16

Mr. Mica. I thank the gentlelady and I'll yield for an opening
statement to Ms. Norton.

Ms. NorTON. Thank you, Mr. Chairman. I think you do us all a
service by calling this hearing. The area of affirmative action is dif-
ficult enough without generating even more confusion. The area is
made even more difficult because of the decisions that surround
this hearing. First, Adarand, of course, Adarand v. Pena, and then
the case that applies directly to the IRS, Byrd v. Rubin. The fact
is that the Supreme Court hasn’t settled down where it wants to
go in this field. This leaves Federal agencies and other employers
between the devil and the deep blue sea. On the one hand, you will
find that women and minorities will want to keep the agencies’ feet
to the fire. On the other hand, others, seeing the Supreme Court’s
decision, will want to look closely to see if they are victims of dis-
crimination because of affirmative action.

It is very troubling to learn that even as the IRS felt it had to
suspend part of its program, complaints were growing. I’m certain
those complaints were from all sides. I’m also certain that most of
them came from minorities and women. To its credit, the adminis-
tration is—has proceeded on a very responsible course, to review
the entire matter and issue regulations which have now come for-
ward and are receiving complaints for the government as a whole.
I would be concerned that agencies in the interim might be—may
be left in a kind of self-help position that is inconsistent with what
the administration is doing, in the absence of the guidance that is
not fully complete or that may be inconsistent with what the courts
expect. This area is as subtle as it is technical. I was very con-
cerned with the prior testimony in the hearings, Mr. Chairman,
that you called before this one, especially the testimony that came
from the Cuban American man who had been passed over. Affirma-
tive action needs to be done. If it’s not done well, it can give affirm-
ative action itself a bad name and yet the agency finds itself hav-
ing to respond in an area that is anything but clear in the law.

When I chaired the EOC, we issued affirmative action guidelines.
I want to invite the IRS to look at the affirmative action guidelines.
They were an attempt to help agencies engage in affirmative action
without trampling on the nights of others and, without guidance
like that or the kind of guidance we’re getting from the administra-
tion, I think that employers, private and public, are put in an im-
possible position. I do want to say for the record that I am con-
cerned about the way in which we are looking at settlement of
cases. My friends on the other side of the aisle would be the first
to encourage settlement of cases. Settlement of cases with a resolu-
tion that is satisfactory to both parties is mandated under title VII
of the 1964 Civil Rights Act as preferential to litigation and is al-
ways the best way to handle litigation. The last thing I’m sure that
this subcommittee wants to do is to invite people to, in fact, go to
trial on every case. Now, people aren’t going to settle cases if they
have to go through exactly what they would have had to if they
had gone to trial. So, therefore, it is common in American law, in
fact it is universal in American law, that when you settle a case,
you don’t then go out to the public and say, I settled this case be-
cause I’m a sinner and this is what I settled it for. If you want to
increase litigation, what you do is to force settlements completely


37

PERFORMANCE PLAN FOR MANAGEMENT OFFICIALS
Critical Elements and Performance Standards

Element1, Program Planning, Management, and Delivery.

Objective: Plans and organizes assigned activities and projects to timely accomplish work
‘objectives according to procedural, administrative, and technical requirements, as well as
business goals: Increase Compliance, Improve Customer Service, and increase Productivity.
Quality and customer service are reflected in all products and activities.

‘Uniform Standards:

+ Sets etfective short and long-term priorities that are realistic, responsive to
accomplishment of the Strategic Plan and Bucget, as wail as local priorities. Plans,
implements, monitors, and delivers assigned programs to meet the local goals of the
Annual Performance Plan.

. Etfectively implements and monitors assigned programs. Provides necessary oversight
ta ensure quality results that are responsive to the needs of the Service, as well as
intemavextemal customers.

+ Utilizes technology to redesigr/maintain business processes that reduce expenditure of
time, money, and resources lor taxpayers and intemal customers. Reviews and/or
recommencs effective use of resources for functional program areas.

+ Utilizes systems management principles. Contributes to continuous quality improvement
in day to day work assignments.

Local, individual, or team standards: May be used to define specific outcomes and time
frames.

Element 2. Communication, interpersonal Relationship, Team Work,

Objective: Develops and maintains fines of communication and interaction which ensure
work accomplishments and enhances work relationships with peers, extemal/intemai customers,
superiors, and others.

Uniform Standards:

: Actively assists in meeting univteam goals as appropriate.

: Exercises sound judgment in identifying the information needed to be communicated.

+ Through timely and etfective oral and written communication, disseminates necessary
information and program guidance.

. Maintains effective working relationships.


33

Executive/Managerial Performance Plan
Critical Siements and Performance Standards

The following critical elements apply to ail Executives and Managers. The General Stardards
appearng with each element describe the requirements for fully successtul performance in ail
organizational components and reflect the imporance of successfully managing day-to-cay
‘operations and furthering the Service's progress toward meeting the organizational goais of the
Strategic Plan and Budget. Additional standards may be prepared for each critical element. These
amplfication/adgitional standards should be used for clarification or emphasis of the organization's
needs and the needs of the individual.

‘The EEO element and standards support the Service's commitment in improving and measuring
EEO etfectiveness. .

1. Increase Compliance.

Objective: Ensure our products, services, policies, and employees directly or indirectly encourage
and assist taxpayers to increase the number who voluntarily file timely, accurate, fully paid retums,
When taxpayers do not comply, take appropriate remediaV/enforcement actions to correc: tuture
behawicr.

General Standards: Consistent with the scope of your responsibilities, apply leadership
competencies to:

+ lan, implement, moniter, and deliver programs to meet the goals of the Strategic Pian and
Sudget timely and within budget allocations, including but not limites to effective sianning
2nd management of labor costs, space utlization, telecommunication resources, equipment
inventones, and accountng controls.

+ ‘dentity emerging tax administration issues and develop/implement strategies to acdress
rem.
+ Provide taxpayers with the ability to interact with employees and systems to meet heir

civerse needs.

. Maximize resource effectiveness through cross-functional coordination with intemal and
extemal stakeholders,

. Foster personal and employee development to better match the skills, abilities, ideas, and
experiences of our diverse workforce to appropnate market segments.

: 2cminister the tax laws with empowered employees wno protect taxpayers’ nights and treat
tem ethically with honesty, integnty, taimess, and respect.

: Develop/maintain systems to protect intemal ang external customer pnvacy, keep data
confidential, and maintain adequate secumty over tax/personnel data.

Amplification/Additional Standards:


42

Mr. FowLer. Not to my knowledge, but I will defer to Mr. Fer-
rara.

Mr. Mica. Mr. Ferrara.

Mr. FERRARA. There have been no other decisions of the moment
of the Byrd that deal with the implementation or any of the poli-
cies directly. We've had individual cases that we’ve won and that
we've lost but always on individual grounds.

Mr. Mica. Are there any similar cases pending?

Mr. FERRARA. I cannot answer that. I don’t know. We are collect-
ing the information but we don’t have it yet available.

ir. Mica. Are there similar cases pending?

Mr. FowLer. Mr. Chairman, what I would say, in all honesty
with you, is that after the Byrd decision, obviously, and the con-
troversy that has surrounded the recent activity concerning per-
formance standards and newspaper articles, national publicity on
TV, et cetera, there are certainly others who perhaps, feel that they
may have a case that centers around the same type of activity as
the Byrd case. But-

Mr. Mica. But do we have others that you’re aware of, Mr.
O'Malley?

Mr. O'MALLEY. No. Is the question are any pending?

Mr. Mica. Yes.

Mr. O'MALLEY. No, I’m not aware of any, Mr. Chairman.

Mr. Mica. You're not aware of any. Your statement describes its
work force as 67 percent female, 35 percent minorities. When
ERR-16 was published in 1989, it reported that the IRS work force
was 61.2 percent female and 30.2 percent minorities. Does the
agency have any or have they set any numerical objectives about
the proper levels of women or minorities in its work force?

Mr. FowLer. We do not have numerical objectives at this time.

Mr. Mica. Mr. O’Malley, has that been a consideration, setting
any kind of corrective measures to create some type of numerical
balance?

Mr. O'MALLEY. No, we wouldn’t be setting any targets, Mr.
Chairman.

Mr. Mica. Mr. Ferrara, no?

Mr. FERRARA. Mr. Chairman, not only are there no goals but the
objectives are not on a national level to achieve certain representa-
tion in the work force. ERR-16, itself, was not looking at the total
work force. It was looking at the higher grade levels and the rep-
resentation of minorities and women in those grade levels and it
was looking at it only as measures at a national level. That doesn’t
translate to—at individual offices where employment decision are
being made, whether there is the same kind of representation in
all of those offices equally throughout the country.

Mr. Mica. The final question. We heard the ranking member cite
certain statistics about inequity as far as promotion and levels. I
believe it was, he cited, statistics of folks having opportunity in the
higher positions in IRS. Is there any program that addresses this
particular situation within IRS? Mr. Fowler.

Mr, Fow.er. Mr. Chairman, would you repeat that? I’m not sure
that I understood all of your question.

Mr. Mica. The ranking member indicated from statistics he
had—I didn’t have access to them. What were they, Mr.



10
3

limited action had been taken. As we will hear from our witness,
the IRS merely suspended, temporarily, certain aspects of its
performance management system for executives and managers
which address expectations or measurements in the area of EEO
and diversity. This action was taken while a review is conducted
of recent court decisions. It is important to note, however, that
notwithstanding the ongoing review, the IRS reaffirmed its
commitment to affirmative action and added a new EEO
performance element to this particular appraisal system which it

believes is fully consistent with the law.

Let me say to the representatives of the IRS here today, that |
expect this subcommittee to be kept abreast of the progress of
your review and to be immediately informed of any conclusions

reached and any further action taken.

Mr. Chairman, | want to make clear for the record that!


10

Attachment 2
MANAGEMENT OFFICIAL PERFORMANCE PLAN
Name of Employee Office/Organization Series and Grace
Title of Position Penod Covered
: From To

This performance pian has been discussed with me and | have been given a copy.
Employee Signature Date .

Supervisor's NameySignature Title Date
‘Approving Officials Name/Signature ‘Tile Date
INSTRUCTIONS

The critical elements are appicable to all management officials. The objective and uniform s:

under each critical elements refiect the major day-to-day responsibilities of the position. All star.

written at the fully successful level. While each entical element is a mandatory performance indicatc
some general standards may not apply. The supervisor and employee shouid review the uniform
standards and delete any that are not applicable. Deletions should be noted, initialed, and dated by the
‘employee and supervisor. Local, individual, or team standards, as appropriate, may be included to reflect
areas of emphasis. These should de kept to a minimum and should be written at the fully successful level
with appropriate indicators of quality, quantity, and timeliness.

‘The employee's pertormance will be assessed in accordance with the pian, and will reflect a rating for
tach critical element and applicable unitorm standards. An overail rating (summary rating) will aiso be
determined.

Progress reviews are an essential part of the performance plan and appraisal system. Although the
process of monitaring plan accomplishment is on-going, a minimum of one review must be conducted
approximately mid-way through the appraisal period. While a formal written review is not mandated,
documentation that the review has been conducted is required in accordance with local procedures.

PRIVACY ACT STATEMENT
Te Privacy Act of 1974 and Paperwork Reduction Act of 1960 say hat when oe ask you fr ors

telt you: our legal night to ask for the information; what major purpose we have in asking for # and he
‘what could happen d we do not receive & and whether your rasponse is voluntary, required to ob!
‘mandatory under the law.

This statement is being provided pursuant to Pubic Law 99-579 (Privacy Act of 1974) Deceme-
individuals who have been requested to submit a statement of accormplishmenl/sell-assessmeni.

The authonty to solicit this information s derived from § USC 4301, at seq., and 5 CFR Par 43:

Management, ‘Opportunity Commission, :
the appropriate system of records. The infomation contained in your perlormence apprassal is part of TRARS
‘Genera Personne! Records.

Failure to fumesh thie information may resuk in your supervisors preparing your appraisal. or conducting # progress
review, without considering any information you may fee! is relevant or significant.


52

Mr. FowLer. Let me say this. At this point in my career and at
this point in my life, there is not anyone that you're going to find
that sits before you that has any more interest in saving the tax-
payer money than I do or in doing what I think is the right thing
to do. Alright, I have no problem in making the contact with OPM,
I have no problem in making the contact with EEOC. We don’t
have a problem in making any contact that would be reasonable
and prudent and that would be efficient for the operation of our bu-
reau, What we don’t want to do, again, is to do something that
would create litigation for us. What we do want to do is to make
sure that we continue to offer equal opportunity for all of our em-
ployees and this has been very tricky.

If you could have been with me this morning, when I spoke to
the executives, one of the things that you would have heard me
saying over and over again is that we can ill-afford, as a govern-
ment entity, to continue to place ourselves in positions where we
have to litigate on issues concerning sexual harassment, concerning
employment discrimination, concerning employees with disability,
you name it, on any of those issues, we don’t need to be in the
courts attempting to try to find out how we settle these issues. And
what we have to do is to take, again, these issues as a leadership
issue, serve as examples, step up to the plate and do what we think
is right and not do it just because the law requires it but, usually
if we do what is right, we will comply with the law. And so, that’s
my firm belief, that’s where we’re headed with it. I certainly take
your comments seriously and I can assure you that we'll do every-
thing to make sure that we have proper coordination.

Mr. Mica. Mr. Cummings.

Mr. CUMMINGS. First of all, Mr. Fowler, I want to thank both of
you gentlemen, all of you, for being here today. Mr. Fowler, as I
listen to you, I must tell you that I’ve been very impressed with
what you're trying to do and I’m trying to sit here and be as opti-
mistic as J possibly can be. But I understand that all of your best
efforts still there are a whole series of subjective decisions that are
made and they are made by individuals. And that’s what kind of,
you know, that sort of tempers my optimism. But, I just have a
suggestion, for whatever it may be worth.

Not very long ago, it’s probably been about maybe 9 months ago,
the New York Times put out a—had an article about 5 or 6 compa-
nies that had effective diversity programs, private companies, and
one of the things I found very interesting. They said one of the
things that they found consistent with all of these companies, and
these are like Fortune 500 companies, one of the things that they
found consistent with all of them is that part of the evaluation
process of supervisors was that when they were looking to promote
supervisors or whatever, pay raises or whatever, is that they
looked to see how they addressed the whole question of diversity.
Not, like I said, doing any favors for anybody, but just doing the
kind of things that you talked about. And you talked a little bit
earlier about supervisors and trying to get the word out to them.
Sometimes, as much as we want to believe that people would do
the right thing, sadly, a lot of times they don’t do the right thing
and so, sometimes, we have to have methods by which we encour-
age them to do the right thing. And I think one of the things that


50

I’m also concerned about the timeframe. Now, this says some of
these standards were suspended for the fiscal year 1998 appraisal
period. Is that going to be for the whole fiscal year, Mr. O'Malley,

r. Fowler, Mr. Ferrara?

Mr. O'MALLEY. Mr. Chairman, as I said earlier——

Mr. Mica. You just put that in for convenience?

Mr. O'MALLEY. Until we come out with a clarification in working
with the Department of Justice and the Treasury Department.

Mr. Mica. OK. The other thing is that since September 22, when
you issued this memorandum which replaces suspension, most of
the public comment on the memo reinstating the performance ele-
ments have come from the White House. Did the Office of Policy
Development of the Office of Management and Budget or any com-
ponent of the White House help determine what these decisions
have been to date, or are you working with the White House to de-
velop a policy?

Mr. FowLer. What I can tell you, and Mr. O’Malley can correct.
me if I am wrong, is that the White House has made its wishes
known to the Justice Department and, in our conversations with
Justice, we have been very much aware of what the White House
position has been. Again, I think that it’s important to note that
the controversy around all of this was that the newspaper articles
were all saying that we had suspended our affirmative action pro-
gram and we have not suspended our affirmative action program.

e suspended certain portions of the performance standards. I
have yet to see that as a headline in the newspaper because no one
was really interested in that. They were interested in the issue
around affirmative action and that we had suspended affirmative
action. That just was not true.

Mr. Mica. But, has there been any coordination with efforts to
set these new policies or have an interim policy, or are you working
with the White House now to develop a policy?

Mr. FOWLER. We—Mr. O’Malley, again, can correct me if I am
wrong, but under normal circumstances, and I’ve served in 5 dif-
ferent government agencies over the last 25 years, normally in set-
ting performance standards for employees and performance cri-
teria, I’ve never known us to coordinate with the White House on
that issue. But I’ll let Mr. O’Malley speak to that.

Mr. Mica. Is there coordination with the White House on this?

Mr. O'MALLEY. The—I’m aware of conversations, so I’ve been
told, between the Department and the White House either before
or after meetings that we have had with the Department of Justice.
And the Department of Justice is working with us and also the De-
partment of Treasury on two issues. One is to revise that EEO ele-
ment and second, to help us with clarifying guidance that we would
issue to our work force around this.

Mr. Mica. Now, you told me that you’re working closely with
Justice. You weren't coordinating with OPM. What about with the
EEOC Are you coordinating with the Federal EEOC office, Mr.

‘owler?

Mr. FowLer. No, we have not coordinated with the EEOC.
Again, this is not what we normally do in terms of setting perform-
ance standards. Again, we’ve looked real carefully at where we are
in compliance with court decisions. We’ve looked at what our exist-


56

changing societal mores and economic necessity also provided the IRS labor force with
increasing numbers of professionally skilled women and minorities. By the late 1980s. the IRS
experienced significant changes, not only in its workforce. but also with respect to fulfilling its
primary mission (to administer the tax laws), and as an employer. Changes in workforce
diversity were important in the IRS planning process. They also were important as we sought to
facilitate changes to our work environment and new business requirements by adopting a
strategic approach to planning and management that focused on long- and short-term business
objectives

Our planning process focused on four strategic areas, one of which was “Enhancing
Recruitment and Retention of Employees.” In this area, the IRS undertook 17 initiatives and
studies. One study reviewed the status of women and minorities in the IRS. That study (
Design for Organizational Diversity: Report of Strategic Initiative ERR-16: Minorities and
Women Within IRS (December 1989)) (ERR-16) has been provided to this Subcommittee and
probably is the most relevant study in connection with this Subcommitiee’s recent hearings.
ERR-16 addressed a number of equal employment opportunity issues within the Service. For
example, it addressed the underrepresentation of women and minorities in management and
leadership positions, as compared to their numbers in the total workforce, It is clear from the
study that the IRS was concemed that the concept of equal employment opportunity was clearly
reflected in our recruitment efforts, but was reflected far less clearly in advancement. The study
also addressed the IRS training and development programs and their adequacy and relevance to

the Service's increasingly diverse workforce.


60

Ina September 22. 1997 memorandum. the National Director. Personnel Division,
reiterated the changes to 1998 performance plans which had been described in the Acting
Commissioner's memorandum. The memorandum also described new. Treasury-mandated EEO
performance elements and standards for all supervisors and managers to be included in the
Executive/Managerial Performance Plan for the FY 1998 performance appraisal period (copy
attached.) The IRS has not terminated its affirmative action program and. indeed. remains
committed to doing everything permitted under law to achieve a diverse workforce

In concluding. the IRS remains committed to providing equal opportunities for all
employees and to maximizing the benefits of having a diverse workforce. The IRS is aware of
its affirmative employment responsibilities under Management Directives promulgated by the
Equal Employment Opportunity Commission. and will work with the Commission in

maintaining a lawful affirmative employment program


48

norities and women, or white men to give to minorities and women.
And I think what you're saying, and help me if I’m wrong, is that
a lot of times you have to—one of the things you have to do in
order to have this level playing field is give people an opportunity
to even develop to become whatever it is that they’re trying to get
to. I mean, am I right?

Mr. FOWLER. Mr. Cummings, I can give you an example that
may clarify this completely. I recently had a conversation with one
of our Chief Officers in the Internal Revenue and the reason I had
that conversation with him is that groups of employees under his
purview have said that they did not feel that they’ve been afforded
the opportunity for acting assignments or for developmental assign-
ments, that these assignments were made arbitrarily, that they
were made behind closed doors and that those that were in the
know had the opportunity, if you will, for acting assignments or de-
velopmental assignments but those that weren’t in the know or
weren't necessarily in the in-crowd or were part of that faceless
part of our work force who maybe don’t have the charisma or the
contacts to always be up front, basically, didn’t get these assign-
ments. The question would become to us, how do you do this with-
out setting a quota or a goal or identifying—what you do is we de-
cided that we would make sure that whenever we have an acting
assignment in that arena or developmental assignment, that we
will make sure that it’s published so that everyone is aware that
this assignment is coming up and so that everyone has an oppor-
tunity to put their hat in the ring and to say that I'm interested
and I would like to be considered. The opportunity, then, would
present itself at least for consideration. And so, those are the kinds
of things that we are trying to do and I’m committed to working
personally with everyone in Internal Revenue in terms of attempt-
ing to do that.

Mr. CummMincs. So, I guess—so what you’re saying is you have
to get the opportunity and then it’s up to you to perform.

Mr. Fow er. I think absolutely it’s up to you to perform but I
think you should have the opportunity.

Mr. CUMMINGS. Well, Pll end on this. The reason why I’m so ada-
mant about this is they told me I would never be able to read or
write and I’m a Phi Beta Kappa. They told me I’d never be able
to read or write. They put me in special education at 5 years old.
I was in special education from the 5th—from the Ist through the
6th grade. I’m a lawyer. I’m a Member of Congress. But it was be-
cause somebody gave me some opportunities along the way that I
sit here today. And so, you know, I know that there are a lot of
people, it has nothing to do with, you know, trying to take some-
thing away from somebody else, it’s just having an opportunity to
show what can be done. Their determination cannot Be measured
by tests so often but it’s what’s in their heart. And so, you know,
I understand what you're trying to do. It makes a lot of sense and
it—I mean, we—I’ve heard a lot of testimony from various people
about trying to make sure you stay within the court decisions and
a lot of people have this, I don’t know, I think it’s a—I don’t know
where they get this concept from that we're still—we’re in some
color-blind society because that’s a lot of stuff. But, be that as it
may, the fact is that I think what we’re talking about here is not


20

executive/managerial performance plan for the fiscal year 1998 per-
formance appraisal period.

The Service has not terminated its affirmative action program
and, indeed, remains committed to doing everything permitted
under the law to achieve a diverse work force and, I would empha-
size again, to also offer equal opportunity for all of our employees.
The Service remains committed to providing equal opportunities for
all employees and to maximizing the benefits of having a diverse
work force. We are aware of the affirmative employment respon-
sibilities under management directives promulgated by the EEOC
and we will work with the EEOC in maintaining a lawful affirma-
tive employment program. At this time, my colleagues and I will
be happy to answer any questions that you or the subcommittee
members might have. Thank you, Mr. Chairman.

[The prepared statement of Mr. Fowler follows:]


38

2
. Keeps management and cmer appropriate parties timely informed ct significant issues.
: Supports a workplace climate where ethical behavior is paramount and everyone is.

treated with honesty, digny, and respect free from harassment an discrimination.

Local, individual, or team standarcs: May be used to identity specific team goals, working
relationships to be improved, and ‘sedback systems.

Element 3. Qual xpertise,
Objective: Etfectively demonszates expertise in assigned program areas.

Uniform Standards:

+ Continually develops apd raintains technical program expertise.

+ Provides accurate, timely uidance and instructions.

+ Maintains knowledge of bread organizational goals to assure program direction and
guidance advance such gcals.

+ Effectively researches issues and prepares thorough recommendations and solutions.

Local, individual, or team standarcs: May be used to cite specific issues, projects, goals, or
developmental activities.


69

-3-

Promote a workplace climate where ethical behavior is paramount and everyone is treated
with honesty, dignity, and respect.

Provide a written performance plan within 30 days of the beginring of the rating period and
assign an annual performance rating of record within 30 days cf the close of the rating
Penod for each employee.

Ampiification/Additional Standards:

4

Equai Empioyment Opportunity .

Objective: Application of the Equal Employment Opportunity principies of faimess and equity in the
workplace.

General Standards: in consultation with the EEO staff and to the extent authorized and consistent
with existing resources:

Supports statt participation in special emphasis programs.

Promptly responds to allegations of discrimination and/or harassment, and initiates
appropriate action to address the situation.

‘Cooperates with EEO counselors, EEO investigators, and other officials who are
responsible for conducting inquiries into EEO complaints.

Assigns work and makes employment decisions in areas such as hiring, promotion, training,
and developmental assignments without regard to sex, race, color, national origin, religion,
‘age, disability, sexual orientation, or prior participation in the EEO process.

Monitors work environment to prevent instances of prohibited discrimination and/or
harassment.


IRS’S SUSPENSION OF ITS AFFIRMATIVE
ACTION PROGRAM

TUESDAY, OCTOBER 28, 1997

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON THE CIVIL SERVICE,
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT,
Washington, DC.

The subcommittee met, pursuant to notice, at 2:40 p.m., in room
2154, Rayburn House Office Building, Hon. John L. Mica (chair-
man of the subcommittee) presiding.

F Present: Representatives Mica, Morella, Cummings, Norton, and

‘ord, Jr. :

Staff present: George Nesterczuk, staff director; Caroline Fiel,
clerk; Ned Lynch, senior research director; and Cedric Hendricks,
minority counsel.

Mr. Mica. Good afternoon. I’d like to call this meeting of the
House Civil Service Subcommittee to order. Today we're conducting
a hearing titled IRS’ Suspension of Its Affirmative Action Program.
I'll start with an opening statement and then yield to other Mem-
bers and we'll proceed with the hearing.

During the past few weeks, our subcommittee has conducted
hearings to examine carefully charges of discrimination in the Fed-
eral workplace and to review current policies and practices relating
to employment discrimination. This afternoon’s qearing will ad-
dress recent actions by the Internal Revenue Service to suspend
parts of its affirmative action program and to replace it with lim-
ited corrections. The Internal Revenue Service drew attention dur-
ing our September hearings, both of those hearings, as a matter of
fact, on employment discrimination in the Federal workplace. The
Nation’s chief tax collector has been accused of tolerating discrimi-
natory practices in our September 10 hearing, and on September
25, we heard from Angelo Troncoso, a Cuban-American IRS agent
who had been passed over for promotions three times in favor of
people who ranked as low as 13 positions below him who were
among the applicants for the position. While we’re preparing those
particular hearings, the Internal Revenue Service is reevaluating
its personnel operations in light of the Supreme Court’s decision in
Adarand v. Pena and the Federal District Court for the Western
District of Louisiana’s decision in Byrd v. Rubin. In May 1997, a
ruling in the Byrd case, in that particular case a Federal district
judge issued an opinion that IRS’ affirmative employment policy as
reflected in a document known as ERR-16 could not pass the strict
scrutiny test required under the Adarand decision.

[e2)


12

=2-
. Keeps management and other appropnate parties timely informed of significant issues.

+ Supports a workplace climate where ethical behavior is paramount and everyone is
treated with honesty, dignity, and respect free from harassment and discrimination.

Local, individual, or team standards: May be used to identity specific team goals, working
relationships to be improved, and feedback systems.

Element 3. Quality of Expertise. .
Objective: Etfectively demonstrates expertise in assigned program areas.
Uniform Standards:

- Continually develops and maintains technical program expertise.

: Provides accurate, timely guidance and instructions.

+ Maintains knowledge of broad organizational goals to assure program direction and
guidance advance such goals.

. Effectively researches issues and prepares thorough recommendations and solutions.

Local, individual, or team standards: May be used to cite specific issues, projects, goals, or
developmental activities.

O°


“ee

PERFORMANCE PLAN FOR MANAGEMENT OFFICIALS.
Critical Elements and Performance Standards

Element 1. Program Planning, Management, and Delivery.

Objective: Plans and organizes assigned activities and projects to timely accomplish work
objectives according to procedural, administrative, and technical requirements, as weil as
business goals: Increase Compliance, improve Customer Service, and increase Productivity,
Quality and customer service are reflected in all products and activities.

Uniform Standards:

+ Sets effective short and long-term priorities that are realistic, responsive to
accomplishment of the Strategic Plan and Budget, as well as iocal priorities. Plans,
implements, monitors, and delivers assigned programs to meet the local goals of the
Annual Performance Pian.

+ Effectively implements and monitors assigned programs. Provides necessary oversight
to ensure quality results that are responsive to the needs of the Service, as well as.
internaVexternal customers.

+ Utilizes technology to redesign/maintain business processes that reduce expenditure of
time, money, and resources for taxpayers and intemal customers. Reviews and/or
secommends effective use of resources for functional program areas.

+ Utilizes systems management principles. Contributes to continuous quality improvement
in day to day work assignments.

Local, individual, or team standards: May be used to define specific outcomes and time
frames.

Element 2. Communication, interpersonal Relationship. Team Work.

Objective: Develops and maintains lines of communication and interaction which ensure
work accomplishments and enhances work relationships with peers, external/intemal customers,
superiors, and others.

Unitorm Standards:

+ Actively assists in meeting unitteam goals as appropriate.

+ Exercises sound judgment in identifying the information needed to be communicated.

+ Through timely and effective oral and written communication, disseminates necessary
information and program guidance.

+ Maintains effective working relationships.


31

<3-

Regional Commissioners, Chief Officers, Executive Officer fs- Service Centar
Operations, Chief inspector, Nationai Director of Appeals, Texpayer Advocate, and
Directors of Support Services

New Performance Plan for Manage HHicials (Attachmer: 2)

+ Inthe past, management officials and their supervisors experienced problems
linking their work to the three corporate objectives in tre Strategic Plan and
Budget (SPB) for evaluating performance. Based upc> input from all levels of
the organization, new performance elements and star‘cards were developed to
describe the most common cuties to the management afficial. The new plan is
within the scope of the management official and consiscent with the overall
objectives of the organization.

The revised Executive/Managenal Performance Plan and the new Management
Official Performance Plan will be printec for Servicewide distr2ution. We plan to have
Publishing Services print the new forms and seng them direczy to the CID sites to be
availaole in mid November. If you have questions regarding ‘ne recent changes,
please call Nora Prokuski at (202) 874-6213, Office of Performance anc Position
Maragement.

ec: Personnel Officers
TPC Chiefs


17

into the open. That is not to say that there are not some elements
of settlements which should be in the open. And I would certainly
agree that elements involving policy should be in the open as be-
tween the parties. We, of course, would want the parties to be pro-
tected in order to encourage settlement in the ordinary courts. It
looks like the IRS was trying to respond to the policy concerns that
may be involved in the settlement by reviewing its affirmative ac-
tion program in its entirety in light of the decision and, beyond
that, temporarily suspending at least one part of it. I don’t have—
I don’t get from this case that there was, from the way in which
the IRS handled this, that the policy implications would not have
come forward. My only concern about the way the IRS handled it
is whether or not it was consistent with the overall administration
approach to remedying the problems in affirmative action.

My concern would be that we have a uniform policy because
agencies are going to be sued left and right and should not be en-
gaging in policy changes on their own at a time when the govern-
ment has said what it’s trying to do is to regularize and systema-
tize affirmative action across all agencies. But the last thing I
would like to see emerge from this area of the law is what we do
not tolerate in any other area of the law, and that is that you can’t
settle cases and have an agreement that is not necessarily open to
the public. I would, of course, again emphasize that policy matters
have to be open to the public. That’s the whole point of settling a
case, to settle not only for the individual litigant but to settle the
case so that the policy does not come up again.

For example, with respect to the Cuban American gentleman, I
would not want simply a settlement for him, as primary as that is.
I would want included in the settlement agreement safeguards so
that the practice of arbitrarily passing over people, assuming that.
it happened, was no longer going to be the case. If I sue because
of discrimination against me because I am pregnant, I don’t want
to just get my money; I want to make sure that the next pregnant
woman is not similarly treated. That can only occur if the settle-
ment agreement says that you will pay her her money and the
agency will no longer engage in practices that are the subject of
this court suit but will take remedial steps to make sure that preg-
nant women are, in fact, promoted or, in fact, hired. That’s the way
the whole thing works. That’s the policy notion. And that’s going
to be made public because it can’t become operative unless it is
made public.

In other words, Mr. Chairman, I think that this hearing is very
important because it'll clarify what, in fact, has been public, what
has not been public, whether or not this agreement comports with
law, and whether or not it comports with the administration ap-
proach, which is to try to fix the entire area of affirmative action.
Again, I thank you very much for calling this hearing, Mr. Chair-
man, and for the deep attention you have given to this area and
this agency.

Mr. Mica. I thank the gentlelady. There being no further opening
statements, we'll call our first panel. Again, we have Mr. Charles
Fowler, Mr. Dennis Ferrara, and Mr. James O’Malley. Gentlemen,
Mr. Ferrara and Mr. O’Malley, are you going to testify or provide
assistance here?


23

ERR-16 defined the strategic direction the IRS was taking in this area as follows:

‘The Internal Revenue Service at all levels will be representative of
the public it serves and committed to a leadership role that ensures
racial, ethnic, and (sexual) gender equality. The IRS culture will
be free of barriers which limit opportunity for minorities and
women.

To elaborate on this strategic direction, we articulated strategies in five areas:

+ Strengthening Management Accountability:
+ Achieving Progress through Education;

+ Improving the EEO Functional Support to Management;

+ Ensuring Effective Recruitment, Retention. Development. and Advancement: and
+ Developing Reliable Workforce Information Systems

ERR-16 called for the IRS to look beyond actions that only remedied existing
representational imbalances and to pursue a comprehensive strategy to understand. and be
strengthened by. the diversity of its human resources. ERR-16 challenged the IRS to become an
organization in which equal employment opportunity was not considered a program for a few
designated groups. but a way of doing business that would ensure that all employees were treated
equitably and were not advantaged or disadvantaged by their racial or ethnic background or by
their gender. It has never been the policy of the IRS to use quotas to achieve diversity. We
wanted to remove barriers to advancement so that any IRS employee who was qualified for a
position would be given a fair chance to attain it. This was our objective in the late 1980s. and
we think it remains a good objective today.

The IRS acted in good faith 1o achieve this objective, and took many actions to provide
opportunities for all employees. We were not alone in our efforts to provide opportunities for all


19

and to pursue a comprehensive strategy to understand, and be
strengthened by, the diversity of its human resources. ERR-16
challenged us to become an institution in which equal employment
opportunity was considered a way of doing business. And I would
like to add that I just finished talking to the executive cadre at In-
ternal Revenue and one of the things that I stressed is that we
must treat all people equally as a way of doing business. It has
never been the policy of the Internal Revenue to use quotas to
achieve diversity. We wanted to remove barriers to advancement so
that any employee who was qualified for a position would be given
a fair chance to attain it. This was our objective in the late 1980's
and we think that it remains a good objective today.

We acted in good faith to achieve this objective and the concept
of equal opportunity and Federal employment has been reaffirmed
over the years by the executive and legislative branches of the Fed-
eral Government and in Supreme Court decisions. We believe that
our programs and policies have served us well. Recent court deci-
sions have caused us to review, as you know, how we strategically
approach or evaluate progress toward our objectives in the areas of
equal employment opportunity.

In April 1997, a Federal district court found, in the Byrd case,
that ERR-16 violated the fifth amendment equal protection clause.
The plaintiffs contended that ERR-16 encouraged institutional dis-
crimination against white male employees because its objective was
to increase representation of women and minorities in managerial
and executive positions through employee development and ad-
vancement strategies.

In Byrd, the court held that ERR-16 encouraged or authorized
preferential treatment of minority and female employees. The dis-
trict court then concluded that diversification of the Service’s work
force was not a compelling government interest sufficient to justify
the agency’s use of race and gender criteria in decisionmaking.
Byrd is one of the first Federal court decisions in which a Federal
affirmative action program was found unconstitutional. After Byrd,
we identified performance standards that were susceptible to mis-
interpretation and application, possibly in violation of the fifth
amendment under Byrd. Therefore, the Acting Commissioner, on
August 19, 1997, in a memorandum for all executives and man-
agers, temporarily suspended portions of two standards of individ-
ual performance plans, and two measures used in the business re-
view. We did not suspend or eliminate our affirmative action pro-
gram, nor our equal opportunity program. The temporary suspen-
sion applies only to these performance end measures, not to the af-
firmative action program.

In consultation, very recently, with the Justice Department and
with the IRS Chief Counsel, we are working to redesign the ele-
ments and standards of the performance plans for executives and
managers for fiscal year 1998. In a September 22, 1997, memo, Mr.
O'Malley, the National Director, Personnel, reiterated the changes
to the 1998 performance plans which had been described in the
Acting Commissioner’s memorandum. The memorandum also de-
scribed new, Treasury-mandated EEO performance elements and
standards for all supervisors and managers to be included in the


32

‘Aachen +
EXECUTIVE/MANAGERIAL PERFORMANCE PLAN
Name of Employee ‘Office/Organizaton ‘Senes and Grade
Title of Postion Period Covered
From To
This performance plan has been discussed with me and Ihave been given a copy.
Employee Signature Date
Supervisors Name/Signanure Title Date
Approving Otficial’s Name/Sigqnature Tite Date
INSTRUCTIONS.

Your performance pian shoulc be developed by you and your manager. The sian will contain the established
critical elements, related standards, and any amplficatiorvadditional standarcs devel: ped specifically for you. The
‘established entical elements and standards were written at the fully successful level and are designed to reflect
basic, on-going responsibilies of executives and managers throughout the Service. While each critical element is
‘@ mandatory performance incicator, some general standards may not apply to your specific position. You and
your manager should review each general standard and delete any that are nct applicable for your pian. Deletions
should be noted and initialed on the pian. Additonal standards, reflecting onty those few hign-prionty
requirements that must be accomplished in the rating period. may be added to your plan. These shouid be kept to
2 minimum (usually not more znan two per element) and written at the fully successful level with appropriate
Indicators of quality, quantty. and timeliness,

‘Your performance will be assessed in accordance with your plan, and will reflect a rating for each entical element
and all applicable stancartis. An overall rating (summary level) will also be determined.

When carrying out your plan responsibilities. itis cntical hat each element and standard be accomplished in
accordance with:

: (esa. procedural, administrative, technical, and program requirements

: ‘objectives in the Strategic Plan and Budget

: ‘program directions and manuals

. transition to Leadersrep Competencies

Progress reviews are an essential part of the performance plan and appraisal system. Although the process af
‘monitoring plan accorrplishment is on-going, a minimum af one review must be conducted approximately mid-way
{through the appraisal penod. While a formal written review is not mandated, cocumentation that the renew has.
been conducted is required in accordance with local procedures.

PRIVACY ACT STATEMENT

The Privacy Act of 1974 and Paperwork Reduction Ae of 1980 sey hat when we atk you for formation. we mist ll you: our egal
‘ight 1 ask forthe formation: whe major purpote we have naiing fr ond how i wil based. what could happen fw ak
‘eeivet: and whether your responses rolatary. required io ota benef or mandatory dere law

Ths statements beng provided peruano Public Law 93-579 (Proacy Act of 1974) Decemoe’ 11,197 or dividuals who have
been equesiedsubmil enasemen! ef eccamplihmenvilfacisomen:

The authority 0 solicit thr formation x derived from 3 USC 4301 eq. and $ CER Per $10.

In-orderto ll you the oppornay io pronde input the appre! proces. management wil gut! ih Wernation rom you.
The information you furnish wl be considered by voor tupervsoryafcals in preparing en eppruslof vou peformanct, or conducing
snidyear progress revinws. Once prepared. he iformaiion contained a your performance appresal wil be used on nced snow
basi by IRS officals. Disclosures my aso be made when appropriate to rua wie aspaalthed sth Federal Register, sch one
Office of Pertnnet Managemen. th Equl Emplowmen Opportunty Commission. the Generel Accouning Office and others ated nthe
gppraprave rem of ecars. The formation coed our prftmanc pra sae TRIKS 600). Cer! Prone!

Failure 1 frh this information may result in your tperizors preparing your appraisl or conducting a progres review, wthout
considering ony nformation you may|er! relevent or sguiicans sere


4

The Honorable Constance A. Morella
Subcommittee on Civil Service
IRS Suspension of Its Affirmative Employment Program
October 28, 1997
Mr. Chairman, I want to thank you for holding today’s hearing on

the IRS’ suspension of its affirmative employment program.

I look forward to hearing more details from IRS concerning their
actions following the Southwestern District of Louisiana’s Byrd v.
Rubin decision. This federal district court ruled that the IRS plan for
organizational diversity known as Enhancing Recruitment and
Rentention of Employees, or ERR-16, violated the Constitution’s equal
protection clause. This program did not pass the strict scrutiny
standard developed in the Adarand y. Pena decision, and the decision

, led to a review of ERR-16 and the suspension of part of the agency’s
affirmative employment program for the remainder of the 1997

performance year.


58

‘The IRS acted in good faith to achieve this objective. and took many actions to provide
opportunities for all employees. We were not alone in our efforts to provide opportunities for all
employees. The concept of equal opportunity in federal employment had been reaffirmed over
the years by the executive and legislative branches of the federal government and in Supreme
Coun decisions. It was against this backdrop that the IRS and other federal departments and
agencies developed affirmative employment programs and policies. We believe that our
programs and policies have served us well. Recent court decisions in the Adarand! and Byrd”
cases have caused us to review how we strategically approach or evaluate progress toward our
objectives in the areas of equal employment opportunity for all employees.

In April 1997. a federal district court found, in an interlocutory decision, in Byrd that
ERR-16 violated the Fifth Amendment equal protection clause. The plaintiffs, four white male
GS-12 revenue officers. alleged that they had been subjected to age. race. and gender
discrimination in connection with specific personnel actions taken by the IRS. The plaintiffs
contended that ERR-16 encouraged institutional discrimination against white male employees,
because its objective was to increase representation of women and minorities in managerial and
executive positions through employee development and advancement strategies.

After Adarand. government actions related to race or ethnicity that are challenged under
the Equal Protection clause are examined under what is called a “strict scrutiny” standard. Under
the strict scrutiny standard, the government prevails if it shows that its program or policy serves a

" Adarand Consiructors ine. v. Pens. 115 § Ct, 2097 (1995).

ohm 4 Byrd v Robert E, Rubin. Cis. Action No. 95-1280 (WD. La. April 9.1997)

4


6

Mr. CUMMINGS. Thank you very much, Mr. Chairman and mem-
bers of the committee. Two months ago, this subcommittee initi-
ated a series of hearings on employment discrimination in the Fed-
eral workplace. At the first hearing, on September 10, we received
shocking reports of widespread discriminatory conduct affecting mi-
norities and women at a number of Federal agencies.

We learned that even though the number of Federal workers has
dropped significantly since 1991, the number of discrimination
complaints has grown by a third from 9,924 in 1991 to 13,156 in
1996. We also noted the issuance of recent reports by the Office of
Personnel Management, Merit Systems Protection Board, and
Equal Employment Opportunity Commission which established
several disturbing facts. First, while the representation of minori-
ties and women in our work force has significantly increased, they
are still concentrated in lower paying jobs and grades. Second, even
though there are more Hispanics employed, their numbers still fall
below their presence in the labor force. And third, African Ameri-
cans and Native Americans are fired at disproportionately higher
rates than whites. The only conclusion that can be reasonably
drawn from this evidence is that discrimination in the Federal
workplace remains a major systemic problem.

Now, Mr. Chairman, we turn to today’s hearing. I was deeply
disturbed when I first saw press reports that the Internal Revenue
Service had suspended its affirmative employment program. I felt
better when I subsequently learned that their reports were in error
and that what had, in fact, occurred was that a far more limited
action had been taken. As we will hear from our witnesses today,
the IRS merely suspended temporarily certain aspects of its per-
formance management system for executives and managers which
address expectations or measurements in the area of EEO and di-
versity. This action was taken while a review is conducted of a re-
cent court decision. It is important to note, however, that notwith-
standing the ongoing review, the IRS reaffirmed its commitment to
affirmative action and added a new EEO performance element to
this particular appraisal system which it believes is fully consistent
with the law.

Let me say to the representatives of the IRS here today that I
expect this subcommittee to be kept abreast of the progress of your
review and to be immediately informed of any conclusions reached
and any further action taken. Mr. Chairman, I want to make it
clear for the record that I strongly support affirmative action. I do
so because I believe that through properly implemented affirmative
action programs, the Federal Government can open the doors of op-
portunity for the millions of minorities and women that continue
to be deprived of a fair chance to enter or advance in the Federal
service.

While I recognize that recent court decisions such as Adarand v.
Pena and the California Initiative have led to some retrenchment
in this area, I believe that there remains a solid basis for the pur-
suit of affirmative action. Certainly the testimony that we received
at our earlier hearings justified its continued use in the Federal
workplace. The policies of equal employment opportunity and af-
firmative action took root and evolved in the Hederal sector over
the past 40 years. They are grounded in Executive orders issued


29

iE DEPARTMENT OF THE TREASURY
Se WASHINGTON. D.C. 20224
SEP 22 Ieg7
MEMORANDUM FOR REGIONAL COMMISSIONERS, CHIEF OFFICERS
EXECUTIVE OFFICER FOR SERVICE CENTER
OPERATIONS, CHIEF INSPECTOR, NATIONAL DIRECTO!
OF APPEALS, TAXPAYER ADVOCATE. AND DIRECTORS OF
: SUPPORT SERVICES
Ergun 2 Ochrn, Sa flemy Foe.
FROM: Jamé& O'Malley ;
National Director, Personne! Division

SUBJECT Changes to the Executive/Managerial Performance Plan and
the New Performance Plan for Management Officials

This memorandum highlights several important changes to the pe“ormance
management program. These changes will impact executives, managers and
management officiais Servicewide. Management officials will be on a sezarate
erformance pian fos 1998 (Octcber 1 - September 30 } performance aopraisa!
serod, Executives and managers will nave a new EEO critical element and standargs.

esa changes we are revising Form 9688, ExecutiveTManagerial

d developing a new form for management officials. These new
‘orms wili not be available until mid November. Until these forms become availabie, the
“ached interim forms should be locally reproduced in order for employees to receive
1 performance plans timely, Regulation requires managers to communicate
expectations with their employees usually within thimy days etter the start
ig period, Discussien and documentation of the attached interm forms would
equirement. Completing tne formal forms would not be necessary in this

+ Changes te Form 9686. Executive/Managerial Pertormance Plan (Attacrment 1)

. Suspension of certain aspects of two performance standards in the
Executives/Managers Periormance Plan addressing expectations/measurements
in area of EEO and diversity (Acting Commissioner's memo, Avfirmanve
Employment Programs and Policies dated August 19, 1997)

The Service is commited to provide equal opportunities for ali emp.oyees and to
maximize the benefits of having a diverse workforce. The Service is currently in
the process of assessing its affirmative employment policies and pragrars in

light of the recent court cases. However. unti! analysis of the impact these court



65

-3-
Regional Commissiorers, Chief Officers, Executive Officer for Service Center

Operations, Chief Inszector, National Director of Appeals, Taxpayer Advocate, and
Directors of Support Services

New Performance Plen tor Management Officials (Attachment 2)

. In the past, management officials and their supervisors experienced problems
linking their werk to the three corporate objectives in the Strategic Plan and
Budget (SPB) for evaluating performance. Based upon input from all levels of
the organizaticn, new performance elements and standards were developed to
describe the most common duties to the management official. The new pian is
within the scope of the management official and censistent with the overall
objectives of the organization.

The revised Executive/Managerial Performance Plan and the new Management
Officiai Performance Plan will be printed fer Servicewide distribution. We plan to have
Publishing Services grint the new forms ard send them cirectly to the CID sites to be
available in mid November. If you have questions regarcing the recent changes,
please call Nora Proxuski at (202) 874-6213, Office of Performance and Position
Management.

ce: Personnel Officers
TPC Chiefs


67

Executive/Managerial Performance Plan
Chtical Elements and Performance Standards

The foliowing critical elemerts apply to all Executives and Managers. The General Standards
appearing with each elemer: describe the requirements for fully successful performance ~
‘organizational components and reflect the importance of successfully managing day-"
‘operations and furthering the Service's progress toward meeting the organization

Strategic Plan and Budget. Additional standards may be prepared for each criti-
amplification/additional standards should be used for clarification or emphasis ¢

needs and the needs of the individual.

‘The EEO element and standards support the Service's commitment in improving a.
EEO effectiveness.

1. Increase Compliance.

Objective: Ensure our products, services, policies, and employees directly or indirectly encourag.
and assist taxpayers to increase the number who voluntarily file timely, accurate, fully paid retums.
When taxpayers do not comply, take appropriate remediaVertforcement actions to correct future
behavior.

General Standards: Consistent with the scope of your responsibilities, apply leadership
‘competencies to:

+ Plan, implement, menitor, and deliver programs to meet the goals of the Strategic Plan and
Budget timely and within budget allocations, including but not limited to elfective planning
and management of !abor costs, space utilization, telecommunication resources, equir~
inventories, and accounting controls.

+ Identify emerging tax administration issues and developimplement strategie
them.

+ Provide taxpayers with the ability to interact with employees and systems to me
diverse needs.

. Maximize resource effectiveness through cross-functional coordination with intemal ar..
extemal stakeholders.

+ Foster personal and employee development to better match the skills, abilties, ideas, and
‘experiences of our diverse worklorce to appropriate market segments.

+ Administer the tax iaws with empowered employees who protect taxpayers’ rights and treat
them ethically with honesty, integrity, faimess, and respect.

. Develop/maintain systems to protect intemal and extemal customer privacy, keep data
confidential, and maintain adequate security over tax/personnel data.

Amplification/Additional Standards:


2. improve Customer Service.

Objective: Reduce the time and expense experienced by taxpayers, tax professionals, and others
in complying with the tax laws while at the same time increasing their satisfaction with the tax
system. Use the skills of a diverse workforce to support front-ine initiatives to maximize intemal
and external customer satisfaction.

General Standards: Consistent with the scope of your responsibilities, apply leadership

competencies to:

. Use the skills and abilities of a diverse workforce and technology to redesign/maintain
business processes that reduce expenditures of time, money, and resources for taxpayers
and intemal customers.

+ Provide the assistance needed to resolve issues during the initial contact with taxpayers.

. Provide customized education and enhanced outreach efforts.

: Establish and aggressively monitor necessary intemal controls (annual assurance process)
to deliver a quality product and guard against waste, fraud, and abuse.

. Meet the Service's goals in cash management, prompt payment, and debt collection,

Amplificatiow/Additional Standards:

3. Increase Productivity.

‘Objective: Continually improve the quality of products and services we provide to our intemal and
extemal customers through the use of teamwork, systems improvement tools and techniques, and
the development of a highly tained, diverse workforce.

General Standards: Consistent with the scope of your responsibilities, apply leadership
competencies to:

. Improve processes and products by using systems management techniques and focusing
‘our modemization efforts to meet customer needs.

: Educate the workforce/stakeholders on how organizational goals, strategies, policies,
practices, and individual jobs relate to the Strategic Pian and Budget.

. Empower individuals to use independent judgment to sotve problems and develop products
and services in a timely and effective manner.

+ Establish and maintain a constructive working relationship with tne National Treasury
Employees Union to implement the IRS/NTEU Total Quality Organization parership.

. ‘Support a healthy, safe work environment, free from harassment and discrimination, in
which the privacy of employees is respected.


26

attached.) The IRS has not terminated its affirmative action program and, indeed, remains
committed to doing everything permitted under law to achieve a diverse workforce.

In concluding, the IRS remains committed to providing equal opportunities for all
employees and to maximizing the benefits of having a diverse workforce. The IRS is aware of
its affirmative employment responsibilities under Management Directives promulgated by the
Equal Employment Opportunity Commission, and will work with the Commission in
maintaining a lawful affirmative employment program. My colleagues and I will be happy to

answer any questions you or other subcommittee members may have.


3

tion to make certain that all other agencies are not repeating the
same errors. With a civil service that extends across the entire gov-
ernment, we have no place for a multitude of individual-agency
policies that might result in discriminatory practices.

If the Byrd decision has demonstrated a vulnerability of Federal
employment policies, Congress should make certain that the rem-
edies that are being proposed by the administration take effective
and corrective measures that are consistent with the laws and con-
sistent across the Federal work force.

In this very sensitive area, we must ensure that the Federal Gov-
ernment is not wasting taxpayer dollars defending or settling cases
that have already been found to be indefensible. More importantly,
every Federal worker should be employed on an equitable basis,
promoted on an equitable basis, evaluated and terminated on an
equitable basis.

Today we'll hear from the Internal Revenue Service. Our lead
witness will be Mr. Charles D. Fowler, the National Director of the
IRS’ Equal Employment Opportunity and Diversity Program. He'll
be accompanied by Mr. Dennis M. Ferrara, the Deputy Assistant
Chief Counsel of General Legal Service and Mr. James O’Malley,
National Director of IRS’ Personnel Division. And we'll be hearing
from Mr. Fowler in just a few minutes. We’ve been joined by other
members of the panel. I'd like to recognize the ranking member for
an opening statement. Mr. Cummings.

[The prepared statement of Hon. John L. Mica follows:]


2

Rather than n proceed to try the Byrd case on its merits, the Gov-
ernment moved to settle this case. Like many settlement agree-
ments, this settlement included a non-disclosure agreement so the
terms of the settlement have been beyond the reach of the sub-
committee until just a few hours ago. We find the timing of this
settlement somewhat troubling because it coincides with IRS policy
decisions that affect the agency’s treatment of its work force. Im-
portant issues affecting the management of Federal agencies are
matters for congressional oversight, and the members of this sub-
committee should be deeply concerned if decisions that shaped
agency policy were made in court settlements that are not available
to congressional scrutiny.

On August 19, Acting Commissioner Michael Dolan issued a
memorandum for all IRS executives in which he stated, “. . . until
we thoroughly analyze all of the ramifications of these court cases,
it is advisable to temporarily suspend certain aspects of our per-
formance management system which address expectations or meas-
urements in the area of EEO and diversity.” a result of this
memo, two of IRS’s employee performance elements were sus-
pended and two measures used in its annual business review were
suspended.

On September 22, James O’Malley, National Director of the IRS
Personnel Division, issued another memorandum announcing the
changes in the agency’s Executive and Managerial Performance
Plans for 1998. This document modifies the performance manage-
ment factors that were suspended by the August memorandum, but
leaves a substantial hole in the public record supporting the policy
changes.

Recent press accounts reported these memorandums. The White
House has several times reaffirmed that the IRS will continue to
adhere to affirmative employment policies, just like other Federal
agencies.

We have several questions about the method of establishing this
policy. For example, has the IRS consulted the Department of Jus-
tice? If so, did they agree that the new guidelines are legally
sound? Was the Office of Personnel Management, the government’s
central personnel management agency, a participant in reaching
this decision and how did they participate? Most Federal agencies
have similar affirmative action performance requirements. Federal
executives and managers can be fired for inadequate performance
on these critical job elements. Why is it only the IRS that has seen
fit to suspend its performance appraisal criteria in this area? Is
IRS the only vulnerable agency?

In a statement submitted to the subcommittee, IRS has reported
that its work force is 67 percent female and 35 percent minority.
Both of these figures substantially exceed the proportion of women
and minorities in the Nation’s civilian labor force. If the agency is
reinstating performance criteria in this area, it would appear to be
pursuing something more than full representation. We would like
the agency to clarify the objectives of its affirmative employment
program during today’s discussion.

There are important lessons to be learned as agencies defend
their personnel practices in the U.S. Courts. If one agency’s policies
are found to be unconstitutional, it is incumbent on the administra-


15

I support affirmative action. But I believe that Adarand’s strict
scrutiny standard makes sense, and J am concerned about the confusing
chain of events by the IRS in the wake of the Byrd decision. 1 look
forward to hearing from the IRS Equal Employment Opportunity and
Diversity National Director, Charles D. Fowler, to better understand
exactly what happened and what this means for affirmative action at the

IRS and in the federal government.


On September 22, James O'Malley, National Director of IRS" Personne! Division, issued
another memorandum announcing the changes in the agency's Executive and Managerial
Performance Plans for 1998, ‘This document modifies the performance management factors that
‘were suspended by the August memorandum, but leaves a substantial hole in the public record
‘supporting the policy changes.

Recent press accounts reported these memoranda, the White House has several times
reaffirmed that the IRS will continue to adhere to affirmative employment policies, just like other
federal agencies. We have several questions about tke method of establishing this policy. For
example, has the IRS consulted the Department of Justice? If so, did they agree that the new
‘guidelines are legally sound?

Where was the Office of Personnel Management. the government's central personnel
management agency, in reaching this decision? Most federal agencies have similar affirmative
action performance requirements. Federal executives and managers can be fired for inadequate
performance on these critical job elements. Why is it only the IRS that has seen fit to suspend its
performance appraisal criteria in this area? Is TRS the only vulnerable agency?

In a statement submitted to the Subcommittee, IRS reported that its workforce is 67
percent female and 35 percent minority. Both of these figures substantially exceed the portion of
‘women and minorities in the nation’s civilian labor force. Ifthe agency is reinstating performance
criteria in this area, ic would appear to be pursuing something more than full representation. We
‘would like the agency to clarify the objectives of its affirmative employment program during
today’s discussion.

‘There are important lessons to be learned as agencies defend their petsonnel practices in
the U.S. Courts. Ifone agency's policies are found to be unconstitutional, tis incumbent on the
Administration to make certain that all other federal agencies are not repeating those errors. With
a civil service that extends across the entire government, we have no place for a multitude of
individual-agency policies that might result in discriminatory practices.

Ifthe Byrd decision has demonstrated a vulnerability of federal employment policies,
Congress should make certain that the remedies that are being proposed by the Administration
take effective corrective measures that are consistent with the laws and consistent across the
federal workforce.

In this very sensitive area, we must ensure that the government is not wasting taxpayer
dollars defending or setting cases that have already been found to be indefensible. More
importantly, every federal worker should be employed on an equitable basis, promoted on an
‘equitable basis, evaluated, and terminated on an equitable basis.

Today we will hear from the Interna] Revenue Service. Our lead witness at this hearing
will be Mr. Charles D, Fowler, the National Director of the IRS’ Equal Employment Opporuity
and Diversity Programa. He wil be accompanied today by Mr. Dennis M. Ferrara, Deputy
Assistant Chief Counsel (General Legal Services) and Mr, James O’Malley, National Director of
IRS* Personne! Division.

ee


21

STATEMENT OF
CHARLES D. FOWLER Il
NATIONAL DIRECTOR EQUAL EMPLOYMENT OPPORTUNITY AND DIVERSITY
INTERNAL REVENUE SERVICE

BEFORE THE
SUBCOMMITTEE ON CIVIL SERVICE
COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT

OCTOBER 28, 1997

Mr. Chairman and Distinguished Members of the Subcommittee:
Lam pleased to appear before you today to discuss the topic of equal employment
‘opportunity at the Internal Revenue Service (IRS). With me today are James O'Malley. National
Director of Personnel at the IRS and Dennis Ferrara, the IRS” Deputy Assistant Chief Counsel

for General Legal Services.

Equal employment opportunity issues often are related to workforce composition
Currently, more than 67% of our workforce is female and more than 35¢e is from minority
groups compared 10 61% for females and 30% for minorities just 11 years ago. The percentage
of female IRS executives has increased from 9.7% in 1988 to 23.6% in 1997. The percentage of
executives from minority groups has risen from 10.4% to 13.1% over the same period. We have
had similar changes in the composition of our workforce in the higher pay grades, The
percentage of females in the GS/GM 13/14/15 positions was 22.9% in 1988 and 32.9% in 1997.
For minorities, the numbers rose from 12.2% to 16.9%

A number of factors have produced this changing workforce composition. The “baby

boomers” who came to the Service in large numbers after 1970 began the change in the ethnic


IRS’S SUSPENSION OF ITS AFFIRMATIVE ACTION
PROGRAM

HEARING

BEFORE THE

SUBCOMMITTEE ON THE CIVIL SERVICE

OF THE

COMMITTEE ON
GOVERNMENT REFORM
AND OVERSIGHT
HOUSE OF REPRESENTATIVES

ONE HUNDRED FIFTH CONGRESS
FIRST SESSION

OCTOBER 28, 1997

Serial No. 105-114

Printed for the use of the Committee on Government Reform and Oversight

ee

U.S. GOVERNMENT PRINTING OFFICE
48-385 CC WASHINGTON : 1998

For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-056581-2



44

to be some agency strategies that would deal with removing some
of the things that were barriers to promotions for all persons.

Mr. CumMinGcs. Do you know whether—how old is the Byrd case,
do you know?

Mr. Fow er. How old?

Mr. CumMINGs. Do you know when it was filed?

Mr. Fow er. I don’t know when it was filed but I know the rul-
ing was just about 4 months ago.

Mr. CUMMINGS. Yes, I understand that. But I was just—I guess
what I’m trying to figure out is was there a court case that caused
the agency to begin to look at itself or what happened? Were there
complaints? I’m sure it just didn’t decide, I mean, just by their
goodwill that they just wanted to look into this. This is not the
most attractive subject for many agencies and I’m just wondering
what may have caused them to begin to even initiate, you know,
the—first of all, to recognize the fact that there was a problem and
then to try to look into it. I was trying to figure out what may have
caused them to even do that.

Mr. FowLer. To have the genesis of ERR-16?

Mr. CUMMINGS. Yes, yes.

Mr. Fow er. I’ll ask my—either one of my colleagues, since they
were here at the time, if they have a better read on it than I do.

Mr. O’MaLLey. Just by way of background, the organization,
probably in the mid-1980’s, set out to look at what strategic objec-
tives it needed to establish so that it could further its mission and
attract and retain the best and brightest for our organization. And
so, there was a whole series of initiatives on the subject, the gen-
eral topic of employee recruitment and retention. And those were
promulgated in the mid-1980’s and late 1980’s and this was one of
the later ones in that stream. There was one on ethics, I think it
was the No. 17, and so, this was part of an overall assessment the
organization went through starting in the mid-1980’s to take a
look, strategically, at what the organization needed to do to posi-
tion itself to deliver on its mission. And so, this was one of a series
under the topic of employee recruitment and retention.

Mr. CUMMINGS. Now, the—what were the specific actions that
the ERR-16 recommended the IRS take? What did it say you need-
ed to do?

Mr. O'MALLEY. Some of those, from my recollection, were to im-
prove management accountability, to improve the support we pro-
vided to the EEO community in the agency in terms of people who
served as counselors and the like, to improve our ability to gather
data on representation of our work force, and to also improve our
performance in the area of mid-level grades for women and minori-
ties which was grades 13 through 15.

Mr. FowLer. I have before me the five strategies if you wish to
have them for the record.

Mr. CUMMINGS. Do they pretty much reflect what he just said?

Mr. FowLer. Pretty much, that they strengthen management ac-
countability, achieve progress through education, improve the EEO
functional support to management, ensure the effective recruit-
ment, retention, development, and advancement, and develop reli-
able work force information systems.


STATEMENT OF THE HONORABLE ELIJAH CUMMINGS
BEFORE THE SUBCOMMITTEE ON CIVIL SERVICE
THIRD HEARING ON
EMPLOYMENT DISCRIMINATION IN THE FEDERAL WORKPLACE

IRS Suspension of its Affirmative Employment Program

October 28, 1997

Two months ago, this subcommittee initiated a series of
hearings on employment discrimination in the Federal workplace.
At the first hearing, on September 10th, we received shocking
reports of widespread discriminatory conduct affecting minorities

and women at a number of agencies.

We learned that even though the number of Federal workers
has dropped significantly since 1991, the number of discrimination
complaints has grown by a third from 9,924 in 1991 to 13,156 in
1996.

We also noted the issuance of recent reports by the Office of
Personnel Management (OPM), Merit Systems Protection Board,

and Equal Employment Opportunity Commission (EEOC) which


7

by Republican and Democratic Presidents alike. Today, there is
statutory authority for agencies to establish Federal Equal Employ-
ment Opportunity recruitment programs through which they may
take steps to eliminate the under-representation of minorities and
women. If some individuals are disadvantaged as the result of the
implementation of these programs, it is important for agencies to
determine how and why that happens and, then, to take such cor-
rective action as may be warranted by the situation at hand.

Mr. Chairman, I look forward to the testimony from today’s wit-
nesses. I trust that it will greatly assist this subcommittee with our
efforts to ensure equal employment opportunity throughout the
Federal Government. And thank you very much.

[The prepared statement of Hon. Elijah E. Cummings follows:]


57

ERR-16 defined the strategic direction the IRS was taking in this area as follows:

The Internal Revenue Service at all levels will be representative of
the public it serves and committed to a leadership role that ensures
racial, ethnic. and (sexual gender equality. The IRS culture will
be free of barriers which limit opportunity for minorities and
women.

To elaborate on this strategic direction, we articulated strategies in five areas:

Strengthening Management Accountability:
Achieving Progress through Education:

Improving the EEO Functional Support to Manazement:

Ensuring Effective Recruitment. Retention. Development, and Advancement: and

Developing Reliable Workforce Information Systems

ERR-16 called for the IRS to look beyond actions that only remedied existing

representational imbalances and to pursue a comprehensive strategy to understand, and be

strengthened by, the diversity of its human resources. ERR-16 challenged the IRS to becom: an

organization in which equal employment opportunity was not considered a program for a few

designated groups. but a way of doing business that would ensure that all employees were treated

equitably and were not advantaged or disadvantaged by their racial or ethnic background or by

their gender. It has never been the policy of the IRS to use quotas to achieve diversity. We

wanted to remove barriers to advancement so that any IRS employee who was qualified fora

position would be given a fair chance to attain it. This was our objective in the late 1980s, and

we think it remains a good objective today.

w


40

Mr. 07 Ley. Yes. All of TreaSury was mandated to add a
fourth, well, an additional, critical element to their performance
plans that were developed after August 15 of this year.

Mr. Mica. So, we have a sort of a band-aid mend in place and
we're waiting for the specific, is that correct?

Mr. O'MALLEY. That’s correct. We——

Mr. Mica. Now, as you formulated these changes, I’ve heard you
talk about Treasury. Where is OPM in this? Is OPM assisting? Are
they being involved? Now, this subcommittee doesn’t just have a
responsibility to IRS. We have a responsibility to the whole Federal
work force in making certain, as I said in my opening statement,
that every employee is hired on an equitable basis, is disciplined
on an equitable basis, is promoted on an equitable basis, is termi-
nated on an equitable basis. My concern is that I have out here the
IRS with a partial fix, not really in place, policy, and I'm wonder-
ing about OPM, which is responsible for the whole work force and
our subcommittee likes to make certain everybody's treated equal
in this process, and that we aren’t operating under dual systems.
Tell me what OPM has been doing with you or you’ve been doing
with OPM to make certain that isn’t the case.

Mr. O'MALLEY. I’m not aware of any contacts with OPM, Mr.
Chairman.

Mr. Mica. Don’t tell me that. Mr. Fowler, come on, now. Mr.
Fowler, you——

Mr. FOWLER. Yes. I would—

Mr. Mica. What’s the coordination with OPM?

Mr. FOWLER. We've not had coordination, to my knowledge, with
OPM, Mr. Chairman. What I can tell you is what we have done in
the Internal Revenue Service, pursuant to Byrd. Byrd specifically
focused upon our policies in the Internal Revenue Service. As a re-
sult, in looking at our performance standards, we attempted to
make sure that we're in compliance with the law.

Mr. Mica. Has OPM contacted you since the Byrd decision to co-
ordinate efforts?

Mr. FOWLER. Not to my knowledge.

Mr. Mica. Mr. O’Malley, Mr. Ferrara?

Mr. O’MALLEY. Not to my knowledge.

Mr. Ferrars. Mr. Chairman, it might be helpful to understand
that, as we read the Byrd decision, it is the implementation of the
ERR-16 that was problematic to the court. The implementation
was through a performance standard. The performance standards
are not uniform throughout the government. The performance
standard was a unique IRS performance standard. That link, I
think, is what explains why OPM was not consulted because we
weren't doing something that was, in our minds, at least, a govern-
mentwide kind of action. We weren’t dealing with the overlying
policies. We were dealing with the IRS-specific performance man-
agement system and particular elements in it, only.

Mr. Mica. Has this ever been a subject of OPM’s government-
wide forum, the interagency advisory group?

Mr. O'MALLEY. I don’t know, Mr. Chairman.

Mr. Mica. Mr. O'Malley, Mr. Fowler?

Mr. Fow er. I’m not aware of that, Mr. Chairman.

Mr. Mica. Mr. Ferrara, no?


28

ALL IRS EXECUTIVES AND MANAGERS,

area of EEO and diversity. This suspension affects two of the generai standards in
individual performance plans and two measures used in the Business Review.

The following guidance applies to preparation of FY 97 performance appraisals for
executives and manezers

Do not prepare eny narrative addressing the lar.guage shown in the following Gener:
Standards.

Critica! Element: Acr eve Quality-Driven Productivity Through Systems Improvement

2nd Engiovee Deve'sament

General Standard: Coach and develop employees to achieve parity at ali grade
levels which is reflective of the Civilian Labor Force by eliminating barriers in
recruiting, hiring, treining, and promoting minorities, women, and persons with
disabilities.

Critica’ Element Mermize Customer Satisfaction and Reduce Burden

General Standard: leet the Service's goals in:...... minority, women, and labor
surplus area conteszing, [Please note that only 2 portion of this genera! standard is
affected Meeting the Service's goais in the areas of cash management, prompt

payment and dedi co’ ection are siti subjec: to narrative evaluation. as appropriete

All other elemeris and standards in the FY 97 periormance plans should be
adoressed in ihe eva.-2tions, consistent with the scope of an individual's,
responsibilities. For crposes of the Business Review this year, in the area of EEO
measu:es, workforce ‘zoo! series) representation and targeted disabilities measures will
not be sodressed The Susiness Review will cover complaint resolution rates

8

Analysis of the pact of these court cases is ongoing. in the near future you
Cen exzect to see moc fications to FY $8 performance plan standz:ds and additional
Suence On how to azorozch our criticel responsibilities in the are2s of EEO end
diversity If you have cuestions about this memorandum, please contact Pauletie
veil-Gibson, Acting National Director, EEO and Diversity. at (202) 622-5400



45

Mr. Cummincs. Now, Mr. Fowler, you, a little bit earlier, had
mentioned the word outreach and that this was, I take it, one of
the strategies to try to reach some of the objectives of getting peo-
ple at certain levels of management and what have you. Outreach
implies to me that, if that is a new strategy, it implies that some-
body must not have been doing something before. In other words,
that if you’re saying that part of the strategy is to outreach, it
means, I take it and you can help me with this, that maybe there
were not certain efforts to expose certain people to certain opportu-
nities. Is that a pretty fair statement?

Mr. Fowier. Mr. Cummings, what I would say is, that in my es-
timation, and again this is part of an ongoing dialog that we have
with our regional directors for EEO, that I’m not entirely satisfied
that in all arenas we’ve had sufficient outreach programs to make
all persons aware of the opportunities in the IRS. I feel that we
could do a better job in terms of our communication strategy, in
terms of our relationship with the public, in terms of what’s avail-
able. And, even internal to the organization, I feel that when we
talk about things like acting assignments, promotion potential, and
developmental assignments, we need to have a better communica-
tion strategy to make sure that all employees are aware of these
opportunities. I would say that while we feel that we’ve had a good
faith effort in the past, I would not characterize it as a 100 percent
effort. I think that we can certainly find areas in the Service in
which we would not be fully satisfied, that there was this push to
make sure that all employees were exposed to all opportunities
equally across the board. And that’s our strategy in the EEO office
at this time.

Mr. CUMMINGS. Well, one of the things—that leads me to my
next question. I spoke before some IRS employees in Baltimore not
very long ago, maybe about 6 or 7 months ago, and I should never
forget when I was talking to them about looking to move up, to do
those things that are necessary to make themselves better qualified
for better positions and talking about the whole idea of applying to
move up. They laughed as if to say, that’s a joke, we’re not going
to get the kind of recognition that we ought to get. And so, the
question becomes, I guess, and we were talking about outreach,
sadly, a lot of people who you're probably aiming at, I assume just
from my experience in talking to them afterwards, they already be-
lieve that even if you tell them about the jobs, expose them to the
jobs and moving up, that there are going to be barriers that are

oing to block them from getting there. Now, you know, I’m the

ind of person who believes that you should do one anyway but I
can imagine someone who may have experienced a lot of that in the
past saying, you know, well, why bother? So, I guess my question
then becomes you also talked about the removal of barriers and the
question is, is what barriers are you talking about? You talked
about that a little bit earlier.

Mr. FowLer. Yes, I continue to say the removal of barriers be-
cause I feel that there are several things. One, there are psycho-
logical barriers. In some cases, the past record of promotion and
hiring and retention has not been good and, in that regard, because
that has been used as an example, because that is a mindset or be-
cause that is the only thing that some employees have been ex-


ra

Bas DEPARTMENT OF THE TREASURY
H INTERNAL 2EVENUE SERVICE
WASHINGTON, DC 20224

comuissionee

Zugusi 19, 1997

Acting Commissfoner of Internal Revenue

SUBJECT Affirmative Emsiayment Programs a7 Policies

For many yeers, the Internal Revenue Service has bee" in the forefront in
Ceveloping programs anc policies interzed to provide opport-nities for all employees.

by thi
ons ?
rational oni

execuiwve ang legislative orenches and in a numter of Supreme Coun
1om the outse!, atirmative ection mezsures persed the consideration of
in sex, of disability ia "7. government cecision
inst this beckGrop the! the Service, 2s did ciner federal dezenments
eloped atirmatwe emzioyment programs end policies

2, 115 §.Ct. 2087 (7998), the Supreme
Imative action :rograms that use razal end etheve cxterie 2s
'si0M making are Subject t2 slnict Scrutiny. Unde Acerand, affirmative
MS end policies must Serve 3 Compelling governmental mierest. Such es
“ecicgtron of the present etfacts of cast discrimiation 292 ast identifiable victims
on a showing of unzerrepreseniation alone
. @ recent district coun case called nto
itietive in tne area of Enhancing

apoication of ne
i Retention o!

| personaily want to reaffirm the

ice’s commument :2 provide equal
opperuniias for all our empioyees and ozt desire to maximize sne Denefits of having 2
diverse workforce However, until we thzroughly analyze all of the ramificauens of
these count cases. it is advisable to tempcrarily suspend cenai. aspects of out
periormance management system which eddress expectations ot measurements in the



64

-2-

Regional Commissioners, Chief Officers, Executive Officer for Service Certer
Orerations, Chief Inspector, Nationa! Director of Appeals, Taxpayer Advccate, and
Directors of Support Services

cases have on our performance management program are completed, we have
temporarily suspended portions of EEO and diversity under the follewing:

Critical Element : Maximize Customer Satisfaction and Reduce Burden

General Standard: Meet the Service's goals in:.... minority, women, and
labor surplus area contracting. (Only a portion of this general standard is
suspended for FY 98 appraisal period.)

Critical Element: Achieve Quality-Driven Productivity through Systems
Improvement and Employee Development

General Standard: Coach and develop employees to achieve parity at ali
grade levels which is reflective of the Civilian Labor Force by eliminating
barriers in recruiting, hiring, training, and promoting minorities, women,
and persons with disabilities. (Suspended for FY 98 appraisal period.)

. Addition of a separate EEO critical element and performance standards.

The Secretary of the Treasury is mandating uniform EEO performance element
and standards for all supervisors and managers to increase management
accountability for EEO activities. As a result of this mandate, the EEO critical
element and performance standards have been added to the
Executive/Managerial Performance Plan for the FY 1998 appraisal period. The
Department's goal is to send a clear message to all supervisors and managers
that they will be held accountable for upholding the Department's commitment to
the EEO principles.

+ Minor changes to the critical elements.
The wording of the critical elements has been revised to reflect the language in

the Strategic Pian and Budget FY 1998. The general standards remain
unchanged.


i
!
i
i

eer ‘OMe HENORED FT COMORES =
sa Congress of the Bniten States ea
= House of Representatives ac
aoa COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT Piece
Eo 2187 Paxyaurw House Orrcs Bu oma Sa
=< Wasraneron, 06 20515-6148 eS

‘Opening Statement of the Honorable John L. Mica
Chairman, Civil Service Subcommittee
IRS’ Suspension of Its Affirmative Action Program
October 28, 1997

During the past few weeks this subcommittee has conducted hearings to examine
discrimination in the federal workplace and to review current policies and practices related to
employment discrimination. ‘This afternoon’s hearing addresses recent actions by the Internal
Revenue Service to suspend parts of its affirmative action program and to replace it with limited
corrections.

The Internal Revenue Service drew attention during our September hearings on
‘employment discrimination in the federal workplace. ‘The nation’s tax collector was accused of
tolerating discriminatory practices in our September 10 hearing. On September 25, we heard
from Angelo Troncoso, a Cuban-American IRS agent who had been passed over for promotions
three times in favor of people who ranked as low as thirteen positions below him among the
applicants for the position.

‘While we were preparing those hearings, the Internal Revenue Service was re-evaluating
its personnel operations in tight of the Supreme Court's decision in Adarand v. Pena and the
Federal District Court for the Western District of Louisiana's decision in Byrd v. Rubin. ina
May, 1997, ruling in the Byrd case, a federal district judge issued an opinion that the IRS"
affirmative eraployment policy, as reflected in a document known as ERR-16, could not pass the
“surict scrutiny” test required after the Adarand decision.

Rather than proceed to try the Byrd case on its merits, the government moved to settle
this case. Like many settlement agreements, this settlement included a nondisclosure agreement,
‘so the terms of this settlement are currently beyond the reach of this subcommittee. We find the
timing of this settlement somewhat troubling because it coincides with IRS policy decisions that
affect the agency's weatment of its workforce. Important issues affecting the management of
federal agencies are matters for congressional oversight, and the members of this subcommittee
should be deeply concerned if decisions that shaped agency policy were made in court settlements
that are not available for congressional scrutiny.

(On August 19. Acting Commissioner Michae! Dolan issued a memorandum for all IRS
‘executives in which he stated, “. . . (U}atil we thoroughly analyze all of the ramifications of these
court cases, itis advisable to temporarily suspend certain aspects of our performance management
system which address expectations or measurements in the area of ceo and diversity.” As a result
of this memo, two of IRS's employee performance elements were suspended, and {wo measures
used in ts annual business review were suspended.


18

Mr. FERRARA. Provide assistance.

Mr. O'MALLEY. Assistance.

Mr. Mica. This is an investigations and oversight subcommittee
of Congress so I'm going to swear in Mr. Fowler and both of you,
then. OK? If you'll stand, please.

[Witnesses sworn.]

Mr. Mica. That is a custom of our investigative and oversight
panel and what we also would like to do, since we have just one
witness, I guess you're the only one that’s going to give an opening
statement, is that correct?

Mr. FowLer. That’s correct, Mr. Chairman.

Mr. Mica. Well, we're not going to limit you but if you have other
lengthy documents you'd like submitted as part of the record, we
will do that by unanimous consent. Mr. Fowler, you’re recognized
and welcome.

STATEMENT OF CHARLES D, FOWLER, NATIONAL DIRECTOR,
EQUAL EMPLOYMENT OPPORTUNITY AND DIVERSITY, IN--
TERNAL REVENUE SERVICE, ACCOMPANIED BY DENNIS
FERRARA, DEPUTY ASSISTANT CHIEF COUNSEL, GENERAL
LEGAL SERVICES, INTERNAL REVENUE SERVICE, AND
JAMES O'MALLEY, NATIONAL DIRECTOR, PERSONNEL DIVI-
SION, INTERNAL REVENUE SERVICE

Mr. FOWLER. Thank you and good afternoon, Mr. Chairman and
distinguished members of the subcommittee. I would like to read
an abbreviated version of the statement that we've submitted for
the record.

Tm pleased to appear before you today to discuss the topic of
equal employment opportunity in the Internal Revenue Service.
With me are Mr. James O’Malley, the National Director of Person-
nel, to my right, and Mr. Dennis Ferrara, who is the Deputy As-
sistant Chief Counsel for General Legal Services in the Internal
Revenue.

In listening to your statements, I would like to emphasize that
we very much want to comply with the law and we want to offer
all of our employees equal opportunity in the workplace and we
want to offer the public the benefit of having a diverse work force.
Equal employment opportunity issues are often related to work
force composition. By the late 1980’s, the Internal Revenue Service
experienced significant changes, not only in its work force, but also
with respect to fulfilling its primary mission—to administer the tax
laws—and as an employer. Changes in work force diversity were
important in the IRS planning process. Our planning process fo-
cused on four strategic areas, one of which was ERR-16. One study
reviewed the status of women and minorities in the Internal Reve-
nue and that study, ERR-16, has been provided to this subcommit-
tee and probably is the most relevant study in connection with the
subcommittee’s recent hearings. ERR-16 addressed a number of
equal employment opportunity issues within the Service. It is clear
from the study that we were concerned that the concept of equal
employment opportunity was clearly reflected in our recruitment
efforts, but was reflected far less in advancement.

ERR-16 called for the Internal Revenue Service to look beyond
actions that only remedied existing representational imbalances


55

STATEMENT OF
INTERNAL REVENUE SERVICE
SUBMITTED FOR THE RECORD
for the

Subcommittee on Civil Service
Committee on Government Reform and Oversight

Employment Discrimination in the Federal Workplace
September 25, 1997

‘The Internal Revenue Service (IRS) appreciates the opportunity to submit this statement
for the record of the hearing on the topic of employment discrimination in the Federal workplace.
Our statement discusses equal employment opportunity at the IRS.

Equal employment opportunity issues ofien are related to workforce composition.

Currently. more than 67% of our workforce is female and more than 35% is from minority

groups compared to 61% for females and 30% for minorities just 11 years ago. The percentage

of female IRS executives has increased from 9.7% in 1988 to 23.6% in 1997. The percentage of
executives from minority groups has risen from 10.4% to 13.1% over the same period. We have
had similar changes in the composition of our workforce in the higher pay grades. The
percentage of females in the GS/GM 13/14/15 positions was 22.9% in 1988 and 32.9% in 1997.
For minorities, the numbers rose from 12.2% to 16.9%.

‘A number of factors have produced this changing workforce composition. The “baby
boomers” who came to the Service in large numbers after 1970 began the change in the ethnic

and gender mix of the IRS. Advances in civil rights and educational opportunities, as weil as


62

ALL IRS EXECUTIVES AND MANAGERS

arze of EEO and diversity. Tris suspersion affects two of :"e general standarzs in
ing vidual performance plans and two measures used in the Business Review

Tre following guidance applies to preparation of FY 97 perstmance appraisais for
executives and managers. .

De not prepare any rarrative addressing the fanguage show in the following General
Stendarcs.

Coteal Element: Ach eve Quality. Driven Productivity Threusn Systems Imorovemert
acs Emviovee Deve'coment

General Standard: Coach and develop employees to achieve parity at all grade
levels which is reflective of the Civilian Labor Force by eliminating barriers in
recruiting, hiring, training, and promoting minorities, women, and persons with
disabilities

“Teal Element. Maximize Customer Satisfaction and Recuce Burden

General Standard: Meet the Service's goals in:..... minority, women, and labor
surplus area contacting. [Please note that only a portion cf this general stancerd is
atscted Meeting tne Service's goals in the areas of cash management, promst
pe-ment anc deb! collection are still subiect to narrative eve'uation. as appropriate.)

Ail other elemen:s and standards in the FY $7 performance pians should be
essed in the evictions, consistent with the scope of sn individual's

poses of the Business Review this year, in the area of EEO
meesures, workforce (p00! series) representation and targe:ed disabilities meesures will
ne:be acdressed The Business Review will cover compia:xt resolution rates.

Analysis of the impact of these court cases is ongoing. In the near future you
27 excect to see modifications to FY $8 pertormance plan standards and adcitional
CE C7. Ow {0 approach our critica! responsibilities in the areas of EEO ard
ersity If you have Guestions about this memorandum, please contact Paulette
jelGibson. Acting National Director, EEO and Diversity, at (202) 622-5400

paw


35

23

: Promote a workpiace climate where ethical behavior is paramount and everyone is veated
with honesty, dignity, and respect,

+ Provide a written performance pian within 30 days of the beginning of the rating period and
assign an annual performance rating of record within 30 days of the close of the rating
period for each employee.

Amplification/Additional Standards:

4, Equal Employment Opportunity

Objective: Application of the Equal Employment Opportunity principles of faimess and equry in the
workplace.

General Standards: In consultation with the EEO staff and to the extent authorized and consistent
with existing resources:

: ‘Supports statf participation in special emphasis programs.

. Promptly responds to allegations of discrimination and/or harassment, and initiates
appropnate action to address the situation.

. Cooperates with EEO counselors, EEO investigators, and other officials who are
responsible for conducting inquiries into EEO complaints.

. Assigns work and makes employment decisions in areas such as hiring, promotipn, training,
and developmental assignments without regard to sex, race, color, national origin, religion,
age, disability, sexual onentaton, or prior paricipation in the EEO process.

+ Monitors work environment to prevent instances of prohibited discrimination and/or
harassment.


Attachment 2
MANAGEMENT OFFICIAL PERFORMANCE PLAN
Name of Employee Offce/Organization Series and Grade
Title of Position Period Covered
From To

This performance plan has been decussed with me and | have been given a copy.
Employee Signature Date

Supervisor's Name/Signature Title Date
Approving Official’s Name/Signature Title Date
INSTRUCTIONS

The critical elements are applicable to all management officials. The objective and uniform standards
under each entical elements refiect the major day-to-day responsibilities of the position. All standards are
written at the fully successtul level. While each critical element is a mandatory performance indicator,
some general standards may not acply. The supervisor and employee should review the uniform
Standards and delete any that are nct applicable. Deletions should be noted, initialed. and dated by the
empioyee and supervisor. Local, individual, or team standards, as appropriate, may be included to reflect
areas of emphasis. These should de kept to a minimum and should be wntten at the fully successful level
with appropnate indicators ot quality. quantity, and timeliness.

‘The empioyee’s performance wil! be assessed in accordance with the plan, and will reflect a rating for
‘each cntical element and applicable uniform standards. An overall rating (summary rating) will also be
determined.

Progress reviews are an essential cart of the performance plan and appraisal system. Although the
process of mononng plan accomplishment is on-going, a minimum of one review must be conducted
approximately mid-way through the appraisal penod. While a formal written review is not mandated,
‘documentation that the review has been conducted is required in accordance with local procedures.

PRIVACY ACT STATEMENT

The Pnvacy Act of 1974 and Paperwork Reduction Act of 1980 say that when we ask you for information. we must
teil you: our iegal nght to ask forthe intormazan: what major purpose we have in asking for t and how ft wil be used:
what could happen i we do nol receive < and whether your response is voluntary, required fo obtain a benefit, or
mandatory under the law.

This statement is being provided pursuant to Public Law 93-579 (Pavacy Act of 1974) December 31, 1974 for
ingividuals who have been requested to submit a statement of accomplishment/sel-assesement.

The authonty to solict this information & denved trom § USC 4301, et seq., and § CFR Part 430.

In order to allow you the opportunity fe provide input ito the apprassal process, management will request this
information from you. The informaton yeu fursh will be considered by your supernsory officals - 2repaning an
‘2ppraisal of your performance. of conavcang mid-year progress reviews. Once prepared. the informanon camtained
1 your performance appraisal wil be used on a “need to know” basis by IAS officials. Disclosures may also be
‘made when apprapnate, fo routine users as published in the Federal Register, such as the Otfce of Personne!
‘Management, the Equal Employment Opportunity Commission, the General Accounting Office and others listed in
the system of . The in your pertormance appraisal is part of TRARS
36.003. General Personne! Records.

Failure to furmish this information may result in your supervisors prepanng your appraisal, ar conducting a progress
‘rewew, without considenng any informaton you may feel is relevant or significant.



51

ing practices in the government are in terms of establishing per-
formance standards and, again, I’ve served at NASA, at the os
Secret Service, at the Commerce Department, at main Treasury
and at Internal Revenue Service and we've never had that kind of
coordination in terms of setting performance standards. We cer-
tainly are quite interested and want to make sure that we are in
compliance with all procedures and all court decisions but I’m not
aware that, you know, we've had that kind of coordination.

Mr. Mica. Given the experience of the Byrd decision, don’t you
think it would be helpful to coordinate with EEOC and to make
certain they find acceptable whatever decision you come up with as
government-wide policy? We're going to have to make sure that any
problems that have been raised as a result of the Byrd decision are
addressed governmentwide.

Mr. FowLer. Well, 1 think, Mr. Chairman, if I understand you
correctly, you’re concerned that we may possibly be placing our-
selves in having to litigate another situation because we've not had
proper coordination?

Mr. Mica. You know, we aren’t just interested in IRS in this sub-
committee. We have governmentwide jurisdiction and we're trying
to make certain that everybody's treated equally, fairly, and that
we have a consistent policy that we don’t ‘diserrminate in hiring,
performance, giving everybody a fair shot. This is the new ap-
proach, but we're also concerned about the taxpayers who are foot-
ing the bill. Byrd cost a lot of money. You were gone, but I said
that it wasn’t just the money, but people were discriminated
against in the Federal Government. We are their employers and
it’s our job to see that that doesn’t happen again. We want to have
it corrected in IRS. We don’t want to be running a dual policy so
that IRS has its policy and the rest have their own policy. We don’t
want to operate so that some are suing agencies of government for
something they did in IRS and no one else knew about it. So, dis-
crimination continues and we keep paying the tab for this discrimi-
nation because we didn’t act. That’s the reason why you have a
committee like this, investigation and oversight, to try to make us
all sing from the same page of the hymnal. That’s the purpose.

I think it would be good if you coordinated some with OPM. God
forbid we should have everybody doing the same thing. It makes
sense that the EEOC gets involved in this so we can look people
straight in the eye and say we are trying to be consistent, we're
trying to be fair, we’re trying to avoid the mistakes of the past, the
discrimination of the past, and do it right across the board. I didn’t
start the confusion and we don’t want confusion. We want equity,
fairness, and consistency in our policy.

Mr. FOWLER. Mr. Chairman.

Mr. Mica. I'll give you a chance to respond.

Mr. Fow er. Yes, what I’d like to——

Mr. Mica. It’s not all your fault.

Mr. Fow.er. Thank you very much.

Mr. Mica. You just happen to be agency du jour that we're pick-
ing on so, I encourage this, just go ahead.

Mr. FowLer. That makes me feel a lot better. I really appreciate
that. But let me——

Mr. Mica. We pick on all of the agencies.


24

employees. The concept of equal opportunity in federal employment had been reaffirmed over
the years by the executive and legislative branches of the federal government and in Supreme
Court decisions. It was against this backdrop that the IRS and other federal departments and
agencies developed affirmative employment programs and policies. We believe that our
programs and policies have served us well, Recent court decisions in the -Adarand' and Byrd
cases have caused us to review how we strategically approach or evaluate progress toward our
objectives in the areas of equal employment opportunity for all employees.

In April 1997, a federal district court found, in an interlocutory decision, in Byrd that
ERR-16 violated the Fifth Amendment equal protection clause. The plaintiffs, four white male
GS-12 revenue officers. alleged that they had been subjected to age. race, and gender
discrimination in connection with specific personnel actions taken by the IRS. The plaintiffs
contended that ERR-16 encouraged institutional discrimination against white male employees.
because its objective was to increase representation of women and minorities in managerial and
executive positions through employee development and advancement strategies.

After Adarand, government actions related to race or ethnicity that are challenged under
the Equal Protection clause are examined under what is called a “strict scrutiny” standard. Under
the strict scrutiny standard, the government prevails if it shows that its program or policy serves a
compelling governmental interest and that it is narrowly tailored to serve that interest. In Byrd.
the Court held that ERR-16 encouraged or authorized preferential treatment of minority and

female employees. and that, accordingly. the strict scrutiny standard must be applied to the

“ sidarand Constructors inc. ¥ Pena, 118 SCt 2097 (1995)
Sola A. Byrss Robert E Rubin Cis, Action No, 95-1280(W'D. La April 9.1997),

4


54

all of our employees, that we will do what is right, that we will not
do it on the backs of other employees who feel that, OK, now you
have a program and now I’m disadvantaged. Again, some of this is
a mindset, some of this has to do with policy and procedure. I have
no reason to sit before you and attempt to give you a lot of stuff
because it doesn’t benefit me any. I’m interested when I leave the
Internal Revenue Service in seeing that the problems that we have
today are not the problems of tomorrow, And so, we’re going to
work on these and, hopefully, we'll be able to come before you in
a future hearing and have both you and Mr. Mica feel that we have
given this a fair shot, that we’ve had the proper coordination be-
tween the Federal agencies, that we all are working together to
make sure that we don’t have litigation and any other agency as
well as the Internal Revenue and that we’re doing what’s right by
the general public.

Mr. CUMMINGS. Thank you.

Mr. Mica. Well, I thank Mr. Ferrara, Mr. O’Malley and Mr.
Fowler for joining us today. Again, we are an investigations and
oversight subcommittee of Congress. We're trying to deal with the
problem of discrimination in the Federal workplace in a fair man-
ner and come up with some good solutions, workable solutions, in
compliance with accord edicts and all the other constraints that we

ave.

In that regard, I would like you to keep us advised, Mr. O’Malley
and Mr. Fowler, of your actions in this regard so we can follow
what your agency is doing. Mr. Cummings, I think it would be
helpful if we wrote OPM, the EEOC office, and asked them to also
counsel with these folks so that we can, hopefully, avoid the same
kinds of mistakes and discrimination, and also to find a mechanism
to institute governmentwide action. I think as an action item we
can initiate that, so, again, we're all singing off the same sheet of
music.

I want to thank you for participating. We look forward to your
future response to the subcommittee.

There being no further business before the Civil Service Sub-
committee, this meeting is adjourned.

(Whereupon, at 4:10 p.m., the subcommittee adjourned subject to
the call of the Chair.)

[Additional information submitted for the hearing record follows:]


63

DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE
WASHINGTON, D.C. 20224

=P 22 WoT

MEMORANDUM FOR REGIONAL COMMISSIONERS. CHIEF OFFICERS.
EXECUTIVE OFFICER FOR SERVICE CENTER
OPERATIONS, CHIEF INSPECTOR, NATIONAL DIRECTOR
OF APPEALS, TAXPAYER ADVOCATE, AND DIRECTORS OF

SUPPORT sapces
Eugene Ochre Sagem, For,
FROM: Jam& OMatey ;

National Director, Personnel Division

SUBJECT: Changes to the Executive/Manageriai Performance Plan and
the New Performance Plan for Management Officials

This memorandum highiights several important changes to the pecformance
management program. These changes will impact executives, managers, and
management officials Servicewide. Management officials will be on a separate
performance pian for FY 1998 (Octeber 1 - September 30 ) performance appraisal
period. Executives and managers will have a new EEO critical element and standards.

Because of these changes we are revising Form $688. Executive/Managerial
Performance Plan, and developing a new form for management officials. These new
forms will not be available until mid November. Until these forms become available, the
attached interim forms should be locally reproduced in order for employees to receive
their performance plans timely. Regulation requires managers to communicate
performance expectations with their employees usualty within thirty days after the start
of the rating period. Discussion and documentation cf the attached interim forms would
meet that requirement. Completing the formal forms would not be necessary in this

. ‘Suspension of certain aspects of two performance standards in the
Executives/Managers Performance Plan addressing expectations/measurements
in area of EEO and diversity (Acting Commissioner's memo, Affirmative
Employment Programs and Policies dated August 19, 1997).

The Service is committed to provide equal opportunities for all employees and to
maximize the benefits of having a diverse workforce. The Service is currently in
the process of assessing its affirmative employment policies and programs in

light of the recent court cases. However, until analysis of the impact these court




43

Cummings? Do you have them? It sounded like people were having
a rough time getting to the top in the agency, particularly from a
minority standpoint, even though there’s significant representation
within the agency numerically. Is this something that your policy
does address or will address?

Mr. FOWLER. I would say that we have policies that, or strate-
gies, if you will, more than policies, that will address these issues
and the strategies are this. Without getting into areas that would
subject us to strict scrutiny situations, we’ve looked at the other
ways to address issues and they are to remove barriers, and to
have effective outreach and recruitment programs. And we also feel
that, in doing so, if we remove those barriers, if we have effective
outreach, if we make it known that we support equal opportunity
for all employees, we will accomplish many of our objectives. I
think that it also must be realized that the court has said to Inter-
nal Revenue that it wiil not say that under no circumstance should
we ever set a goal because if we have a compelling government in-
terest, if we feel that we can narrowly tailor it, and if we can make
a business case supported by data, then, in fact, we should be able
to stand the strict scrutiny test. I think we have to look at all of
our employment practices, whether that’s hiring, retention, pro-
motion, et cetera. We have to look at what the business case is and
how the public will be best served. This is what we're all about
here. We must do this in compliance with the law and continue to
offer equal opportunity for everyone.

Mr. Mica. Just one final question. We’ve seen the September 22
memo. Mr. O’Malley, I guess you produced that. When can we ex-
pect some final language and some final policy to be developed? Is
there a timeframe set for that?

Mr. FERRARA. We are working with the Department of Justice in
order to come up with appropriate language for a performance
standard and appropriate guidance to put out. I expect it to happen
soon but there isn’t a timeframe or a target date for that.

Mr. Mica. That suffices as far as you’re concerned. Has the agen-
cy set a target date, Mr. Fowler?

Mr. FOWLER. We have not set a target date but what I can as-
sure you, Mr. Chairman, is that we are working with all due speed
to attempt to try to resolve this issue. As Ms. Norton said, there
is a lot of confusion in the work force because of newspaper arti-
cles, because of publicity, because of uncertainty with the employ-
ees, because of the performance standards being suspended, certain
portions of them, and we are anxious to eliminate that confusion
so that we can get on with the business of the agency.

Mr. Mica. Mr. Cummings.

Mr. CUMMINGS. Thank you very much, Mr. Chairman. Tell me,
Mr. Fowler, the history of the ERR-16. How did that come about?

Mr. FowLer. Mr. Cummings, I was not in the Internal Revenue
Service at the time but what I can tell you is that the Service rec-
ognized that it had under-representation at that time in certain
areas and a committee of executives convened and looked over the
programs in terms of hiring practices, promotions, retentions, re-
cruitment, et cetera and, as a result of those meetings which oc-
curred, I guess, around 1989 or so, determined that there needed


41

Mr. FERRARA. No, I’m not aware of that.
Mr. Mica. I’m a little bit concerned that there’s not coordination
with OPM but you are coordinating all of this activity with Treas-

ury.

Mr. FowLer. We are coordinating it with Treasury but we are
also coordinating it with the Justice Department. We’ve had meet-
ings just recently at the main Treasury in which we had members
of the Treasury Department as well as members of the Justice De-
partment review our activity around our performance standards
and our compliance with recent court decisions.

Mr. Mica. The Justice Department is responsible for defending
IRS in litigation and has issued legal guidance to agencies to pro-
mote compliance, but the Adarand guidelines—DOJ issued revised
guidelines on Federal agencies’ affirmative action programs in re-
sponse to Adarand in February 1996. Did IRS revise its perform-
ance management elements to reflect the Department of Justice
Adarand guidelines between February 1996 and August 19, 1997?
Mr. Fowler, do you know?

Mr. Fow Ler. Mr. Chairman, I’m going to defer to Mr. O’Malley
on that.

Mr. Mica. Mr. O’Malley?

Mr. O’MALLEY. No, we didn’t make a change.

Mr. Mica. In light of the Adarand guidelines and its own loss in
the Byrd case, did IRS consult with the Department of Justice be-
fore issuing the revised guidelines in the September 22 timeframe
from August to September?

Mr. O'MALLEY. No.

Mr. Mica. No?

Mr. O'MALLEY. No, we did not.

Mr. Mica. Did not? What makes you confident that the revised
guidelines are more legally defensible than the pre-Byrd guide-
lines? Mr. Fowler.

Mr. FowLeER. I think the opinion at this point, in having had con-
versations with the Justice Department and with Treasury in
which we've had counsel from Treasury involved, is that the re-
vised guidelines that we have that deal with the area of equal em-
ployment opportunity are certainly in compliance as far as the Jus-
tice Department is concerned.

Mr. Mica. Well, let me ask you a question about diversity prob-
lems at IRS. How many EEO complaints has IRS received in recent
years, Mr. Fowler?

Mr. FowLer. Mr. Chairman, I didn’t come prepared to give those
numbers. I can provide them for the record.

Mr. Mica. Are you aware of any statistics, Mr. O’Malley, on
this——

Mr. O'MALLEY. No, I’m not, Mr. Chairman.

Mr. Mica. What groups, in your estimation, are under-rep-
resented in IRS’ recent Federal equal opportunity employment re-
ports? Anyone have that information?

Mr. Fow er. I didn’t bring that with me, Mr. Chairman. I apolo-

gize.

Mr. Mica. Well, in addition to the loss of Byrd and Rubin, has
IRS lost any other litigation related to its affirmative employment.
program? Any other actions lost, Mr. Fowler?


Attachment 1
EXECUTIVE/MANAGERIAL PERFORMANCE PLAN

Name of Employee Otfice/Organization ‘Senes and Grade
Title of Position Period Covered
From To
This performance plan has been Sscussed wih me and have been given ac.
Employee Signature
Supervisors Name/Signature Tite Date >
Approving Oficia's Name/Signasre Tile Cate
INSTRUCTIONS

‘Your performance plan should be developed by you and your manager. The pian will contain the established
critical elements, related standarcs, and any ampiification/additional standards developed specifically for you. The
‘established critical elements anc standards were writen at the fully successful level and are designed to rellect
basic, on-going responsibilies cf executives and managers throughout the Service, While each cntical element is
‘a mandatory performance indica:2r, some general standards may not apply to your specific position. You and
your manager should review eacz general standard and delete any that 8ré not applicable for your pian. Deletions,
‘should be noted and initaled on He plan. Additional standards, reflecting onty thase few high-prionty

requirements that must be accor-plished in the rating period, may be added to your plan. These should be kept to
minimum (usually not more than two per element) and written at the fully successful level with appropriate
indicators of quality, quantity, anc timeliness,

‘Your performance will be assessed in accordance with your plan, and will refiect a rating for each critical element
and ail applicable standards. An overall rating (summary level) will also be de:ermined.

When carrying out your pian responsibilities, ‘t is critical that each element and standard be accomplished in
accordance with:

* Jegal, procedural, admirsstrative, technical, and program requiremen:s
= objectives in the Strategc Pian and Budget

: program directions and manuals

. transition to Leadership Competencies

Progress reviews are an essertal part of the performance plan and appraisal system. Although the process of
‘menitonng plan sccomplstmertis on-going. & micumum of ene reviw musi be conducted approximately mic-way

the appraisal period. Wrile a formal writen review is not mandated, documentation that the review has
been conducted is required in accordance with local procedures.

PRIVACY ACT STATEMENT
The Privacy Act of 1974 and Paperwork Reduction Act of 1980 say chat when we ait you for information, we must tell you: our legal
righ ak fr the formas: wha aor purpose wt Ree ian or and hw wil sek wha! cold happen we dent
‘receive: and whether your responses wolunsary, required io abxain @ benef, or mandatory wader the
‘Ths samen itbing rd arms Pui Lay 9-579 (Pricy At of 1974) December 3 1974 ordi oho hve
‘been requested 19 tubmat a satemens of eccomplishment/self-astesn
The authori sl ds formas is rivd rom 3 USC 4301. 3 sand 5 CER Por 430.
{tn order to allow you the opportuni to provide input ino the appraisel process. management will request this inermation from you.
‘The inom po unis il be coidered by your apes ln preparing ax spp of vou performance. or conducting
«mid-year progress reviews. Once prepared the information conained in your performance appraisal willbe wied ona “aced a know”
‘basis by IRS officiats. Ducloswes mey also be made when appropriate, to routine users as published inthe Federal Register, such asthe
Office of Personnel Management. ie Equal Employment Opportunity Commission. che General Accounzing Office and achers listed in the
appropiate syem of recanks, Th formation onained i your performance appraisal spa of TRS 36.03, General Personae
cor
File to furnish this information may renal in your supervisors preparing your apprasal conducting & progrest review, without
considering any information you may el ix relevant or significant,



i

4
strongly support affirmative action. | do so because | believe that
through properly-implemented affirmative action programs, the
Federal government can open the doors of opportunity for the
millions of minorities and women that continue to be deprived of a

fair chance to enter or advance in the Federal service.

While | recognize that recent court decisions such as
Adarand v. Pena, and the California Initiative have led to some
retrenchment in this area, | believe that there remains a solid basis
for the pursuit of affirmative action. Certainly the testimony that
we received at our earlier hearings justifies its continued use in

the Federal workplace.

The policies of equal employment opportunity and affirmative
action took root and evolved in the Federal sector over the past 40
years. They are grounded in executive orders issued by

Republican and Democratic Presidents alike. Today, there is


53

you all might want to—and you probably have already thought
about this is that a part of that evaluation process should be one
where you say, well, we’re looking at you, Mr. Supervisor and Ms.
Supervisor. We want to look at how you got the word out. Did you
outreach? How, I mean, who did you put this—I mean, how did you
bring people in? How widespread were these acting positions and
developmental assignments spread out? And we just want to see,
you know, how many people have access to opportunity because one
of the things you said that shall forever be embedded in the DNA
of every cell of my brain was that whole thing that you just—when
you just gave that example of the people who never even got to the
door to make the application. See, that’s two steps before—three
steps before you—people talk about diversity. You can’t have diver-
sity if there are people who don’t—can’t even get to the door to
make the application, let alone what happens after they get in the
oor.

So, all I’m saying to you is that, one of the things that I like
about Mr. Mica is that we both have agreed that we want to be
effective. We don’t want to just go through a series of sitting here,
wasting taxpayers money, and not be effective. But be effective and
be fair at the same time. And so, that’s why I make that sugges-
tion. I don’t know, you may want to comment on that but I think
that, I know, and I understand what you're saying at this point in
your career that this is where you have arrived but we also want
it so that when you leave this position and maybe move onto an-
other position or whatever that you have left some things in place
that, hopefully, will be there for a long time and where you don’t
have to be there checking to see if it’s going alright. Because one
of the things that I’ve learned about the Federal Government, you
have an in-and-out situation. People are constantly in-and-out. The
question is, in your time and in your space can you do something
that has a lasting effect consistent with the goals that you’re trying
to accomplish? And so, you know, just a little commentary there.

Mr. FOWLER. Mr. Cummings, and Mr. Chairman, first of all let
me thank you for what I consider to be a fair hearing and certainly
I am very interested in hearing your positions and your questions
on both sides of the aisle. I think they all are pertinent.

I have looked at the operational procedures of companies like All-
state, Xerox, Johnson and Johnson, Nations, Harley-Davidson
Corp., in terms of what they have done concerning diversity, con-
cerning equal opportunity, concerning some of the work force issues
that you speak of. Some of them have had even more severe prob-
lems than we feel that we have in Internal Revenue. Again, I don’t
think anyone has a magic bullet but what I think you have to have
in this line of work is you have to have commitment. I have com-
mitment. I am not interested in doing what I can do for a short
period of time and then leaving the job and having it to fall
through the floor. In that regard, I've just brought onboard Ms.
Marsha Coates who was the Director of Equal Opportunity Pro-
grams for Civilian and Military Programs at the Coast Guard and
we intend to continue to pursue this. I’m getting competent staff
onboard. We have a commitment from the Commissioner's office.
We report directly to the Commissioner of Internal Revenue and
we are determined that we will push to have equal opportunity for


59

compelling governmental interest and that it is narrowly tailored to serve that interest. In Byrd.
the Court held that ERR-16 encouraged or authorized preferential treatment of mizority and
female employees. and that, accordingly. the strict scrutiny standard must be applied to the
Service's initiative. The district court then concluded that diversification of the Service's
workforce was not a compelling governmental interest sufficient to justify the agency's use of
race and gender criteria in decision making.

Byrd is one of the first federal court decisions in which a federal affirmative action
program was found unconstitutional. It was an interlocutory decision on a motion for partial
summary judgment which could not be appealed until the trial on the merits had concluded.
After that decision and before a final judgment on the merits. the case was settled by the parties
under an agreement not to disclose the terms of the settlement.

‘The Acting Commissioner, in an August 19, 1997. Memorandum For All Executives and
‘Managers. temporarily suspended portions of two standards in individual performance plans and
‘two measures used in the Business Review (copy attached), The temporary suspension applies
only to these performance measures -- not the affirmative action program, In consultation with
the Justice Department and IRS Chief Counsel. we are working to redesign the elements and
standards of the performance plans for executives and managers for FY 1998. The redesigned
elements and standards will ensure that all managers and executives are evaluated on their efforts
to develop and promote all employees in accordance with affirmative action plans that are

consistent with current law and Administration policy.


13

Mr. Mica. I thank the gentleman. Mrs. Morella, did you have a
statement?

Mrs. MoRELLA. Thank you, Mr. Chairman, and thanks also for
holding today’s hearing on the IRS’ suspension of its affirmative
employment program. I look forward to hearing more details from
IRS concerning their actions following the southwestern District of
Louisiana’s Byrd v. Rubin decision. This Federal district court
ruled that the IRS plan for organizational diversity, known as En-
hancing Recruitment and Retention of Employees or ERR~16 which
sounds like err 16, violated the Constitution’s equal protection
clause. This program did not pass the strict scrutiny standard de-
veloped in the Adarand v. Pena decision and the decision led to a
review of ERR-16 and the suspension of part of the agency’s af-
firmative employment program for the remainder of the 1997 per-
formance year.

I support affirmative action but I believe that Adarand’s strict
scrutiny standard makes sense and I am concerned about the con-
fusing chain of events by the IRS in the wake of the Byrd decision.
I look forward to hearing from the IRS’ Equal Employment Oppor-
tunity and Diversity National Director, Charles D. Fowler, to bet-
ter understand exactly what did happen and what this means for
affirmative action at the IRS and in the Federal Government.
Thank you, Mr. Chairman.

[The prepared statement of Hon. Constance A. Morella follows:]


CONTENTS

Hearing held on October 28, 1997 ...
Statement of:
Fowler, Charles D., National Director, Equal Employment Opportunity
and Diversity, Internal Revenue Service, accompanied by Dennis Fer-
rara, Deputy Assistant Chief Counsel, General Legal Services, Internal
Revenue Service, and James O'Malley, National Director, Personnel
Division, Internal Revenue Service ... ee
Letters, statements, etc., submitted for the record b:
Cummings, Hon. Elijah E., a Representative in Congress from the State
of Maryland, prepared statement of ..
Fowler, Charles D., National Director, Equal Em mployment ‘Opportunity
and Diversity, Internal Revenue Service, prepared statement of ...
Mica, Hon. John L., a Representative in Congress from the State of
Florida, prepared statement of ..
Morella, Hon. Constance A., a Representative i in Congress from the State
of Maryland, prepared statement of ...

(a)



34

2, Improve Customer Service.

‘Objective: Reduce the time and expense experienced by taxpaye's, tax professionals, and othe
in complying with the tax laws while at the same time increasing their satisfaction with the tax
system. Use the skills of a diverse workforce to support front-line iritiatives to maximize intemal
and extemal customer satisfaction.

General Standards: Consistent with the scope of your responsibiliies, apply leadership
competencies to:

+ Use the skills and abilities of a diverse workforce and technology to redesign/maintain
business processes that reduce expenditures of time, money, and resources for taxpayers
and internal customers.

+ Provide the assistance needed to resolve issues during the initial contact with taxpayers.
+ Provide customized education and enhanced outreach ettorss.
+ Establish and aggressively monitor necessary internat contrcis (annual assurance process)

to deliver a quailty product and guard against waste, fraud, and abuse.
+ Meet the Service's goals in cash management, prompt payment, and debt collection,
Ampiification/Additional Standards:
3. Increase Productivity.
‘Objective: Continually improve the quality of products and services we provide to our intemal and

external customers through the use of teamwork, systems improvement tools and techniques, and
‘the development of a highly trained, diverse workforce.

General Standards: Consistent with the scope of your responsibilities, apply leadership
competencies to:

+ Improve processes and products by using systems management techniques and focusing
‘our modemization efforts to meet customer needs.

+ Educate the workforce/stakeholders on how organizational gcals, strategies, policie:
Practices, and individual jobs relate to the Strategic Plan and Budget.

. Empower individuals to use independent judgment to solve preblems and develop products
and services in a timely and effective manner.

. Establish and maintain a constructive working relationship with the National Treasury
Employees Union to implement the IRS/NTEL Total Quality Organization partnership.

. Suppor a neatthy, safe work environment, free fram harassment and discrimination, in
which the privacy of employees is respected.


22

and gender mix of the IRS, Advances in civil rights and educational opportunities, as well as
changing societal mores and economic necessity also provided the IRS labor force with
increasing numbers of professionally skilled women and minorities. By the late 1980s, the IRS
experienced significant changes, not only in its workforce, but also with respect to fulfilling its,
primary mission (to administer the tax laws), and as an employer. Changes in workforce
diversity were important in the IRS planning process. They also were important as we sought to
facilitate changes to our work environment and new business requirements by adopting a
strategic approach to planning and management that focused on long- and short-term business
objectives.

Our planning process focused on four strategic areas, one of which was “Enhancing
Recruitment and Retention of Employees.” In this area, the IRS undertook 17 initiatives and
studies. One study reviewed the status of women and minorities in the IRS, That study (A
Design for Organizational Diversity: Report of Strategic initiative ERR-16: Minorities and
Women Within IRS (December 1989)) (ERR-16) has been provided to this Subcommittee and
probably is the most relevant study in connection with this Subcommittee’s recent hearings.
ERR-16 addressed a number of equal employment opportunity issues within the Service. For
‘example. it addressed the underrepresentation of women and minorities in management and
leadership positions. as compared to their numbers in the total workforce. {tis clear from the
study that the IRS was concerned that the concept of equal employment opportunity was clearly
reflected in our recruitment efforts. but was reflected far less clearly in advancement. The study
also addressed the IRS training and development programs and their adequacy and relevance to

the Service's increasingly diverse workforce.

w


COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT
DAN BURTON, Indiana, Chairman

BENJAMIN A. GILMAN, New York HENRY A. WAXMAN, California

J. DENNIS HASTERT, Illinois TOM LANTOS, California

CONSTANCE A. MORELLA, Maryland ROBERT E. WISE, Jr. West Virginia

CHRISTOPHER SHAYS, Connecticut MAJOR R. OWENS, New York

STEVEN SCHIFF, New Mexico EDOLPHUS TOWNS, New York

CHRISTOPHER COX, California PAUL E. KANJORSKI, Pennsylvania

ILEANA ROS-LEHTINEN, Florida GARY A. CONDIT, California

JOHN M. McHUGH, New York CAROLYN B. MALONEY, New York

STEPHEN HORN, California THOMAS M. BARRETT, Wisconsin

JOHN L. MICA, Florida ELEANOR HOLMES NORTON, Washington,

THOMAS M. DAVIS, Virginia De

DAVID M. McINTOSH, Indiana CHAKA FATTAH, Pennsylvania

MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland

JOE SCARBOROUGH, Florida DENNIS J. KUCINICH, Ohio

JOHN B. SHADEGG, Arizona ROD R. BLAGOJEVICH, Illinois

STEVEN C. LATOURETTE, Ohio DANNY K. DAVIS, Mlinois

MARSHALL “MARK” SANFORD, South JOHN F. TIERNEY, Massachusetts
Carolina JIM TURNER, Texas

JOHN E. SUNUNU, New Hampshire THOMAS H. ALLEN, Maine

PETE SESSIONS, Texas HAROLD E. FORD, Jr., Tennessee

MICHAEL PAPPAS, New Jersey Pree

VINCE SNOWBARGER, Kansas BERNARD SANDERS, Vermont

BOB BARR, Georgia (Independent)

ROB PORTMAN, Ohio
Kevin BIncER, Staff Director
Dante. R. MOLL, Deputy Staff Director
WILLIAM MOSCHELLA, Deputy Counsel and Parliamentarian
dupitH McCoy, Chief Clerk
PHIL SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON THE CIVIL SERVICE
JOHN L. MICA, Florida, Chairman

MICHAEL PAPPAS, New Jersey ELIJAH E. CUMMINGS, Maryland
CONSTANCE A. MORELLA, Maryland ELEANOR HOLMES NORTON, Washington,
CHRISTOPHER COX, California DC
PETE SESSIONS, Texas HAROLD E. FORD, Jr., Tennessee

EX OFFICIO
DAN BURTON, Indiana HENRY A. WAXMAN, California

GEORGE NESTERCZUK, Staff Director
Nep LYNCH, Senior Research Director
CAROLINE FIEL, Clerk
Cepnic HENDRICKS, Minority Counsel

ap


46

posed to, then psychologically they can be defeated before they ever
step up to the plate. In other cases, we have a corporate mentality
that I think we have to deal with and that’s a barrier because if
we don’t have all of our managers on board, that EEO is not just
a law but—because a law can be broken. You can have a law to
stop at the stoplight but if you want to have a rolling stop and dis-
regard it, then there’s a problem there. We are not interesting in
hammering over the heads of the employees that this is the law.
What we want people to do is to do things in the work force be-
cause they are the right things to do, because it makes good busi-
ness sense and we're going to press that. And what we call for is
to make this a leadership issue in the IRS and to say that you
must take ownership of this issue and we want you to realize that
the tenets of this organization are to provide equal opportunity to
everyone and to make them aware that there’s equal opportunity
out there and that we will do everything that we can to make sure
that all of our employees, all over 100,000 of them, feel this way.
That’s something that we have to work on and, in changing our
corporate mentality, it’s not something that we can do overnight
but we do feel that, with proper communication strategy and lead-
ing by example, that we can achieve this over a period of time.

Mr. CUMMINGS. One of the things that I have noticed, which I
find very interesting, is that a lot of times people who may be o
posed to affirmative action or opposed to diversity, I mean full di-
versity, a lot of times people use these code words and one of them.
is quota. And while I understand, you know, what that’s all about
and why people may have a problem with quota, the question be-
comes how do you measure your progress? In other words, if you
have a situation where you have 1,000 top people, whatever the top
grade is, in 1996 and 99.9 percent of them are white, and then in
1997 you want to look after you’ve done all of these good things to
let people know about what’s going on and outreach and removing
barriers, how do you all measure and we all do it, we measure our
progress or I don’t see how we can even—I think all of us are try-
ing to get to a certain place, so how did you measure your
progress? I mean, do you look at numbers? I mean, do you just say,
well, we feel better today because we feel better, or do you say, we
now have out of 1,000 employees of top people, we now have 10 mi-
norities and women as opposed to 1? I mean, how do you measure
it? You follow what I’m saying?

Mr. FOWLER. I follow.

Mr. CUMMINGS. In some kind of way, it seems to me, that you
have to have some kind of way of saying it looks like we made
some progress or we're going backward because you all are spend-
ing a lot of Federal money trying to do all these ERR-16s and all
of this kind of stuff. Then, the question becomes, when you speak
to the Congress, how do you tell us, or even tell yourselves, that
we made progress after we did all of those wonderful things that
you just said you’re trying to do?

Mr. FowLeR. You asked me a very difficult question, as you
know, Mr. Cummings, but what I can tell you is that the court has
said that we can’t set quotas and we can’t have numbers and, yet,
we are called upon to attempt to have a diverse work force. We
have to serve a diverse public. We have to administer the tax sys-


-2-

Rezional Commissioners, Chief Officers. Executive Officer for Service Center
Operations, Chief Inspector, Nationa! Director of Appeals, Taxpayer Advocate, and
Directors of Support Services

cases have on our performance management program are completed, we have
temporarily suspended portions of €£0 and diversity under the following:

Critical Element : Maximize Customer Satisfaction and Reduce Burden

General Standard: Meet the Service's goals in:.... minority, women, and
labor surplus area contracting. (Only a porticn of this general standard is
suspended for FY 98 appraisal penod.)

Critical Element: Achieve Quality-Orven Productivity through Systems
improvement and Employee Development

General Standard: Coach and develop employees to achieve parity at all
grade levels which is reflective of the Civilian Labor Force by eliminating
barriers in recruiting, hiring, training, and promoting minorities, women,
and persons with disabilities. (Suspended for FY 98 aopraisal period.)

: Addition of a separate EO critical element and oerformance standards.

The Secretary of the Treasury is mandating uniform EEO performance element
and standards for ali supervisors and managers to increase management
accountability for EEO activities. As a result of this mandate, the EEO critical
element and performance standards have been added to the
Executive/Managerial Performance Plan for the FY 1998 appraisal period. The
Department's goal is to send a clear message to all supervisors and managers:
that they will be held accountable for uphoiding the Department's commitment to
the EEO principies.

+ Minor changes to the critical elements
The wording of the critical elements has been revised to reflect the language in

the Strategic Plan and Budget FY 1998, The general standards remain
unchanged.


, 39

Mr. Mjca. Thank you, Mr. Fowler. A first question: Did I hear
your testimony wrong, it wasn’t clear to me regarding the memo’
of the 22nd. Early on, you suspended policy relating to discrimina-
tion and work force standards and things of that sort, as a result
of the Byrd decision. Now, the memo of the 22nd—I thought that
this reinstituted new policy. Did you testify that you still haven’t
developed a final policy? You’re developing ——

Mr. FowLer. We have issued performance standards. The stand-.
ards include a new element in equal employment opportunity. The
original memo that Mr. Dolan issued in August suspended certain
portions of our performance standards in order that we might re-
view them.

Mr. Mica. And this——

Mr. Fow er. And that was to suspend them at the end of the
rating period.

Mr. Mica. And this really doesn’t reinstitute them in detail. Is
that what you’re saying?

Mr. FowLer. It doesn’t reinstitute the portions that we had in
question.

Mr. MIca. So, what policy do we have in place?

Mr. FOWLER. We now have in place performance standards that
we hope will not mislead our managers and executives into doing
anything that would appear to be a quota system, which would be
in violation of the law.

Mr. Mica. But you haven’t replaced that, is that correct? You
suspended, then you reinstituted, but you reinstituted with some
clements still missing without a full explanation of standards. Is
that——

Mr. O'MALLEY. I can answer that question, Mr. Chairman, sure.

Mr. Mica. Mr. O’Malley? Tell me where we are.

Mr. O'MALLEY. What we did was issue new performance plan
standards for managers and executives——

Mr. Mica. Right.

Mr. O'MALLEY [continuing]. That contained a new fourth EEO
critical element which we worked on with the Department of Treas-
ury that they mandated for all Treasury bureaus. Now, we did
make one change to that where we eliminated some language about
meeting bureau affirmative employment goals because we weren’t
sure about that particular language. Now, as indicated in the testi-
mony, we are working with Treasury and the Department of Jus-
tice to take a look at that EEO element and see if there is a better
way to describe what are appropriate responsibilities for managers
and executives——

Mr. Mica. So, what we have in place is temporary.

Mr. O'MALLEY. That’s correct.

Mr. Mica. And the specific differences in the revised standard
are not there yet. The new standards have not been enumerated,
published——

Mr. O'MALLEY. We have published a version of this EEO element
as a new fourth critical element but we are working with the De-
partment of Justice to modify that language, to make it more ap-
propriate and clear to our work force.

r. Mica. Is this just for IRS or it is going to be for all of Treas-
ury? Is all of Treasury under this edict?


25

Service's initiative. The district court then concluded that diversification of the Service's
workforce was not a compelling governmental interest sufficient to justify the agency's use of

race and gender criteria in decision making.

Byrd is one of the first federal court decisions in which a federal affirmative action
program was found unconstitutional. It was an interlocutory decision on a motion for partial
summary judgment which could not be appealed until the trial on the merits had concluded.
After that decision and before a final judgment on the merits. the case was settled by the parties
under an agreement not io disclose the terms of the settlement

The Acting Commissioner. in an August 19, 1997, Memorandum For All Executives and

Managers, temporari

suspended portions of two standards in individual performance plans and

two measures used in the Business Review (copy attached). The temporary suspension applies

only to these performance measures

not the affirmative action program. In consultation with

the Justice Department and [RS Chief Counsel. we are working to redesign the elements and
standards of the performance plans for executives and managers for FY 1998. The redesigned
elements and standards will ensure that all managers and executives are evaluated on their efforts

to develop and promote all employees in accordance with affirmative action plans that are

consistent with curvent law and Administration po!

Ina September 22, 1997 memorandum. the National Director. Personnel Division.

reiterated the

to 1998 performance plans which had been described in the Acting
Commissioner's memorandum. The memorandum also described new, Treasury -mandated EEO
performance elements and standards for all supervisors and managers to be included in the

Executive/Manaveria! Performance Pla:

r the FY 1998 performance appraisal period (copy


established several disturbing facts: First, while the representation
of minorities and women in our workforce has significantly
increased, they are still concentrated in lower paying jobs and
grades. Second, even though there are more Hispanics
employed, there numbers still fall below their presence in the labor
force. And third, African Americans and Native Americans are

fired at disproportionately higher rates than whites.

The only conclusion that can be reasonably drawn from this
evidence is that discrimination in the Federal workplace remains a

major systemic problem.

Now, Mr. Chairman, to turn to today’s hearing. | was deeply
disturbed when | first saw press reports that the Internal Revenue
Service (IRS) had suspended its affirmative employment program.
| felt better when | subsequently learned that these reports were in

error and that what had, in fact, occurred was that a far more


61

DEPARTMENT OF THE TREASL?Y
INTERNAL SEVENUE SERVICE
WASHINGTON, DC Z2224

comms ves

tugusi 19, 1867

ME‘“ORANDUM FOR ALL EXECUTIVES Al MANAGERS

FROM Michael P Dee
Acting Comm ssfoner of Ir

Affirmative Er=

yment Programs 2nd Policies

ue Service has teen in the forefro-tin
to provide oppstunities for all e~ployees
“al employment hes been reaffirmes over the
anches anc na number of Supreme Court
ecisions. From the outset, aXirmative action measures pe—nitted the cons ceration of
face natonal in govern mer: decision
maxing twas ageinsi this backdrep ‘at the Service, as ¢': other federal cepartments,
arc agercies. ceveloped affirmative e~sioyment frograrrs and policies

Fer mary years. the Intern:
developing programs and policies
The soncest
yea's by me exzcuiwve and legislative

| believe mat the Service s progems and po''c'es ha.# served us we: and that
we 2’e stronger end more effective ezency because of ¢." actions in the erea of EEO
arc civersity However, two court cases are causing us tc “sview how we strategically
aez"2ecr oF evaluate progress on cur ctjectives in hese esas.

in Adarand Constructors, inc v Zena, 115 $ Ct 2037 (1995), the Sucreme

oun he'd that tederal affirmative actic~ programs {nat use “acial and ethnic criteria as
a tesis for decision making are subject ‘0 strict scrutiny U-ger Adarand, atirmative
acren programs and policies must serve a compelling gove amental interes:. such as
the eracication of the present effects c* 2st discriminatior against identifiazie victims
AScmative action programs that are besed on a showing o* underrepresentation alone
de rot satisty the Adarand standard. Also, a recent distric: court case calles into
question the ezplication of the Service's strategic initiative ‘= the area of Enzancing
Recruitment and Retention of Employess, ERR-16

| perscnally want to reattirm the Se-vice's commitment to provide ecval
opzcrumites fer ail our employees anc our desire to maxir ze the benefits of having a
dive'se workforce However, unt! we thoroughly analyze 2/ of the ramificat.ons
these court cases. it is advisable to temporarily suscend ce-zin aspects 6: out
perormance management system wh.ch address expectat ons of measurements in the



47

tem with the most effectiveness and efficiency that we can and, at
the end of the day, we have to look at our work force and ask, have
we afforded everyone equal opportunity. And, in some cases, we
may very well look at that work force and say that that work force
does not mirror society or it doesn’t mirror the specific local popu-
lation. I think what I want to get back to is the court has not left
us completely without being able to use numbers. What the court
has said is that if, in fact, at the end of the day, we can show that
because we are structured the way we are or because we have em-
ployees in the numbers that we do, we have a compelling govern-
ment interest that we need to serve in order to get our job done
and we can meet the strict scrutiny of the court, then in those
cases we would be able to do it. But I think anything that we do
we have to do in accordance with the existing law.

Mr. CUMMINGS. So, the—certainly, you want to consult——

Mr. FOWLER. Excuse me.

Mr. CuMMINGS. Sure, go ahead.

Mr. Fow.er. Thank you, Mr. Cummings.

Mr. CUMMINGS. The—you know, you used two terms a little bit
earlier that I just found so interesting. You used the terms acting
positions and development assignments. What does that mean?

Mr. FOWLER. Whenever there are vacancies in the Service, and
it takes time to certainly fill those positions, normally a person
would be placed in an acting position, Acting Director or Acting
Service Center Director, Acting Manager or whatever the case may
be. There have been accusations, if you will, information given to
us that when the choices are made for those persons that would be
placed in an acting assignment, which, in fact, can be a develop-
mental assignment, it can expose that person to opportunities to
manage where they may not have been a manager before, can ex-
pose them to a different group of people in which they may have
to interact with those persons and get a different type of exposure,
that’s what I mean by acting or developmental assignments.

Mr. CuMMINGS. That’s very interesting. So, you know, I just read
a book by a fellow named Samuel Procter and what Dr. Brocter is
is a great preacher and, unfortunately, he died about 4 months ago.
But one of the things he says in that book is that a lot of times
where a person ends up in life is not about race. It’s not about age,
not about color. It’s about opportunity. Opportunity. And oppor-
tunity to prove who they are, and opportunity to, what you just
said, talking about developmental positions. That they never get
into a position to show who they are and what they can do. Then,
it’s his philosophy that they can go a lifetime and be denied, in
some instances, millions of dollars, millions of opportunities for
their children, millions of—I mean, thousands of different kinds of
opportunities like simple things like violin lessons for kids, private
schools, things of that nature. And so, discrimination, for me, is a
very serious thing because I realize that it does not only affect the
individual, but it affects their children and generations to come and
so, you know, I think, as I’m listening to you, I think what you’re
saying is making a lot of sense to me. And, the reason why it’s
making sense is because first of all, you’re not talking—a lot of peo-
ple, when they think about affirmative action-type things, they as-
sume that you’ve got to take away from white people to give to mi-


49

so much taking away opportunities from others but giving every-
body an opportunity to be on the same playing field so that they
can show their stuff, so that they can do their things, so to speak,
so that they can get to where they've got to go. So, I really appre-
ciate your testimony today.

I think what you're trying to do makes a lot of sense but there’s
one thing that the chairman said before he chimes in. I know he’s
probably picked up on this so I need to get to it before he does. He
mentioned something about the over-representation. You have a
situation where you have a higher number of minority and women
than are in the society, say, in the IRS, or whatever, and I’m trying
to figure out how—but the problem is not so much the representa-
tion in the society, it’s where they end up in the system. Is that
right?

Mr. FOWLER. Well, certainly, that’s only a part of the equation.

Mr. CUMMINGS. Yes, so, in other words, you can have 35 percent
African Americans but if they are, like they are in Baltimore's Vet-
erans Hospital—90 percent of them, although they are there, about
60 percent of the total work force, 90 percent of them are in the
bottom 3 grades. So, I know it’s not that bad at IRS but I’m just—
I just wanted to make that point.

Mr. Mica. Don’t bet on that. [Laughter.]

Mr. CUMMINGS. Thank you very much.

Mr. Fow.er. Thank you, Mr. Cummings.

Mr. Mica. Don’t bet on that, Mr. Cummings. We do need to look
at those figures, as a matter of fact. Gentlemen, I’ve got the Byrd
decision which we got this morning. The Byrd decision regarding
these plaintiffs—Mr. Byrd, Weldon and Hansen and McMillan et
al—says pretty clearly that as a result of alleged on-the-job dis-
crimination and retaliation while working at the Shreveport post of
duty in the Internal Revenue Service, a substantial amount of
money—I don’t know how much, that’s been redacted and I don’t
care to guesstimate—but this action by the Federal Government
has cost the taxpayers a lot of money. And not only has it cost folks
money, it has, in fact, discriminated against these folks who work
for the Federal Government.

Now, our job as a civil service subcommittee is to try to make
certain that we have fairness and equity across the board. I’m a lit-
tle bit concerned by the lack of coordination with OPM, and I think
we should have opM in this mix in some way. Maybe we can do
a letter from Mr. Cummings and myself because every agency is re-
quired, as I understand it, to have performance management
standards and programs in place. IRS is no different than any
other agency. If others have the same violations or standards that
violate folks’ rights, and there is discrimination, then we could be
subject to additional suits, and we shouldn’t be exposing ourselves
in that fashion.

I’m also concerned that IRS is in the position of setting up its
own standard. True, there may be differences in management per-
formance standards, but you are in the process of setting up dif-
ferent elements that would determine whether or not there is dis-
crimination and how you would address discrimination in the work-
place. In that regard, I don’t see the coordination that we should
have across the board.


12

5
statutory authority for agencies to establish Federal Equal
Employment Opportunity Recruitment Programs through which
they may take steps to eliminate the underrepresentation of
minorities and women. If some individuals are disadvantaged as
the result of the implementation of these programs, it is important
for agencies to determine how and why that happens, and then to
take such corrective action as may be warranted by the situation at

hand.

Mr. Chairman, | look forward to the testimony from today's
witness. | trust that it will greatly assist this subcommittee with our
efforts to ensure equal employment opportunity throughout the

Federal government.

Thank you.

[f-discrimi.st3]