same business 
area. For instance, the audit community within Defense shares 
ideas on recruiting and personnel management things, as does 
the Federal law enforcement community. But I do think more of 
that can be done in this specific area. We were talking in 
terms of people not understanding what authorities they already 
have. There has been an awful lot of duplicate research to 
figure out what those authorities are all over the Department. 
So we probably could do better if we could make that more 
systematic.
    Senator Carper. Mr. Chairman, my pager is going off here. 
It is trying to tell me something. Do we have a vote in 
progress?
    Senator Voinovich. Mine has not gone off yet.
    Senator Carper. My wife is saying, do not forget that bread 
and milk tonight coming home. [Laughter.]
    Can I ask one more question, just a quick one?
    Senator Voinovich. Certainly.
    Senator Carper. Thanks. One of the great values I found 
over the years in a hearing like this is to find where our 
speakers, our witnesses agree, and let me just ask if you would 
each just give me one idea where you think you agree on 
something we ought to do this year--this year--to address the 
problems that we have talked about today, just one idea where 
you think you agree. Each of you give me one idea, if you 
would, on an approach to help us address these problems this 
year.
    Mr. Hinton. I think that there is agreement that the human 
capital issue has gone unattended for many years in the 
government right now and I think there is agreement amongst the 
work that we have done, the Commission has done and other 
studies, is that it needs to be a priority within the Executive 
Branch to start addressing it, and from GAO's point of view, 
that begins with strategic planning as you look to your future 
needs, and I think that is a very key, fundamental point that 
needs to occur.
    But it cannot occur unless you have got the commitment that 
starts with the President down through the secretaries, and 
that they are on board and are going to move in that direction. 
Because what happens is sometimes there are competing policy 
issues that move things to the side, though not intentionally, 
but they lose that sense of priority that needs to be done, and 
I do not think that we can wait any longer.
    I think all the studies point in one direction. Enough of 
this has been studied. It is time to act. To use the term from 
the McKinsey study that was done at the Department of State, 
there is a war on for talent and that talent is the folks that 
we need to bring into the workforce, particularly into State 
and DOD. It is our front-line defense and we have got to be 
prepared for what the future brings and we cannot wait much 
longer for that to be left unattended.
    Senator Carper. Thank you. Our other witnesses, one idea 
that you agree on.
    Admiral Train. The President should propose and Congress 
should pass a National Security Science and Technology 
Education Act with four sections: Reduced interest loans and 
scholarships for students to pursue degrees in science, 
mathematics, and engineering; loan forgiveness and scholarships 
for those in these fields entering government or military 
service; a national security teaching program to foster science 
and math teaching at the K through 12 level; and increased 
funding for professional development for science and math 
teachers.
    Senator Carper. Terrific. Thank you. The last word?
    Mr. Lieberman. I think both the White House and the 
Congress should demand that senior managers in the Executive 
Branch use whatever flexibilities they have now or whatever 
additional flexibilities are authorized and be accountable for 
getting on top of this civilian workforce problem.
    Senator Carper. Thank you.
    Senator Voinovich. I want to thank the witnesses. I would 
like to acknowledge that Representative Cummings has arrived 
today, and Representative Cummings, we apologize to you, but we 
are going to wrap up.\1\
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Cummings appears in the Appendix 
on page 35.
---------------------------------------------------------------------------
    I would like to say that, from my perspective, one of our 
biggest jobs is to prioritize the things that we need to do to 
address this human capital crisis, and you have been discussing 
many of them here today.
    Second of all, I would think that given the problems that 
the Commission's report addresses, we need to share that 
information with the chairman of the Armed Services Committee, 
the chairman of the Intelligence Committee, and the chairman of 
the Foreign Relations Committee and try to get them to focus 
their attention on this particular problem that has been 
ignored for so many years. Too often, it seems to me, they get 
distracted with other subjects. We have to get this onto their 
high priority list and also make sure that they come up with 
the money to fund some of the existing incentives and start 
looking at some of the additional things that we need to 
recruit and retain employees.
    We never did get into the issue of training, for example, 
which I have mentioned on several occasions. When I inquired of 
the last administration how much money they spent on training, 
the Office of Management and Budget, responded, ``We do not 
know.'' I think any organization that is going to keep people 
and be vital and attractive must provide money to train those 
individuals, upgrade their skills and make it an exciting place 
for them to be.
    I cannot help but think about this attrition issue that we 
have, and Admiral, you are talking about the changed nature of 
our armed services today. I will never forget as long as I live 
when I was in Tirana, Albania, and visiting with the crew of 
several Apache helicopters and talking to them after one of 
their comrades had died in the training missions. After the 
brass left, I asked them, what is the problem? And one of them 
told me, ``Senator, do you not understand that this is a family 
Army?'' And when I went to Arlington Cemetery and visited with 
David Gibbs' widow, the first thing she said was, ``Do you not 
understand that this is a family Army and we never see our 
husbands?''
    I think that is a very, very important thing that has been 
overlooked, and I know the services are starting to give some 
consideration to it. But I think it is fundamental if we expect 
to retain the people that we have and attract more people to 
the services.
    Mr. Scarborough.
    Mr. Scarborough. Mr. Chairman, thank you. I have enjoyed 
this first hearing. It has been very informative and important. 
I am honored to be sitting next to you. I have heard you called 
Governor and Senator, Mr. Chairman, and, of course----
    Senator Carper. Mayor.
    Mr. Scarborough. I was going to say, one of his great 
accomplishments was becoming mayor and just stopping the river 
from catching on fire. [Laughter.]
    I mean, that was awe inspiring for all of us. But you are 
emminently qualified because you have done it on the municipal 
level, you have done it on the State level, and now you are 
looking at the situation up here.
    It has been a great first hearing and I look forward to 
working alongside you in the coming hearings.
    I would like to also submit for the record, and we have not 
had time to answer all these questions, I would like to submit 
a question for all of you to answer in the coming weeks just on 
something that I got off of Government Executive magazine. It 
is March 23, 2001. The headline says, ``Better Pay Will Not 
Solve Tech Worker Shortage,'' and it says the top five reasons 
reasonably paid techies stay at jobs are, (1) good management, 
(2) good work environment, (3) challenging work, (4) flexible 
work arrangements, and (5) training--the very thing you said 
that we did not get a chance to discuss today. But I would like 
to submit this for record, without objection, and if you all 
could just grade the Federal Government on these five areas in 
the coming weeks, I think that would be helpful.
    [The information of Hon. Joe Scarborough follows:]
      RESPONSE TO QUESTION FOR THE RECORD BY CHAIRMAN SCARBOROUGH
    Mr. Lieberman. We agree with the article's premise that factors 
other than pay alone are important to Federal employees, both military 
and civilian. Regarding grades for the Federal Government in the five 
areas mentioned by the author, however, we are hesitant to generalize 
beyond those parts of the DOD workforce that we have evaluated recently 
from a personnel management standpoint or that belong to the job series 
used in our office. We also believe there are drastically different 
degrees of workforce issue awareness and workforce management 
effectiveness across the many organizations that comprise the DOD. 
Finally, numerous actions began over the last year or two that are 
intended to address recruiting and retention problems, so any 
performance grades given at this time may not capture the effects of 
those initiatives.
    Those caveats aside, we offer the following observations:

    Management. Managing a workforce during a prolonged period of 
downsizing is extremely difficult, but the lack of a strategic plan for 
the DOD civilian workforce throughout the past decade has made the 
situation worse. The Department has yet to demonstrate that, across the 
board, it has any particular plan for the civilian workforce other than 
to make additional arbitrary cuts. On the military side, the Secretary 
of Defense has raised the provocative question of whether the 
traditional ``up or out'' promotion and retention policy still makes 
sense.
    Work Environment. The DOD can compete favorably with other 
organizations in terms of work environment for civilian employees, 
except that constant public disparagement of Government workers has a 
wearing effect on employee morale. The Department needs to do more in 
terms of expressing confidence in its civilian workforce. In addition, 
the instability and uncertainty created by seemingly never ending talk 
and rumor of further downsizing, restructuring and outsourcing make it 
difficult to maintain a positive work environment. Achieving a 
strategic plan that lays out a clear roadmap for what lies ahead would 
greatly help. On the military side, the DOD has recognized the severe 
degradation of the work environment caused by very high operating 
tempo, underinvestment in housing and other facilities, and frustrating 
shortages of materiel.
    Challenging Work. Overall, DOD ranks high in terms of offering 
interesting work to both civilian and military personnel.
    Flexible Work Arrangements. We have not reviewed this matter and 
have no basis for comment, except to note that the use of alternative 
work schedules and other flexible arrangements appears fairly 
widespread.
    Training. The Department has acknowledged that much more needs to 
be done to improve both civilian and military training.

    Mr. Scarborough. Thank you again. I appreciate it.
    Senator Voinovich. We again thank the witnesses and thank 
Members of the House and Senate that have been here with us. 
The hearing is adjourned.
    [Whereupon, at 12:10 p.m., the Subcommittees were 
adjourned.]
                            A P P E N D I X

                              ----------                              

             PREPARED STATEMENT OF HON. ELIJAH E. CUMMINGS
    Thank you, Mr. Chairman.
    I am please to be here with my colleagues from the House Civil 
Service Subcommittee and the Senate Subcommittee on Oversight of 
Government Management, Restructuring and the District of Columbia. As 
the former Ranking Member of the Civil Service Subcommittee, I know the 
importance of bipartisanship and forming good working relationships 
with our friends in the Senate.
    The focus of today's hearing: How the human capital crisis is 
affecting the national security, is vitally important. In recent years, 
military services have struggled to meet recruiting goals. The State 
Department has struggled to recruit and retain Foreign Service 
Officers. Sadly, the thought of ``serving our country'' is not enough 
to lure people to the Departments of Defense and State. With the 
attraction of higher salaries and competitive benefit packages, it is 
not surprising that Federal agencies are finding it difficult to keep a 
talented workforce.
    It is imperative that we examine the Federal government's efforts 
to recruit recent college graduates and their retention and training 
efforts.
    Human capital reforms will be necessary as Federal employees are 
aging and nearing retirement. In a recent interview, the new director 
of the Office of Management and Budget (OMB) stated that Federal 
agencies are struggling to hire qualified college graduates at a time 
when a large majority of their Federal workers are nearing retirement.
    The Federal Government faces the great challenge of keeping a 
qualified and well-trained workforce. Federal agencies must offer 
enhanced technology training and higher wages. Later this year, I will 
reintroduce the Federal Workforce Digital Access Act (FDWA) that 
proposes to provide a home computer and Internet access to permanent 
Federal employees, who complete one year of employment. Additionally, I 
support Senator Sarbanes' effort to ensure civil service employees 
receive a pay raise similar to the pay raise given to our men and women 
in the military.
    I agree with Senator Voinovich that we must do all that we can do 
to empower Federal employees by creating a workplace where employees 
can efficiently use their talents and skills to make a difference.
    I look forward to hearing from our witnesses.
    Thank you.

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