United States General Accounting Office

GAO Report to the Chairman, Subcommittee

on Civil Service, Committee on

Government Reform and Oversight,

House of Representatives

August 1996 FEDERAL

DOWNSIZING

Better Workforce and

Strategic Planning

Could Have Made

Buyouts More

Effective

G O A

years

1921 - 1996

GAO/GGD-96-62

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-270907 

August 26, 1996

The Honorable John L. Mica

Chairman, Subcommittee on Civil Service

Committee on Government Reform

 and Oversight

House of Representatives

Dear Mr. Chairman:

This report, prepared at your request, provides information on a number of issues related to the

implementation of the Federal Workforce Restructuring Act of 1994 and agencies’ use of

buyouts. As such, this report is the latest in a series of studies we have completed to help

Congress monitor the downsizing of the federal workforce.

We will send copies of this report to the Vice President of the United States, other congressional

committees, the Director of the Office of Personnel Management, and other interested parties.

We will also make copies available to others upon request.

Please call me or Associate Director Timothy P. Bowling on (202) 512-8676 if you have any

questions concerning this report. The major contributors to this report are listed in appendix V.

Sincerely yours,

L. Nye Stevens

Director

Federal Management and Workforce

 Issues
Executive Summary

Purpose The Federal Workforce Restructuring Act of 1994 authorized

non-Department of Defense (DOD) agencies to offer buyouts to employees

of as much as $25,000 to voluntarily leave the workforce. DOD agencies

already had buyout authority under earlier legislation.

To help monitor the implementation of the act, the Chairman,

Subcommittee on Civil Service, House Committee on Government Reform

and Oversight, asked GAO to review a number of issues related to the

buyout program. In response, GAO examined

• whether the downsizing goals of the Federal Workforce Restructuring Act

were being achieved;

• whether agencies’ use of buyouts reflected the administration’s workforce

restructuring goals as articulated by the National Performance Review

(NPR);

• what the demographic results of the buyouts were;

• how agencies viewed buyouts as a downsizing tool; and

• what operational impacts were attributed by agencies to workforce

downsizing.

Background In recent years, the administration has relied heavily on NPR’s workforce

restructuring goals to help guide federal downsizing efforts. In

September 1993, NPR recommended cutting the federal workforce by

252,000 positions, with these cuts intended to reduce “management

control” positions such as (1) those held by managers and supervisors and

(2) employees in personnel, budget, procurement, and accounting

occupations. In its subsequent guidance, the administration directed

agencies to increase supervisors’ and managers’ span of control over other

employees from a ratio of 1:7 to 1:15, and to cut by half the remaining

management control positions by fiscal year 1999.

To achieve these reductions while avoiding reductions-in-force (RIF), NPR

called for legislation to permit non-DOD agencies to offer buyouts to

employees who voluntarily left federal service. NPR’s aim was to give

federal agencies the same downsizing tool commonly used by private

companies.

Subsequent to NPR’s request, Congress enacted the Federal Workforce

Restructuring Act of 1994. The act required the government to reduce its

workforce by 272,900 full-time equivalent (FTE) positions by fiscal year

1999 and gave non-DOD agencies the authority to offer buyouts of as much

Page 2 GAO/GGD-96-62 Federal Downsizing
Executive Summary

as $25,000 to workers who left federal employment by March 31, 1995

(unless extensions were approved by agency heads). The act did not

include NPR’s workforce restructuring goal of cutting specific types of

positions.

In addition to requiring governmentwide downsizing, the act also

contained provisions that required the elimination of one position for each

buyout granted, and it generally required buyout recipients to repay the

full amount of the buyout if they returned to federal service within 5 years

of taking the buyout. Further, the act provided that the President take

appropriate action to ensure that there was no increase in service

contracts as a result of the act, unless a cost comparison indicated that

such contracts were financially advantageous to the government.

Although the act covered workforce reductions in all federal departments

and agencies, including DOD, it only authorized buyouts in non-DOD

agencies. Buyouts in DOD were already authorized under legislation passed

in 1992. According to OPM, as of September 30, 1995, agencies had paid

more than 112,500 buyouts, nearly 80,000 of which (about 71 percent)

went to DOD employees.

To ensure that agencies would accompany their downsizing with

management reforms consistent with NPR’s goals, the President directed

agencies to prepare streamlining plans. The plans were to show, among

other things, how agencies intended to reduce management control

positions as intended by NPR. The Office of Management and Budget (OMB)

was responsible for approving agencies’ streamlining plans.

Currently, Congress is considering legislation that would give agencies

temporary authority to pay retirement and separation incentives. As

proposed, the Federal Employee Separation Incentive and Reemployment

Assistance Act (H.R. 2751) would allow agencies to pay eligible employees

as much as $25,000 if they left federal service between enactment of the

legislation and September 30, 1997. The maximum amount of the buyout

would then decrease to $20,000 for takers between October 1, 1997, and

September 30, 1998. A final round of buyouts would pay up to $15,000 for

takers between October 1, 1998, and September 30, 1999. In addition to

this governmentwide bill, Congress is considering agency-specific buyout

legislation.

To address the Subcommittee’s request, GAO analyzed Office of Personnel

Management (OPM) workforce data, examined selected agencies’

Page 3 GAO/GGD-96-62 Federal Downsizing
Executive Summary

streamlining plans, interviewed agency officials, and sent questionnaires to

the 24 departments and agencies (both DOD and non-DOD) responsible for

paying most of the buyouts. These agencies accounted for about

31 percent of the executive branch civilian workforce in fiscal year 1995.

In reviewing whether the agencies’ use of buyouts reflected the

administration’s workforce restructuring goals as articulated by NPR, GAO

did not attempt to judge the appropriateness of these goals. Rather, GAO’s

use of the goals as criteria for evaluation was based solely on the

administration’s stated intention of relying on them as the framework for

its downsizing strategy.

Results in Brief Considerable progress has been made in achieving the downsizing goals of

the Federal Workforce Restructuring Act. Between January 1993 and

March 1996, non-Postal executive branch civilian employment declined by

almost 230,500 employees (10.5 percent). In addition, the buyouts

authorized by the act helped agencies reach the act’s downsizing goals

with minimal use of RIFs.

With respect to the administration’s restructuring goals, the data show

that, at the end of the non-DOD buyout window, there was little, if any,

decrease in the management control positions designated for reduction by

NPR, proportional to the workforce as a whole. This situation occurred

because agencies often set downsizing goals for management control

positions that were less than those recommended by the administration

and did not use buyouts to specifically reduce these positions.

Demographically, the buyouts enabled agencies to downsize without

disproportionately affecting the representation of women and minorities.

Had RIFs been necessary, it is unlikely that women and minorities would

have fared as well. Since retention during a RIF is based largely on seniority

and military veteran status, women and minorities—who generally rank

lower in one or both of these factors compared to white males—would, in

all likelihood, be separated disproportionately.

The largest share of the buyouts were paid to employees who took regular

or early retirements. Although GAO did not analyze whether buyout

payments motivated individual employees to leave federal service earlier

or later than they otherwise would have, GAO’s analysis of overall

separation trends suggests that some employees may have delayed their

departures in order to receive a buyout payment.

Page 4 GAO/GGD-96-62 Federal Downsizing
Executive Summary

On the one hand, agency officials viewed buyouts favorably as an effective

downsizing tool. Indeed, most agencies GAO surveyed said that buyouts

had helped them to meet mandated workforce ceilings and restructure

their workforces while minimizing RIFs. In our prior work, we found that,

depending upon the assumptions made, buyouts generally saved the

government more money than did RIFs. RIFs can also adversely affect

agency operations and employee morale.1

On the other hand, agencies reported that downsizing in general led to

such negative effects as the loss of institutional memory and an increase in

work backlogs. In fact, half of the agencies in GAO’s survey said that

downsizing hindered their ability to carry out their missions. To offset

personnel reductions, most agencies said they were relying more heavily

on reengineering work processes and on automation. Five agencies

reported using contractors to do the work previously performed by

employees who had taken buyouts. In some cases, buyout recipients

returned to their agencies as contract employees.

Despite the general success of the buyouts in meeting the downsizing

goals of the Federal Workforce Restructuring Act, some agencies believe

that they are being stretched too thin. Several agencies reported that they

anticipated production and service shortfalls, skill imbalances, or

increased use of overtime as a result of their downsizing.

Further, provisions of the act designed to guard against an increase in

service contracts, unless they are financially advantageous to the

government, are unclear. The outsourcing of work previously done by civil

servants without adequate cost comparisons may offset some of the

benefits obtained by downsizing, and appears to be inconsistent with the

purpose of the act.

Overall, many of the unintended results of downsizing could have been

mitigated had agencies done adequate strategic and workforce planning.

Such planning would have helped agencies to clearly define the agency’s

mission and identify the workforce mix needed to successfully accomplish

that mission. Such planning would have increased the likelihood that

employees with the needed skills and training were retained.

1

Federal Downsizing: The Costs and Savings of Buyouts Versus Reductions-in-Force (GAO/GGD-96-63,

May 14, 1996).

Page 5 GAO/GGD-96-62 Federal Downsizing
Executive Summary

Principal Findings

Agencies Used Buyouts

More to Meet the Act’s

Downsizing Objectives

Than the Administration’s

Restructuring Goals

Overall, federal agencies have made good progress in meeting the Federal

Workforce Restructuring Act’s downsizing goals. According to OPM data,

from fiscal year 1994 through March 1995 (a period when both DOD and

non-DOD agencies had buyout authority), governmentwide, on-board

personnel levels dropped from 2.16 million employees at the beginning of

fiscal year 1994 to 2.03 million employees as of March 31, 1995. Buyouts

accounted for 63,789 (48 percent) of these reductions, while 7,450 (6

percent) were accomplished through RIFs. Given this level of downsizing,

agencies were able to meet the act’s fiscal year 1995 ceiling of 2.04 million

FTE positions. (See pp. 22-24).

Concerning the administration’s workforce restructuring goals, the

number of management control positions was reduced, but as a proportion

of the total workforce, there was little change. For example, at DOD

agencies, the ratio of supervisors to other employees moved from 1:6.9 to

1:7.4 while the remaining categories of management control positions

stayed roughly equal to their representation in the workforce. Similarly,

non-DOD agencies reflected only slight reductions in the proportion of

these positions in the workforce. (See pp. 24-27).

Data provided by the 24 agencies GAO surveyed suggest that management

control positions were not reduced in greater numbers in large part

because agencies’ restructuring goals were often lower than those called

for by the administration and agencies were inconsistent in using their

buyouts to achieve NPR’s workforce restructuring goals. This occurred in

large part because (1) while OMB encouraged agencies to use buyouts to

downsize in accordance with NPR’s workforce restructuring goals, OMB’s

guidance on preparing streamlining plans did not specifically require

agencies to show how they planned to use buyouts to meet these goals;

(2) some agencies feared that morale and agency operations would be

adversely affected if they tried to reduce specific occupations to the levels

recommended by the administration; and (3) the Workforce Restructuring

Act did not require that buyouts be used to reduce the ranks of

management control positions as intended by NPR. (See pp. 27-32)

Page 6 GAO/GGD-96-62 Federal Downsizing
Executive Summary

Planning for Buyouts

Appeared to Be an

Important Factor in

Achieving Successful

Results

Good strategic and workforce planning are important tools for helping to

ensure successful downsizing. Agencies that said they planned their use of

buyouts appeared to have more successful outcomes than those that did

not. For example, an agency that reported planning its buyouts said that it

was able to eliminate unnecessary positions, while simultaneously

retaining critical skills. On the other hand, comments from other agencies

indicated that the loss of critical employees could have been avoided had

agencies done meaningful planning and granted their buyouts consistent

with those plans. This is supported by our earlier review of downsizing

strategies at nonfederal organizations where 15 of the 25 organizations

included in our study indicated the importance of planning before

initiating workforce reductions.2

 (See p. 32).

Buyouts Enabled Agencies

to Downsize Without

Disproportionately

Affecting Women and

Minorities and May Have

Led Some Employees to

Delay Separations

The personnel reductions that have occurred since 1993 were carried out

without adversely affecting workforce diversity. Of the 24 agencies

responding to GAO’s survey, 10 indicated that buyouts helped them

enhance the representation of women and minorities. Moreover, because

males and whites took buyouts at a somewhat higher percentage than

their representation in the workforce, the proportion of women and

minorities in the workforce governmentwide increased slightly. In 1992,

for example, women made up 43.4 percent of the workforce, compared to

44.6 percent at the end of the first half of fiscal year 1995. Likewise, during

that same period, minorities increased their representation from

27.9 percent to 28.9 percent of the workforce. (See pp. 34-36).

Of the 82,771 buyouts made from when DOD first began them in

January 1993, through June 30, 1995, about 40 percent of the buyouts were

paid to employees who took regular retirement, and 32 percent were paid

to employees taking early retirement. GAO did not examine whether

buyouts influenced individual employees to leave federal service any

earlier or later than they would have without the separation incentive.

Nevertheless, separations dropped by more than 20 percent from the end

of fiscal year 1992 through fiscal year 1993, when Congress was

considering buyout legislation, but then rose by 35 percent in fiscal year

1994, when both DOD and non-DOD agencies had buyout authority. This

suggests that some employees may have delayed their retirements to

receive buyout payments. (See pp. 36-37).

2

Workforce Reductions: Downsizing Strategies Used in Selected Organizations (GAO/GGD-95-54,

Mar. 13, 1995).

Page 7 GAO/GGD-96-62 Federal Downsizing
Executive Summary

Agencies Viewed Buyouts

Positively but Said That

Staff Reductions Created

Operational Problems

Most of the agencies GAO surveyed viewed buyouts favorably as a

downsizing tool. Of the 24 agencies responding to GAO’s survey, 23 said

that buyouts allowed them to avoid or reduce the number of RIFs, and 20

reported that buyouts allowed them to both meet mandated workforce

ceilings and align their workforce with changing mission requirements.

Nevertheless, many of the agencies GAO surveyed said that downsizing

itself had caused problems. Fifteen agencies cited the loss of corporate

memory and expertise, and 11 reported work backlogs due to the loss of

key personnel. (See pp. 38-40).

To offset workforce reductions, all 24 agencies reported they were relying

on reengineering/reinvention initiatives to streamline their operations,

while 20 said they were making greater use of automation. Five agencies

reported using contractors to do the work previously performed by buyout

recipients, typically without doing cost comparisons to determine if such

outsourcing saved money.

The law and guidance on outsourcing following buyouts is vague, as

demonstrated in part by two agencies’ different interpretations of what

types of contract actions could trigger the cost comparison requirement.

Further, in some cases, buyout recipients returned to agencies as

employees of private contractors. In such situations, any savings and

workforce reductions realized from buyouts would be reduced by

increased contracting costs and thus would appear to be inconsistent with

the purpose of the Workforce Restructuring Act and the administration’s

downsizing goals. At a minimum, the Workforce Restructuring Act

required that agencies complete a cost comparison to ensure that any new

contracts were financially advantageous to the government. (See pp.

40-44).

Matters for

Congressional

Consideration

To ensure the most cost-effective use of any future buyouts and to help

mitigate the adverse effects that can result from poorly planned

downsizing, GAO recommends that Congress, in reviewing HR 2751 or

other legislation that would grant buyout authority to agencies, consider:

• Requiring agencies to do strategic and workforce planning as a

prerequisite for receiving buyout authority, and to implement downsizing

consistent with the results of their planning efforts. To the extent possible,

priority should be given to retaining those employees possessing the

knowledge and skills necessary to accomplish the agency’s work.

Page 8 GAO/GGD-96-62 Federal Downsizing
Executive Summary

• ensuring that consideration of any buyout legislation is completed quickly

and that buyouts, if approved, occur shortly thereafter. This will help

reduce the number of employees who might delay their retirements and

other types of separations in the expectation of receiving a buyout.

• Clarifying the kinds of procurement actions (e.g., new contracts, task

orders, modifications, etc.) that would be subject to the cost comparison

requirement. (See p. 45).

Agency Comments

and GAO’s Evaluation

NPR and OPM provided written comments on a draft of this report. NPR said

the report brought to light several important issues, including the

administration’s commitment to downsizing the federal workforce and the

value of buyouts in reducing the impact of downsizing on employees. OPM

commented that GAO’s report was a timely analysis of federal downsizing

and would be helpful in planning future downsizing activities.

NPR and OPM both commented that GAO mixed the different purposes or

results of buyouts and the more general concept of downsizing, and

expressed concern that GAO used three different sources of data

interchangeably. GAO agreed that the use of buyouts as a tool for

downsizing is different from the broader concept or results of downsizing,

and has modified the language of the report to clarify that distinction. GAO

also agreed that it obtained data from several sources as necessary to

address the objectives of the work. GAO did not agree, however, that the

data were used interchangeably. Rather, the data were used to describe,

corroborate, or explain key findings. Where appropriate, GAO has modified

the report to clarify the source and purpose of the data.

NPR commented further that the report’s conclusions and observations

might be better understood if additional information were provided as

context for the discussion about contracting out and reemployment of

buyout recipients. GAO agreed that additional context would be helpful and

provided additional information to that end. NPR also observed that GAO’s

matters for congressional consideration concerning workforce planning

and clarifying guidance on contracting out following the use of buyouts

might be difficult to implement and could cause additional problems.

Because strategic and workforce planning were identified as key elements

of successful downsizing in other organizations it has studied, GAO

continues to believe that such planning is a critical starting point for

implementation of buyout authorities in the federal government. GAO also

continues to believe that, since different agencies had different

interpretations, clarification of the requirements for cost comparisons in

Page 9 GAO/GGD-96-62 Federal Downsizing
Executive Summary

contracting out would reduce the likelihood of agencies’ misinterpretation

of the intent of the Workforce Restructuring Act.

NPR’s and OPM’s comments are discussed further at the end of chapter 4

and reprinted in full in appendixes III and IV.

Page 10 GAO/GGD-96-62 Federal Downsizing
Page 11 GAO/GGD-96-62 Federal Downsizing
Contents

Executive Summary 2

Chapter 1 

Introduction

16

Origins of the Federal Buyout Authority 16

Provisions of the Federal Workforce Restructuring Act of 1994 17

The Workforce Restructuring Act Increased Federal Downsizing

Goals

17

Past Work on Nonfederal Organizations Showed That Downsizing

Was More Effective When Accompanied by Adequate Planning

18

Congress Is Considering New Buyout Legislation 19

Objectives, Scope, and Methodology 19

Chapter 2 

Agencies Used

Buyouts More to Meet

Statutorily Mandated

Downsizing

Objectives Than the

Administration’s

Workforce

Restructuring Goals

22

Buyouts Helped Agencies Downsize With Minimal Use of RIFs 22

The Administration Directed Agencies to Pare Down Specific

Positions

24

Management Control Positions Showed Little Proportional

Reduction

25

Possible Reasons Why Downsizing Is Falling Short of the

Administration’s Workforce Restructuring Goals

27

Conclusions 32

Chapter 3 

The Effects of

Buyouts and

Downsizing on

Employee

Demographics and

Agency Operations

34

Buyouts Enabled Agencies to Downsize Without

Disproportionately Affecting Women and Minorities

34

Most Buyouts Were Paid to Employees Who Retired 36

Most Agencies Viewed Buyouts Favorably as a Downsizing Tool 38

Agencies Said That Downsizing Has Caused Operational Impacts 39

Agencies Reported Taking Various Steps to Compensate for a

Smaller Workforce

40

Conclusions 43

Page 12 GAO/GGD-96-62 Federal Downsizing
Contents

Chapter 4 

Matters for

Congressional

Consideration

45

Agency Comments and Our Evaluation 45

Appendixes Appendix I: Agencies Participating in GAO’s Study 48

Appendix II: Aggregate Questionnaire Responses 50

Appendix III: Comments From the National Performance Review 59

Appendix IV: Comments From the Office of Personnel

Management

69

Appendix V: Major Contributors to This Report 75

Tables Table 1.1: Annual FTE Ceilings Mandated by the Workforce

Restructuring Act

17

Table 2.1: Reductions in NPR Positions Compared to

Administration’s Goals

25

Table 2.2: NPR Positions Recommended for Reduction as a

Proportion of the Workforce, FY 1992 and the First Half of FY

1995

26

Table 2.3: Percentage of Supervisors Converted to

Nonsupervisory Roles

27

Table 2.4: Buyouts by NPR Management Control Position 28

Table 2.5: Reductions in NPR Management Control Positions 30

Table 3.1: Federal Agencies Downsized Without

Disproportionately Affecting Women and Minorities

36

Table 3.2: Most Buyout Recipients Were Eligible for Either Early

or Regular Retirement

37

Table 3.3: Agencies Reported Buyouts Had Favorable Outcomes 38

Table 3.4: Agencies Reported Negative Outcomes From

Downsizing

40

Figures Figure 2.1: Buyouts Were Responsible for Nearly Half of the

Reductions in On-Board Personnel in FY 1994 Through the First

Half of FY 1995

23

Figure 3.1: Buyout Recipients Were Most Likely to Be White

Males

35

Figure 3.2: Respondents’ Views on How Downsizing Has Affected

Their Agency’s Ability to Accomplish its Mission

39

Page 13 GAO/GGD-96-62 Federal Downsizing
Contents

Abbreviations

BLM Bureau of Land Management

CDC Centers for Disease Control

CPDF Central Personnel Data File

DOD Department of Defense

EPA Environmental Protection Agency

FAA Federal Aviation Administration

FORM Federal Operations Review Model

FTE Full-time equivalent

GSA General Services Administration

HHS Health and Human Services

NASA National Aeronautics and Space Administration

NPR National Performance Review

OIG Office of Inspector General

OMB Office of Management and Budget

OPM Office of Personnel Management

RIF Reduction-in-Force

Page 14 GAO/GGD-96-62 Federal Downsizing
Page 15 GAO/GGD-96-62 Federal Downsizing
Chapter 1 

Introduction

To downsize the federal workforce with minimal use of reductions-inforce (RIF), Department of Defense (DOD) and non-DOD agencies were given

the authority—under separate pieces of legislation—to pay eligible

employees voluntary separation incentive payments (buyouts) of as much

as $25,000 to leave federal service. In September 1994, we testified on the

results of the fiscal year 1994 buyouts at non-DOD agencies.1

 Since then,

thousands of additional employees have taken buyouts, and new buyout

legislation for non-DOD agencies has been introduced in Congress. What

have the buyouts achieved? To answer this, we examined whether

statutorily-mandated downsizing goals were being achieved; the

management strategy used to implement the buyouts; the demographic

results; how agencies viewed buyouts as a downsizing tool; and what

agencies said about the operational effects of downsizing.

Origins of the Federal

Buyout Authority

The National Performance Review (NPR)—the administration’s initiative to

“reinvent” government—called on agencies in its September 1993 report to

implement a variety of management reforms that would allow for the

elimination of 252,000 federal positions over the following 5 years.

Included in this number were 100,000 positions the President had earlier

ordered eliminated by the end of fiscal year 1995.2

To achieve these reductions while avoiding RIFs, NPR called for legislation

to allow non-DOD agencies to offer buyouts to employees who voluntarily

left federal service. DOD agencies had been making buyouts since

January 1993 under earlier legislation.3

 According to NPR, the original

purpose of the DOD buyout authority was to ease the reductions in the size

of DOD following the end of the Cold War.

According to Office of Personnel Management (OPM) data, agencies paid

over 112,500 buyouts to employees from January 1993 through

September 30, 1995. About 80,000 (71 percent) of these buyouts were paid

to DOD employees.

1

Federal Employment: The Results to Date of the Fiscal Year 1994 Buyouts at Non-Defense Agencies

(GAO/T-GGD-94-214, Sept. 22, 1994).

2

Executive Order 12839, Feb. 10, 1993.

3

P.L. 102-484 authorized DOD buyouts through Sept. 30, 1997; P.L. 103-337 extended DOD buyouts

through Sept. 30, 1999.

Page 16 GAO/GGD-96-62 Federal Downsizing
Chapter 1 

Introduction

Provisions of the

Federal Workforce

Restructuring Act of

1994

Responding to NPR’s recommendation, on March 30, 1994, Congress

enacted the Federal Workforce Restructuring Act of 1994 (P.L.

103-226) that permitted non-DOD executive branch agencies to offer

buyouts. The buyouts could be paid to eligible employees in any

designated component, occupation, and/or geographic location who

agreed to resign, retire, or take early retirement by March 31, 1995, unless

the date was extended by the head of the agency, but no later than

March 31, 1997. The buyout payment was the lesser of $25,000 or an

employee’s severance pay entitlement.

To receive a buyout, an employee must

• have served under appointment without time limit,

• have had 12 months of continuous service,

• not be a reemployed annuitant, and

• not be eligible for disability retirement.

Under the law, buyout recipients who are rehired by the federal

government or perform services under a personal services contract with

the government within 5 years of their separation date are generally

required to repay the full amount of the buyout.

The Workforce

Restructuring Act

Increased Federal

Downsizing Goals

In addition to providing non-DOD agencies with buyout authority, the

Workforce Restructuring Act raised the federal downsizing target for all

agencies, including DOD, from 252,000 to 272,900 full-time equivalent (FTE)

positions by fiscal year 1999.4

 Additionally, as shown in table 1.1, the act

placed annual ceilings on civilian executive branch FTE levels for fiscal

years 1994 through 1999.

Table 1.1: Annual FTE Ceilings

Mandated by the Workforce

Restructuring Act

Fiscal year FTE ceiling

1994 2,084,600

1995 2,043,300

1996 2,003,300

1997 1,963,300

1998 1,922,300

1999 1,882,300

Source: Federal Workforce Restructuring Act of 1994.

4

According to OMB guidance, an FTE or work-year generally includes 260 compensable days or 2,080

hours. These hours include straight-time hours only and exclude overtime and holiday hours.

Page 17 GAO/GGD-96-62 Federal Downsizing
Chapter 1 

Introduction

In March 1995, we testified that data from the President’s fiscal year 1996

budget showed that for fiscal years 1995 and 1996, the administration

anticipated that the workforce would be below the FTE levels mandated by

the act.5

To ensure that vacated positions were not refilled, the act required a

governmentwide (excluding DOD and the Central Intelligence Agency)

reduction in one FTE positions for each buyout given. OMB interpreted this

to mean that for each buyout that occurs in a fiscal year, the following

year’s FTE level should be reduced by at least one.

Past Work on

Nonfederal

Organizations Showed

That Downsizing Was

More Effective When

Accompanied by

Adequate Planning

In calling on Congress to pass buyout legislation, NPR wanted to give

federal agencies the same downsizing tool commonly used by private

companies. Our March 1995 review of downsizing strategies used by

selected nonfederal organizations found that they often used buyouts to

help cut employment levels.6

 Indeed, of the 25 entities we contacted (17

private companies, 5 state governments, and 3 foreign governments) that

had successfully downsized in recent years, at least 18 provided various

incentives to encourage employees to voluntarily leave. Of these, 14

allowed buyouts based on the organization’s severance pay

formula—usually 1 or 2 weeks’ pay for each year of service, with a

maximum of a year’s salary. Employees electing early retirement, regular

retirement, or resignation were eligible for the payments.

Fifteen of the 25 nonfederal organizations we contacted said that it was

essential to do adequate strategic and workforce planning before making

decisions about appropriate workforce size and composition. They said

strategic planning was needed to establish an organization’s mission.

Workforce planning was used to ensure that employees with the skills and

training needed to carry out the organizations’ mission were retained.

Several nonfederal organizations noted that when they did not plan their

downsizing or consider the skills they would need in the future, they cut

needed employees, suffered skill imbalances, and were often forced to

replace employees with essential skills.

5

Federal Downsizing: The President’s Fiscal Year 1996 Budget and Its Compliance With the Federal

Workforce Restructuring Act of 1994 (GAO/T-GGD-95-105, Mar. 30, 1995).

6

Workforce Reductions: Downsizing Strategies Used in Selected Organizations (GAO/GGD-95-54,

Mar. 13, 1995).

Page 18 GAO/GGD-96-62 Federal Downsizing
Chapter 1 

Introduction

Congress Is

Considering New

Buyout Legislation

In December 1995, legislation was introduced in the House of

Representatives that would give agencies temporary authority to pay

retirement and separation incentives. The Federal Employee Separation

Incentive and Reemployment Assistance Act (H.R. 2751) would allow

agencies to pay eligible employees the lesser of their severance pay

entitlement or $25,000, if they left federal service between enactment of

the legislation and September 30, 1997. The maximum amount of the

buyout would then decrease to $20,000 for takers between October 1,

1997, and September 30, 1998. A final round of buyouts would pay up to

$15,000 for takers between October 1, 1998, and September 30, 1999. The

bill also contains incentives for employees not yet eligible for retirement.

In addition to this governmentwide bill, Congress is also considering

agency-specific buyout legislation.

Objectives, Scope,

and Methodology

To help monitor the implementation of the Workforce Restructuring Act,

the Chairman, Subcommittee on Civil Service, House Committee on

Government Reform and Oversight, asked us to examine several issues

related to the buyout program. In response, we reviewed

• whether the downsizing goals of the Federal Workforce Restructuring Act

were being achieved;

• whether agencies’ use of buyouts reflected the administration’s workforce

restructuring goals as articulated by NPR;

• what the demographic results of the buyouts were;

• how agencies viewed buyouts as a downsizing tool; and

• what operational impacts were attributed by agencies to workforce

downsizing.

To determine whether agencies’ use of buyouts was consistent with NPR’s

workforce restructuring goals, we interviewed representatives of NPR, OMB,

OPM, and officials of agencies that were downsizing. We also reviewed OMB

memoranda and other pertinent documents, and did a content analysis of

a judgmental sample of 15 agencies’ streamlining plans.7

 The President had

directed executive departments and agencies to prepare streamlining

plans that described how they intended to meet NPR’s restructuring goals.

7

The 15 plans we reviewed were the Departments of Agriculture, Commerce, Defense, Education,

Energy, Housing and Urban Development, Interior, Justice, State, and Transportation; and the

Environmental Protection Agency, General Services Administration (GSA), Internal Revenue Service,

National Aeronautics and Space Administration (NASA), and National Archives. These agencies were

selected because they include the largest users of the buyout authority, and to obtain a cross-section of

different agencies.

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Introduction

We compared the management strategies identified through our interviews

and document reviews to governmentwide results of the buyouts as

indicated by workforce data contained in OPM’s Central Personnel Data

File (CPDF). The file includes information on federal workers in most

agencies, the major exclusions being Members and employees of

Congress, the Judicial Branch, and the Postal Service. The CPDF covered

fiscal years 1992 (the prebuyout workforce) through March 31, 1995, (the

date when the non-DOD buyouts ended). We did not assess the validity of

the management strategies.

To determine the demographic results of the buyouts, we analyzed CPDF

data by race, gender, occupation, type of separation, and years of service.

To identify operational impacts that were attributed by agencies to

workforce downsizing, we mailed questionnaires to the seven departments

and agencies that, at the time we began our study, were expected to make

nearly 85 percent of all buyouts granted between January 1993 (the date of

the first DOD buyouts) and the end of fiscal year 1995. The departments and

agencies included Agriculture, Interior, Transportation, DOD, Health and

Human Services (HHS), GSA, and NASA. For all but GSA and HHS, we sent

questionnaires to the major subunits that granted the largest number of

buyouts at those agencies. GSA and HHS each received a single

questionnaire, and responses represented the agencies in their entirety. In

all, questionnaires were sent to 24 agencies. Together, they accounted for

about 31 percent of the executive branch civilian workforce in fiscal year

1995. All 24 agencies responded for a return rate of 100 percent (app. I lists

the agencies included in our survey).

Questionnaires were generally sent to personnel officials such as office

directors. When warranted, we had follow-up discussions with agency

officials. Agency responses to our questionnaire were also used to respond

to the first two objectives, when applicable. The aggregate results from

respondents are contained in appendix II.

The scope of our work covered the DOD buyout window, which began in

January 1993 (and is to remain open through fiscal year 1999), and the

non-DOD buyout window, which opened Apri1 1994 and ended March 31,

1995. We did not verify the data in the CPDF nor the information provided

by agencies in their questionnaire responses and interviews.

NPR and OPM provided written comments on a draft of this report. These

comments are presented and evaluated in chapter 4. NPR’s comments are

reprinted in appendix III, and OPM’s comments are reprinted in appendix

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IV. Our detailed responses to their comments are presented in these

appendixes as well.

We did our audit work in Washington D.C., from April 1995 through

April 1996 in accordance with generally accepted government auditing

standards.

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Buyouts helped agencies downsize with comparatively few RIFs. Were it

not for buyouts, the agencies we surveyed said that many more

involuntary separations would have been necessary. Although NPR

recommended that agencies direct their downsizing toward certain

“management control” positions that the administration said contributed

to government inefficiency, there has been little, if any, decrease in

management control positions as a proportion of the total workforce.

Buyouts Helped

Agencies Downsize

With Minimal Use of

RIFs

Federal employment levels have declined steadily since the

administration’s downsizing efforts began in early 1993. According to OPM

data, as of March 1996, non-Postal executive branch civilian employment

was 1.96 million, a reduction of almost 230,500 employees (10.5 percent)

since January 1993.

Moreover, from fiscal year 1994 through March 1995 (a period when both

Defense and non-Defense agencies had buyout authority), the executive

branch civilian workforce downsized from 2,164,727 employees to

2,032,440 employees, a reduction of 6 percent. The nearly 64,000 buyouts

that were made by Defense and non-Defense agencies during that period

accounted for much of this downsizing and helped mitigate the need for

RIFs. Of the 24 agencies responding to our questionnaire, 13 reported they

RIFed 4,466 employees in fiscal year 1994, and 12 reported they RIFed 868

employees in fiscal year 1995, at the time of our study. (Nearly half of the

fiscal year 1994 RIFs occurred at the Naval Sea Systems Command’s

Philadelphia, Portsmouth, and Norfolk Naval Shipyards. Fiscal year 1995

RIFs were more evenly distributed across agencies).

Governmentwide, CPDF data showed there were 7,450 RIFs during this same

period. Thus, as shown in figure 2.1, RIFs were responsible for 6 percent of

the 132,287 reductions in on-board personnel that took place in fiscal year

1994 and the first half of fiscal year 1995, while buyouts were responsible

for about 63,789 reductions (48 percent). The remaining reductions

resulted from separations without buyouts or were not coded by the CPDF.

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Figure 2.1: Buyouts Were Responsible

for Nearly Half of the Reductions in

On-Board Personnel in FY 1994

Through the First Half of FY 1995

• 6%

RIFs

48% • Buyouts

•46%

Other reductions

Note 1: “Other reductions” include separations without buyouts or those that were not coded by

the CPDF.

Note 2: During this period there was a reduction of 132, 287 on-board personnel.

Source: GAO calculations based on OPM’s CPDF database.

Ten of 24 agencies said that they expected RIFs during the second half of

fiscal year 1995. For fiscal year 1996, nine agencies said they expected

RIFs, six did not expect RIFs, and nine did not know. The U.S. Geological

Survey, for example, RIFed 485 people early in fiscal year 1996.

Had it not been for the buyout authority, it is likely that more agencies

would have RIFed a larger number of employees to meet federal

downsizing goals. Indeed, 23 of the 24 agencies responding to our

questionnaire claimed that buyouts helped them avoid RIFs. As one

respondent commented, “The buyout authority allowed us to implement

our reorganization and streamlining of staff without the use of RIFs.”

Likewise, an official from a Defense agency noted, “By using buyouts, we

drastically decreased the number of involuntary separations originally

planned. The use of buyouts has been a big payoff for our command.” A

third said, “Buyouts substantially reduced the number of individuals who

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would have been involuntarily separated at three of our field activities

which were targeted for closure. . . .”

The Administration

Directed Agencies to

Pare Down Specific

Positions

To streamline government, the administration, through NPR, directed

agencies to aim their workforce reductions at specific “management

control” positions that it said added little value to serving taxpayers. The

administration also required agencies to prepare streamlining plans

describing the steps they intended to take to pare down their workforces

consistent with NPR’s objectives. OMB was to review these plans to

determine whether or not agencies could proceed to offer buyouts.

As defined by NPR, management control positions were those held by

managers and supervisors (including members of the Senior Executive

Service); headquarters staff; and employees in personnel, budget,

acquisition, and accounting/auditing occupations. NPR recommended that

agencies increase supervisors’ span of control over other employees from

1:7 to 1:15, as well as to cut the remaining NPR management control

positions by 50 percent, all by fiscal year 1999. According to NPR, such

positions had grown to twice their optimum number. By NPR’s calculations

in September 1993, they amounted to about 660,000 positions, or about

one-third of all federal employees.

To ensure that agencies would accompany their downsizing with

workforce restructuring consistent with NPR’s objectives, the President

called on each federal agency to submit a streamlining plan to OMB.

Through a series of detailed memorandums and bulletins, OMB provided

the heads of executive agencies with information on how to prepare these

plans. Agencies were to address, among other items, how and when

streamlining actions would occur, how the supervisory span of control

would be increased, and how their workforces would be reduced

consistent with NPR’s objectives. If an agency was unable to meet one or

more NPR goals, it was to justify its reasons for not doing so and explain

what it was doing instead to streamline and improve program

performance. OMB officials told us that the quality of these plans played an

important role in whether or not OMB approved agencies’ buyout requests.

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Management Control

Positions Showed

Little Proportional

Reduction

Although agencies substantially reduced the number of management

control positions, as a proportion of the total workforce many of these

positions showed little, or no, reduction and, in some cases, have

increased.

Governmentwide,

Management Control

Positions Have Not Been

Reduced as Intended by

NPR

Although large numbers of management control positions have been

eliminated since the end of fiscal year 1992 (the year before buyouts began

at non-Defense agencies), as a proportion of the total workforce, they

were barely reduced. As shown in table 2.1, for example, while Defense

and non-Defense agencies have made substantial reductions in the number

of supervisors, reductions in most other positions have been carried out

more slowly.

Table 2.1: Reductions in NPR

Positions Compared to

Administration’s Goals NPR management control

position

NPR reduction goal

by FY 1999

Change from end of FY

1992 through first half

FY 1995

Defense agencies

Personnel 50% –8.3%

Budget 50 –1.8

Accounting/

auditing

50 –4.1

Acquisition 50 –12.2

Headquarters staff 50 –1.8

Supervisory span of control 1:7 to 1:15 1:7.4

Non-Defense agencies

Personnel 50% –7.0%

Budget 50 +0.1

Accounting/

auditing

50 –1.0

Acquisition 50 –2.4

Headquarters staff 50 –6.5

Supervisory span of control 1:7 to 1:15 1:7.6

Source: GAO calculations based on OPM’s CPDF database.

Moreover, because the entire government was being downsized, in many

instances the management control positions increased relative to the

workforce as a whole. This was particularly true for Defense agencies.

While the percentage of supervisors dipped from 12.7 percent of the

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Defense workforce to 11.9 percent, (1 supervisor for every 6.9 employees

to 1 supervisor for every 7.4 employees), all but one of the other

management control positions increased somewhat. Acquisition positions

showed no change (see table 2.2).

Non-Defense agencies did only slightly better. The percentage of

supervisors in the non-Defense workforce went from 12.5 percent to

11.6 percent (1 supervisor for every 7 employees to 1 supervisor for every

7.6 employees). Personnel and headquarters staff also decreased as a

proportion of the non-Defense workforce, while the remainder showed no

improvement or slight increases (see table 2.2).

Table 2.2: NPR Positions

Recommended for Reduction as a

Proportion of the Workforce, FY 1992

and the First Half of FY 1995 NPR management

control position

Percentage of

DOD/non-DOD

workforce FY 1992

Percentage of

DOD/non-DOD

workforce at end

first half FY 1995

Net change FY

1992 to 1995

Defense agencies

Personnel 1.5% 1.6% +0.1%

Budget 1.2 1.3 +0.1

Accounting/

auditing

2.4 2.6 +0.2

Acquisition 4.9 4.9 0

Headquarters staff 6.6 7.4 +0.8

Supervisors 12.7 11.9 –0.8

Non-Defense agencies

Personnel 1.7% 1.6% –0.1%

Budget 0.4 0.4 0

Accounting/auditing 2.4 2.5 +0.1

Acquisition 2.0 2.0 0

Headquarters staff 14.6 14.2 –0.4

Supervisors 12.5 11.6 –0.9

Note: Workforce totals for the end of FY 1992 were 960,317 (DOD); 1,231,229 (non-DOD);

workforce totals for the end of the first half of FY 1995 were 846,479 (DOD); 1,185,961 (non-DOD).

Source: GAO calculations based on OPM’s CPDF database.

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A Number of Agencies

Reduced Supervisory

Positions by Reclassifying

Supervisors to

Nonsupervisors

Nineteen of the 24 agencies responding to our survey said they reduced

the number of supervisors partly by converting existing supervisors to

nonsupervisors or team leaders. Four agencies said this practice was not

occurring, and one did not know. Although such conversions help flatten

agencies and could result in less bureaucracy, individuals in these

positions remain on the payroll.

As shown in table 2.3, among the seven agencies that indicated the extent

of this practice, such conversions often represented a large portion of the

total reduction in supervisors. Conversions were responsible for

41 percent of the supervisory reductions at NASA’s Marshall Space Flight

Center; 40 percent at Bureau of Land Management (BLM); 35 percent at

Federal Aviation Administration (FAA); 29 percent at Naval Sea Systems

Command; and 28 percent at HHS. Conversions accounted for 5 percent of

the reduction in supervisors at both the Natural Resource Conservation

Service and NASA’s Lewis Research Center.

Table 2.3: Percentage of Supervisors

Converted to Nonsupervisory Roles

Agency

Percentage of total reductions in

supervisors represented by converting

supervisors to nonsupervisors

NASA Marshall Space Flight Center 41%

BLM 40

Federal Aviation Administration 35

Naval Sea Systems Command (excluding

shipyards)

29a

Department of Health and Human Services 28

Natural Resources Conservation Service 5

NASA Lewis Research Center 5

aThis percentage represents an average of all unit activities. Individual activities ranged from

10 percent to 51 percent.

Source: GAO survey (see app. II, question 21).

Possible Reasons Why

Downsizing Is Falling

Short of the

Administration’s

Workforce

Restructuring Goals

Data provided by the 24 agencies we surveyed suggested that at least two

factors may be responsible for the lack of progress made in reducing

management control structures: (1) agencies were inconsistent in their use

of the buyout authority to reduce management control positions and (2) a

number of agencies often set downsizing goals for the management

control positions that were less ambitious than those called for by the

administration. Although the administration gave agencies discretion to

downsize in ways that best suited their needs, it appears that buyouts were

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used to meet the numerical goals of the Federal Workforce Restructuring

Act with minimal regard for NPR’s objective to reduce management control

positions.

Except for Supervisors,

Agencies Were

Inconsistent in Using

Buyouts to Help Meet

NPR’s Workforce

Restructuring Goals

One reason for the lack of progress made in meeting NPR’s workforce

restructuring goals lies in the fact that with the exception of supervisory

positions, agencies were inconsistent in using the buyout authority as a

tool to trim management control positions as recommended by NPR.

Instead, agencies appeared to use buyouts mostly for achieving the

numerical targets of the Workforce Restructuring Act.

Had agencies more successfully directed their buyouts to NPR management

control positions, the percentage of buyouts in these occupations would

probably have been higher than their representation in the workforce.

However, as shown in table 2.4, when both Defense and non-Defense

agencies had buyout authority (fiscal year 1994 through the first half of

fiscal year 1995), this was not the case for most positions. In fact, the

percentage of buyouts taken in budget, accounting/auditing, and

headquarters positions, was actually less than their representation in the

workforce. For most other positions, the percentage of buyouts was

roughly equal to their representation in the workforce. The one exception

to this was supervisory positions, which represented 11.5 percent of the

workforce during this period but received 20 percent of the buyouts.

Table 2.4: Buyouts by NPR

Management Control Position

NPR management control

position

Percentage of workforce,

FY 1994 through the first

half FY 1995

Percentage of buyouts FY

1994 through first half FY

1995

Personnel 1.9% 2.2%

Budget 0.9 0.8

Accounting/auditing 3.1 1.8

Acquisition 3.6 5.4

Headquarters staff 15.1 9.5

Supervisors 11.5 20.0

Note: There were 63,790 buyouts in fiscal year 1994 through the first half of fiscal year 1995.

Source: GAO calculations based on OPM’s CPDF database.

In some instances, agencies simply did not attempt to use buyouts to help

meet NPR’s workforce restructuring goals. Although the Workforce

Restructuring Act authorized the use of buyouts to assist agencies in

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meeting numerical downsizing targets, it did not require that buyouts be

used to reduce the ranks of management control positions as intended by

NPR. Moreover, OMB’s guidance on preparing streamlining plans did not

specifically require agencies to show how they planned to use buyouts to

meet NPR’s workforce restructuring goals. Finally, some agencies may not

have restricted buyout eligibility to employees in specific positions

because they may have feared morale would be adversely affected if

buyouts were offered to one set of employees but not to others.

When agencies used buyouts to reduce the ranks of management control

positions, they were often directed at one or two management control

positions, typically supervisors and upper-level employees. For example, 7

of the 15 agency streamlining plans we examined tied their buyouts to

reducing supervisors and managers as well as upper-level employees;

however, none of the plans tied buyouts to personnel, budget, acquisition,

or accountant/auditor positions. Similarly, other agency documents we

reviewed only gave preference to some of the groups NPR recommended

for reduction. In such instances, supervisors, managers, and upper-level

employees were generally given priority for receiving buyouts. For

example, in its first round of buyouts, BLM gave priority to Senior

Executive Service employees, followed by employees in grades 15 and 14,

and personnel occupations. Similarly, in its voluntary separation incentive

plan, the Department of Energy gave priority to supervisory and

managerial positions and upper-level employees in both fiscal years 1994

and 1995.

Finally, even those agencies that directed buyouts at specific positions did

not always get the results they wanted. The Environmental Protection

Agency (EPA), for example, planned to use up to 80 percent of its total

buyouts for managers and supervisors. In actuality, about 20 percent of the

buyouts went to such individuals, and EPA had to flatten the agency

through other means, including converting supervisors to nonsupervisors

and team leaders.

Agencies Often Set

Restructuring Goals That

Were Less Ambitious Than

Those Recommended by

the Administration

Another likely reason for the minimal change in levels of management

control positions is that agencies said they could not meet NPR’s workforce

restructuring goals without adversely affecting their ability to carry out

their missions. Like the government as a whole, the 24 agencies we

surveyed made substantial personnel reductions, many of which were

achieved through buyouts. However, our analysis of agency streamlining

plans shows that agencies claimed they could not reduce management

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Restructuring Goals

control positions to the levels recommended by NPR without adversely

affecting their operations. As a result, these agencies often set their own

restructuring goals at a less ambitious level than those called for by the

administration. Although OMB allowed this, agencies were asked to specify

what alternative steps they were taking to restructure their workforces.

Table 2.5 shows the variance between NPR’s goals for reducing

management control positions and the average of agencies’ reduction

goals as reported in their survey responses. While agencies made

considerable progress in meeting their own workforce restructuring goals,

those goals were generally far lower than those recommended by NPR. DOD

agencies may have had somewhat lower reduction goals for management

control positions because when closing a military base, all positions are

eliminated, regardless of whether they are management control positions.

Table 2.5: Reductions in NPR Management Control Positions

NPR management control

position

NPR reduction goal

by FY 1999

Average of agencies’

reduction goals

Percentage reduction

FY 1993 through

Sept. 1995

Percentage of

reduction due to

buyouts

Defense agencies

Personnel 50% 25.9% 16.0% 55.3%

Budget 50 17.3 7.6 114a

Accounting/

auditing

50 20.7 28.9 18.3

Acquisition 50 15.6 15.7 74.5

Supervisory span of control 1:7 to 1:15 1:14.1 29.7% 33.3%

Non-Defense agencies

Personnel 50% 37.1% 26.5% 48.8%

Budget 50 33.4 17.0 57.2

Accounting/

auditing

50 27.8 17.4 46.4

Acquisition 50 31.4 15.4 76.8

Supervisory span of control 1:7 to 1:15 1:12.5 16.7% 64.4%

aThe percentage of reduction due to buyouts was 114 percent because three agencies increased

their FTE levels while still granting buyouts, and a fourth agency reported it granted more buyouts

than the decrease in its FTEs.

Note: Our analysis was based only on those agencies that provided complete data for each

category in their survey responses.

Source: GAO survey (see app. II, questions 6-8).

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With regard to meeting their own goals, however, table 2.5 shows that, on

average, agencies are well on their way. Indeed, several individual

agencies have already met or exceeded their reduction goals. For example,

the Geological Survey’s goal for reducing accountants and auditors was

47 percent, but the Survey expected a 58 percent reduction by the end of

fiscal year 1995. The Forest Service’s goal for reducing acquisition

specialists was 15 percent, but the Service expected a 22 percent reduction

by the end of fiscal year 1995. Similarly, three agencies responding to our

survey stated that buyouts helped them meet their reduction goals for

supervisors and managers. For example, the Department of Health and

Human Services (HHS) said that buyouts helped its Agency for Health Care

Policy and Research reduce senior staff by six people, supervisory staff by

five people, and control staff by one person.

The agency streamlining plans we examined cited various reasons for not

meeting NPR’s goals. For example, the Department of Housing and Urban

Development said it will increase acquisition specialists by 23 percent

because it needs them to address long-standing weaknesses cited in

reports on compliance with the Financial Integrity Act. The Department of

Education said it will reduce budget analysts by 25 percent, but that a

deeper cut is infeasible given, for example, the continuing growth in the

number of department programs as well as the complexity of its

legislation, budgets, policies, and programs.

Only one of the 15 agencies whose plans we reviewed had complied with

the NPR recommendation to establish a goal that would increase the

supervisor to subordinate ratio from 1:7 to 1:15 by fiscal year 1999. The

others set goals ranging from 1:9 to 1:14. The Department of Justice, for

example, said the U.S. Marshals Service will not make significant progress

at improving its supervisory ratio. Because the Marshals Service must

maintain offices with 10 or fewer employees in order to staff all federal

court facilities, it is difficult to eliminate supervisors in district offices. The

Department of Agriculture claimed that doubling the current span of

control for supervisors to 1:15 would not allow it to carry out its mission.

It said most of its work is at field project locations, where a supervisor

monitors two to six people. Moreover, the optimum size of fire fighting

crews for safety and coordination purposes is less than the 1:15 ratio.

Although OMB gave agencies discretion to downsize according to their

needs, if agencies could not meet NPR’s workforce restructuring goals, they

were to provide information on what they were doing instead to

streamline and improve program performance. Of the 15 agency

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streamlining plans we examined in our content analysis, 10 indicated they

could not meet NPR’s objectives. While these 10 streamlining plans

generally included discussions of how agencies intended to reorganize,

reengineer, and take other steps to improve services, only one indicated

what the agency was doing instead to meet NPR’s workforce restructuring

goals.

Agencies That Reported

They Planned Their Use of

Buyouts Said They Had

Successful Outcomes

As we found in our earlier survey of nonfederal organizations, several

federal agencies, in comments written on their questionnaire responses,

indicated that they planned the use of their buyouts and thus had

successful outcomes. The National Park Service, for example, said that it

“used the buyout authority, with management controls, to target

occupational series and organization levels as well as senior management

positions to effect those reductions that were consistent with the

administration’s goals. We were very successful accomplishing this

without the need for [RIFs].” Similarly, the Naval Supply Systems

Command reported that “Controlling [buyout] eligibility by series and

grade level provided an opportunity to encourage attrition in labor surplus

skill while permitting the retention of critical skills.”

However, other agencies’ comments suggested that they could have

avoided certain adverse impacts had they done more meaningful

workforce planning. One agency noted the effects of inadequate

workforce planning at its Office of Inspector General (OIG):

“[The] average grade for buyouts was GS-13. Employees in these grades were primarily

journeyman level auditors and investigators with a great deal of experience and knowledge

in [agency] programs and OIG’s mission. It will take considerable time for remaining staff to

acquire the previous level of expertise given continuing workload pressures.”

Another agency noted:

“Some activities have actually had to turn away work because of insufficient numbers of

personnel . . . while other activities carry more employees than there is work. Downsizing

is only effective if it is based on a full analysis of workload, past, present, and future. Some

activities actually could use more personnel; most could downsize to an even greater

extent.”

Conclusions The buyouts enabled agencies to meet the downsizing goals of the

Workforce Restructuring Act while mitigating the need for RIFs. Had it not

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Restructuring Goals

been for the buyout authority, it is likely that agencies would have needed

to RIF a larger number of employees to meet their downsizing objectives.

Nevertheless, compared to the workforce as a whole, little, if any, progress

was made in reducing the ranks of management control positions, as

recommended by NPR in the belief that these positions added to federal

bureaucracy. As a proportion of the workforce, the number of

management control positions was rarely smaller and, in some cases, was

slightly larger than they were before the buyouts began.

The buyout authority gave agencies a powerful tool to manage their

downsizing by directing personnel cuts where they were needed most.

However, it appears that many agencies used buyouts to meet workforce

reduction goals without restructuring their agencies’ workforces. As a

result, some agencies are reporting skill gaps (see chapt. 3). As

demonstrated in our earlier study of downsizing strategies at selected

nonfederal organizations, better workforce planning—which would have

analyzed what skills were needed and where—combined with using

buyouts to help achieve the results of such planning, would likely have

made agencies’ downsizing and restructuring efforts more effective.

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Operations

Buyouts allowed agencies to downsize without adversely affecting

workforce diversity. Had RIFs been used instead, our prior work suggests

that women and minorities might not have fared as well. Most buyouts

went to retirement-eligible employees.

Although we could not determine whether buyouts influenced individual

employees to leave federal service earlier or later than they would have

otherwise, separation data suggests that some employees stayed longer to

receive a buyout.

Agencies generally had favorable views of buyouts as a downsizing tool.

They noted that buyouts allowed them to meet mandated workforce

ceilings and align their workforce with changing mission requirements,

among other positive outcomes.

On the other hand, agencies reported that downsizing has had certain

adverse operational effects. These included the loss of institutional

memory and an increase in work backlogs.

To compensate for fewer employees, agencies said they were relying more

heavily on reinvention initiatives and automation as well as contracting

out. Although such outsourcing could help agencies carry out their work,

it was often done without first determining whether it was financially

advantageous to the government. Further, without such a determination, it

appears to be contrary to the purpose of the Workforce Restructuring Act

and the administration’s downsizing goals.

Buyouts Enabled

Agencies to Downsize

Without

Disproportionately

Affecting Women and

Minorities

The buyouts enabled agencies to downsize while maintaining their

workforce diversity. RIFs, an alternative method of downsizing, could have

resulted in higher separation rates of such individuals.

The Effect of Buyouts on

Women and Minorities

Although it was not an explicit goal of the buyout legislation, 10 of the 24

agencies responding to our survey indicated that buyouts helped them

improve the diversity of their workforces. This is because, as shown in

figure 3.1, buyout recipients governmentwide were most likely to be white

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males. Indeed, of the nearly 83,000 employees who accepted buyouts from

fiscal year 1993 through the first half of fiscal year 1995, 52 percent were

white males.

Figure 3.1: Buyout Recipients Were

Most Likely to Be White Males Percentage

0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

FY 1993 FY 1994 First half FY

1995

Percentage

Minority females

Minority males

White females

White males

Note 1: Buyouts were authorized only for DOD agencies in FY 1993.

Note 2: There were 18,982 buyouts taken in FY 1993; 34,341 in FY 1994; and 29,449 through the

first half of FY 1995.

Source: GAO calculations based on OPM’s CPDF database.

The demographic profile of buyout recipients is one reason why the

personnel reductions that have taken place over the past few years were

carried out without disproportionately affecting the employment of

women and minorities. To the contrary, as a percentage of the total

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workforce, women and minorities made slight gains from fiscal year 1992

(the year before buyouts were authorized for DOD agencies) through the

first half of fiscal year 1995 (see table 3.1).

Table 3.1: Federal Agencies

Downsized Without Disproportionately

Affecting Women and Minorities Fiscal year

On-board

personnel

Percentage of

women

Percentage of

minorities

1992 2,191,546 43.4% 27.9%

1993 2,164,727 44.1 28.4

1994 2,086,877 44.3 28.6

First half FY 1995 2,032,440 44.6 28.9

Source: GAO calculations based on OPM’s CPDF database.

Had RIFs been used to downsize the federal workforce, it is unlikely that

women and minorities would have fared as well. As set forth in 5 U.S.C.

3502, an employee’s retention depends on (1) tenure (i.e., career, career

conditional, or temporary); (2) veterans’ preference; (3) length of service;

and (4) efficiency or performance rating. The RIF regulations implementing

this provision require agencies to rank each employee where jobs are to be

eliminated and record this ranking in a retention register. In our prior

work at three defense installations, we found that women and minorities

were separated at a rate disproportionate to their numbers, partly because

they ranked lower than white males in one of the retention factors.1

Moreover, our analysis of the retention factors for all civilian workers

employed by the military services at the end of fiscal year 1991 indicated

that minority and women employees may continue to be vulnerable to

future RIFs because they ranked lower than their male counterparts in all

retention factors.

Most Buyouts Were

Paid to Employees

Who Retired

The largest share of the buyouts were paid to employees who took regular

or early retirements. Short of surveying these individuals, there is no way

of knowing whether the buyout payment motivated them to leave earlier

than they would have otherwise, thus generating payroll savings. However,

recent separation trends suggest that among all buyout recipients, there

were probably a number who stayed on the federal payroll longer in order

to receive a buyout payment.

1

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

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Retirement-Eligible

Employees Received the

Largest Share of the

Buyouts

As shown in table 3.2, of the 82,771 buyouts made governmentwide

between fiscal year 1993 and the first half of fiscal year 1995, when we

could identify the type of separation, 40 percent of the buyouts were paid

to employees who took regular retirement. Nearly another third were paid

to employees who took early retirement. Thus, even without buyouts, a

number of these employees might have left anyway.

Table 3.2: Most Buyout Recipients Were Eligible for Either Early or Regular Retirement

Percentage of buyouts by type of separation

Fiscal year Total buyouts Resignation Early retirement Regular retirement

Others plus those

not classified by

CPDFa

1993 18,982 10.2% 28.9% 30.1% 30.8%

1994 34,341 12.2 35.1 45.7 6.9

First half FY 1995 29,448 9.8 31.2 40.6 18.4

Total 82,771 10.9% 32.3% 40.3% 16.5%

aOf 82,771 buyouts, 20 accompanied separations other than those listed in the table; 13,649

buyouts were not classified by the CPDF according to type of separation.

Note: Row percentages may not add to 100 percent because of rounding.

Source: GAO calculations based on OPM’s CPDF database.

Without directly surveying employees, it is difficult to determine whether

buyouts influenced them to leave federal service earlier or later than they

would have otherwise. However, governmentwide data shows that

separations for employees covered by the Civil Service Retirement System

and the Federal Employees Retirement System dropped by 20 percent

from the end of fiscal year 1991 through fiscal year 1992, when Congress

was considering buyout legislation. Separations then rose by 35 percent in

fiscal year 1994, when both DOD and non-DOD agencies had buyout

authority. Although some of the drop in separations may have been due to

economic conditions at the time, it is likely that some employees delayed

their separations so that they could receive a buyout. As one agency

commented in its survey response:

“Due to the heavy, constant and lengthy publicity about potential legislation to authorize

buyouts, many individuals eligible to retire earlier had delayed their retirement hoping to

cash-in on the extra money, i.e., attrition during the 2 or 3 years prior to the incentive

legislation was almost non-existent.”

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Most Agencies Viewed

Buyouts Favorably as

a Downsizing Tool

When asked their opinion of the buyout authority as a downsizing tool,

most respondents to our questionnaire reported positive outcomes. As

shown in table 3.3, nearly all of the agencies responding to our survey

reported that buyouts enabled them to mitigate the need for RIFs (as

already discussed in chapt. 2); meet mandated workforce ceilings; and

align their workforce with changing mission requirements.

Table 3.3: Agencies Reported Buyouts

Had Favorable Outcomes Outcome Agencies responding

Allowed agencies to avoid or reduce the

number of RIFs

23

Allowed agencies to meet mandated

workforce ceilings

20

Assisted agencies in aligning workforce with

changing mission requirements

20

Assisted in improving agencies’ diversity

profiles

10

Source: GAO survey (see app. II, question 15).

Several respondents added comments to their questionnaires that

elaborated on their views. They include the following:

• “The buyout authority has enabled the Centers for Disease Control (CDC)

to reduce staffing and realign and improve its organization. . . . FTE

reductions coupled with attrition have enabled CDC to reach its fiscal year

1995 targeted FTE level while allowing for selected external recruitment for

critical scientific and technical vacancies.”

• “Buyouts helped the Naval Supply Systems Command meet budgeted

end-strength targets for the headquarters and its subordinate field

activities.”

• “Buyouts helped limit organizational turmoil/disruption during downsizing

by reducing adverse impacts and involuntary separations.”

Moreover, in our prior work, we found that buyouts generally saved the

government more money than did RIFs. Our analysis showed that

compared to a typical RIF, buyouts could generate over $60,000 more in net

savings for each vacated position over a 5-year period, depending upon the

assumptions made.2 RIFs can also adversely affect agency operations and

employee morale.

2

Federal Downsizing: The Costs and Savings of Buyouts Versus Reductions-in-Force (GAO/GGD-96-63,

May 14, 1996).

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Agencies Said That

Downsizing Has

Caused Operational

Impacts

From fiscal year 1993 to fiscal year 1995, the 24 agencies responding to our

survey reported that they lost nearly 85,000 FTEs, or about 12 percent of

their allocation. As shown in figure 3.2, when respondents were asked

whether they thought downsizing has helped, hindered, or had no effect on

their agency’s ability to accomplish its mission, half said that downsizing

somewhat or greatly hindered their agency’s mission. Ten agencies could

not say, one reported no effect, and only one said that downsizing has

helped the agency accomplish its mission.

Figure 3.2: Respondents’ Views on

How Downsizing Has Affected Their

Agency’s Ability to Accomplish Its

Mission

Number responding

0

1

2

3

4

5

6

7

8

9

10

Greatly

helped

mission

Somewhat helped mission

Had no effect on mission

Somewhat hindered mission

Greatly hindered mission

Cannot say at this time

Source: GAO survey (see app. II, question 26).

Other operational effects of downsizing reported by agencies are shown in

table 3.4. Of these, the largest number of respondents said that downsizing

resulted in the loss of corporate memory and expertise and created work

backlogs because key personnel were separated.

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Table 3.4: Agencies Reported Negative

Outcomes From Downsizing Outcome Agencies responding

Loss of corporate memory and expertise 15

Created work backlogs due to loss of key

personnel

11

Lowered morale of remaining employees 8

Agency projects have been delayed or

canceled because of staffing deficiencies

5

Lowered productivity of remaining workforce 4

Reduced ability to oversee contractor

operations

2

Source: GAO survey (see app. II, question 15).

Comments supporting their views include:

• “. . . [S]ince older, more experienced workers took advantage of [the

buyout] there was an initial backlog plus loss of corporate memory. We

are adjusting to that by increased training (mostly on-the-job). Morale has

been somewhat lower due to the loss of experienced employees.

Remaining personnel required to assume additional duties may not have

experience.”

• “Several [agency] operating divisions were impacted by the loss of

expertise in key management areas including program management,

financial management, procurement and grants, personnel, and

engineering services.”

• “Downsizing has had a material impact on the [agency] in meeting its

critical mission requirements. Backlogs have been created and some “nice

to do” actions are no longer being performed or are significantly delayed.

There is an impact on the morale of the employees left behind who have

been tasked with maintaining productivity and the level of services

expected by the customers prior to downsizing.”

Agencies Reported

Taking Various Steps

to Compensate for a

Smaller Workforce

Given the large-scale downsizing that has taken place over the past few

years, agencies reported taking a number of steps to offset workforce

reductions. These included various reengineering and automation

initiatives as well as contracting out work formerly done by federal

employees.

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Agencies Said They Will

Rely on Reengineering and

Automation to

Compensate for a Smaller

Workforce

To compensate for fewer employees, all of the agencies we surveyed said

they were relying on reengineering/reinvention initiatives to streamline

their operations, while 20 indicated they were increasing their use of

automation. Examples of the steps being taken by agencies include the

following:

• GSA said that it has enlisted the services of a contractor to develop a

Federal Operations Review Model (FORM). FORM is the avenue through

which all GSA business operations are to be evaluated to determine the

most cost effective method of ownership, management, and operations.

• HHS reported it is deploying staff more efficiently by cross-training auditors

and evaluators to assist in investigative work through joint audits,

evaluations, and investigations. Its Office of Inspector General (OIG) is also

doing joint investigations with other federal law enforcement agencies,

including the Secret Service, Federal Bureau of Investigation, Internal

Revenue Service, Postal Inspection Service, state governments, and other

agencies’ Offices of Inspector General. OIG also said it was making greater

use of teleconferencing, the Internet, and other forms of electronic mass

communication.

• The Naval Sea Systems Command said it began reinventing its operations

through a program called “Building High-Performance Organizations for

the Twenty-first Century.” It focuses on team building, formal and informal

employee training, leveraging technology, and promoting leadership

throughout all levels of the organization. According to the Naval Sea

Systems Command, this effort has resulted in a net cost avoidance of over

$160 million and an increased return on investment by 60 percent in at

least one program.

Despite these initiatives, agencies may still encounter problems in trying

to carry out all their work with fewer employees. One agency, for example,

said that despite taking steps to compensate for staff losses, such as

readjusting workloads to ensure that the highest priority work was

accomplished with the available resources, it anticipated shortfalls in

production and service levels. Further, the agency estimated that it would

take 3 years to return to the current skill level for fire management, one of

its key functions. Another agency reported that it was using a substantial

amount of overtime to meet production schedules.

Several Agencies Reported

Contracting Out Functions

to Cope With Staff Losses

Another way agencies are compensating for a smaller workforce is by

outsourcing work to private contractors. Five of the 24 agencies

responding to our survey said they were using contractors to perform

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work previously done by employees who had taken a buyout. Three of

these agencies said they anticipated contracting out more work in the

future.

Of these five agencies, four reported that some of the contract employees

were former federal workers who took buyouts and then returned to the

agency under a contract. Three additional agencies indicated that buyout

recipients returned as employees of private contractors, but the agencies

did not say whether these employees had replaced civil servants who took

buyouts. In total, seven agencies indicated that buyout recipients had

returned to work as employees of contract firms.

The reemployment of buyout recipients as employees of service

contractors was not prohibited under the DOD and non-DOD buyout

authorities. Further, we did not find any evidence that would suggest that

this practice was pervasive, especially when considered in light of the total

number of buyouts that have been made to date.

Contracting Provisions of

the Workforce

Restructuring Act and

Other Guidance on

Procurement Are Unclear

The Workforce Restructuring Act and OMB guidance limited an agency’s

ability to replace vacated civil service positions with contract employees.

Section 5(g) of the act provided that the President shall take appropriate

action to ensure that there is no increase in service contracts as a result of

the act, unless a cost comparison indicated that such contracts were

financially advantageous to the government. In a 1994 memorandum to the

heads of departments and agencies, the Acting Director of OMB stated that

the administration did not expect agencies to simply contract out the work

of employees who left the government as a result of downsizing, and asked

for “vigilance” in complying with the provisions of section 5(g).

Nevertheless, section 5(g) is unclear and may not be effective in limiting

the outsourcing of vacated positions. This is demonstrated in part by the

different interpretations of section 5(g) by two agencies that reported that

buyout recipients returned to their agencies as contractor employees.

At NASA’s Lewis Research Center, 18 of the 199 buyout recipients in fiscal

year 1994 returned to Lewis as employees of service contractors. All but 1

received the maximum allowable buyout of $25,000, and 5 of the 18

returned within a week of leaving the agency. NASA did not do a cost

comparison because, according to a Lewis official, the former employees

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were hired under task orders of an existing contract. Because of this, NASA

felt that section 5(g) of the Workforce Restructuring Act did not apply.3

Conversely, guidance issued by FAA required cost comparisons for task

orders and other procurement actions. The Department of

Transportation’s Inspector General cited this guidance in finding

violations of the Workforce Restructuring Act at FAA. In its February 1996

report, the Inspector General found that of the 20 former FAA employees it

audited who had returned as contract employees, cost comparisons were

done in just three cases.4

Section 5(g) is also unclear in specifying what type of “appropriate action”

agencies shall take to comply with the section. Thus, there is little to

ensure accountability on the part of agencies.

Aside from these legal issues, our analysis and prior work5

 suggest that

better planning, and particularly offering buyouts based on the results of

such planning efforts, could have reduced or eliminated the need for

contract personnel. For example, one agency told us that when two

employees who provided computer services took buyouts, it left a gap in

the agency’s technical support. The agency turned to an existing

contractor to provide the services, and the contractor supplied the two

former employees. Another agency paid a buyout to the only engineer in a

particular region. To get the work done, the agency had to rehire that

person as a contractor.

Conclusions Available data indicate that buyouts helped agencies downsize without

disproportionately affecting the representation of women and minorities

in the workforce. Despite the successes of buyouts, a number of agencies

said they are being stretched too thin, in part because the agency

workforce was reduced, while the workload was not. This is why strategic

planning is so important—it establishes an organization’s future goals and

work to be carried out. Without meaningful strategic planning, it is

unlikely that agencies can continue to downsize and maintain the level of

service and productivity that they currently provide taxpayers. Moreover,

3

Nevertheless, following our inquiry, the Center director stopped the practice of using contractors to

fill positions vacated by civil servants in order to avoid the appearance of impropriety.

4

The Department of Transportation Inspector General recommended, and the FAA administrator

agreed, to take action to identify individuals who violated applicable provisions of the Workforce

Restructuring Act and initiate appropriate remedial action.

5

Workforce Reductions: Downsizing Strategies Used in Selected Organizations (GAO/GGD-95-54,

Mar. 13, 1995).

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when strategic planning is combined with workforce planning, as

described in chapter 2, skill imbalances—which may be contributing to

some of the adverse effects that agencies are experiencing as a result of

downsizing—are more easily avoided. Similarly, such comprehensive

planning could have better determined the number of potential retirees at

agencies, thus permitting better planning to retain or replace key skills.

Further, although outsourcing may be economically feasible in certain

circumstances, without cost comparisons, the savings to taxpayers are

difficult to determine. The Workforce Restructuring Act is unclear in

specifying when such cost comparisons are required. Without a cost

comparison showing that contracting-out is financially advantageous to

government, any savings realized from buyouts would be reduced by

increased contracting costs and would appear to be inconsistent with the

purpose of the Workforce Restructuring Act and the administration’s

downsizing goals.

Page 44 GAO/GGD-96-62 Federal Downsizing
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Matters for Congressional Consideration

To ensure the most cost-effective use of any future buyouts and to help

mitigate the adverse effects that can result from poorly planned

downsizing, we recommend that Congress, in reviewing HR 2751 or other

legislation that would grant buyout authority to agencies, consider:

• Requiring agencies to do strategic and workforce planning as a

prerequisite for receiving buyout authority and to implement downsizing

consistent with the results of their planning efforts. To the extent possible,

priority should be given to retaining those employees possessing the

knowledge and skills necessary to accomplish the agency’s work.

• Ensuring that consideration of any buyout legislation is completed quickly

and that buyouts, if approved, occur shortly thereafter. This will help

reduce the number of employees who might delay their retirements and

other types of separations in the expectation of receiving a buyout.

• Clarifying the kinds of procurement actions (e.g., new contracts, task

orders, modifications, etc.) that would be subject to the cost comparison

requirement.

Agency Comments

and Our Evaluation

NPR and OPM provided written comments on a draft of this report. NPR’s

comments, along with our responses, are reprinted in appendix III; OPM’s

comments and our responses are reprinted in appendix IV.

NPR said that the report brought to light several interesting issues,

including the administration’s commitment to downsizing the federal

workforce, the value of buyouts in reducing the impact of downsizing on

employees, and the need for the administration to do a better job of

decreasing management control positions as NPR recommended in its

September 1993 report. However, NPR expressed concerns with aspects of

our methodology and with our proposed matters for congressional

consideration. OPM commented that our report was a timely analysis of

federal downsizing, and that it was quite helpful for “planning future

action relating to reducing the size of the federal workforce in an efficient

and fiscally responsible manner.” OPM also expressed concerns about

aspects of our methodology.

With respect to our methodology, both NPR and OPM stated that we had

used data from three different sources ’interchangeably,” and that we had

not adequately distinguished the use of buyouts as a tool for downsizing

and the broader concept and results of downsizing. We acknowledge that

we obtained data from several different sources (e.g., the CPDF, agency

streamlining plans, and a survey of agency officials). We did so to address

Page 45 GAO/GGD-96-62 Federal Downsizing
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Matters for Congressional Consideration

each of the specific objectives of our review. For example, the CPDF data

were relevant to our evaluation of the governmentwide use of buyouts and

to our analysis of the workforce reductions in the management control

positions targeted for reduction by the NPR. Information from agency

streamlining plans and our survey were relevant to our evaluation of the

extent of agency planning for their reductions and to the broader impacts

of downsizing on agency operations. Thus, we do not believe that we used

the data interchangeably. However, we have added clarification where

appropriate to identify the source and purpose of the data we report. We

also agree that it is important to distinguish between the use of buyouts as

a tool for downsizing and the broader concept and results of downsizing,

and have modified the report to make that distinction clearer.

NPR observed that our conclusions and observations would be better

understood if additional information were provided to show more details

about DOD’s and non-DOD agencies’ use of buyouts, including the different

time periods and constraints of the buyout authorities. We agree and have

modified the report to clarify those differences. NPR also suggested that it

would be helpful to provide additional context for our discussion about

the use of contracting out and the reemployment of buyout recipients. In

particular, NPR was concerned that it be made clearer that contracting out

and reemployment of buyout recipients were occurring on a relatively

small scale compared to the use of buyouts governmentwide. We agree

and have added language to better provide that perspective.

NPR also expressed concern that the matters for congressional

consideration would “do more harm than good,” and could cause

additional burdens or costs, because workforce planning is difficult and

time consuming and would conflict with the recommendation to promptly

implement buyout authority. Because strategic and workforce planning

have been identified as key elements of successful downsizing in other

organizations we have studied, we have long considered such planning to

be a critical aspect of carrying out a downsizing effort. We agree that such

planning can be a challenge to do successfully, since downsizing

objectives are not always consistent with mission requirements or

organizational needs, but we continue to believe that strategic and

workforce planning should be part of the decisions regarding the use of

buyouts.

Finally, NPR commented that our recommendation that additional guidance

be provided concerning the requirement for cost comparisons in the

contracting out of activities carried out by employees who accepted

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Matters for Congressional Consideration

buyouts would further complicate an already overly restrictive and

burdensome law. On the basis of our observations that NASA and FAA had

different interpretations of the cost comparison requirement, we believe

that additional guidance would clarify the issue for agencies, with little if

any additional burden or cost.

NPR and OPM each made additional specific comments, which are

addressed as appropriate in appendixes III and IV.

Page 47 GAO/GGD-96-62 Federal Downsizing
Appendix I 

Agencies Participating in GAO’s Study

1. Air Force Materiel Command

2. Army Armament, Munitions, and Chemical Command

3. Army Communications and Electronics Command

4. Army Corps of Engineers

5. Army Depot Systems Command

6. Army Forces Command

7. Army Training and Doctrine Command

8. Bureau of Indian Affairs

9. Bureau of Land Management

10. Bureau of Reclamation

11. Defense Logistics Agency

12. Department of Health and Human Services

13. Federal Aviation Administration

14. Forest Service

15. General Services Administration

16. Geological Survey

17. NASA Lewis Research Center

18. NASA Marshall Spaceflight Center

19. National Park Service

20. Natural Resources Conservation Service

21. Naval Air Systems Command

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Appendix I 

Agencies Participating in GAO’s Study

22. Naval Sea Systems Command (excluding shipyards)

23. Naval Sea Systems Command (including shipyards)

24. Naval Supply Systems Command

Page 49 GAO/GGD-96-62 Federal Downsizing
Appendix II 

Aggregate Questionnaire Responses

U.S. General Accounting Office

Questionnaire -

Federal Downsizing

INTRODUCTION

Congress has asked the General Accounting Office (GAO) to review the status of agencies’ downsizing

efforts. To meet this request, GAO is surveying selected federal agencies to obtain information on their use

of buyouts and overall workforce reductions.

Please complete this questionnaire and fax it to the number indicated below. So that we can include your

data in the report we are preparing for Congress, we would appreciate your response within 10 business

days. After we obtain your responses, we may want to contact you for additional information.

If you have any questions, please call Robert Goldenkoff on (202) 512-2757 or Geraldine Beard on (202)

512-8570.

Thank you for your assistance.

Please fax completed questionnaire to:

Geraldine Beard

Fax number - (202) 512-4516

1. Please indicate the total number of Full-Time-Equivalents (FTEs) used by or allocated for your agency

in the following fiscal years: (Enter numbers. If none, enter 0.)

FTEs

FY 1993 (actual usage) ............. 703, 825 n=24

FY 1994 (actual usage) ............. 660,749 n=24

FY 1995 (allocated) ............... 618,840 n=23

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Appendix II 

Aggregate Questionnaire Responses

FY 1996 (allocated) ............... 584,682 n=22

FY 1997 (estimated, if available) ....... 468, 561 n=19

FY 1998 (estimated, if available) ...... 353,212 n=15

FY 1999 (estimated, if available) ....... 344,874 n=15

2. Please indicate the number of employees separated from your agency with buyouts in:

(Enter numbers. If none, enter 0.)

- fiscal year 1994 26,374 n=24

- fiscal year 1995 24,697 n=24

Indicate, as of March 31, 1995, the number of employees approved for buyouts with deferred

separations after March 31, 1995. (Enter number. If none, enter 0.)

3500 employees n =7

3. We would like to know where buyouts have been concentrated in your agency. If information is

available, please indicate the number of buyouts by major organizational subunit or location. Please

use your discretion here; we would like some breakout of buyouts by each organizational component.

Please provide the name and phone number of a person who might have more information about the

buyouts in these units or locations.

Organizational subunit Location Number of

buyouts

Contact person Phone

number

4. Please provide the total number of buyouts granted in fiscal years 1994 and 1995 broken out by:

(Enter numbers. If none, enter 0.)

Buyouts granted to employees

eligible for early retirement ................. .20, 633 n = 24

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Aggregate Questionnaire Responses

Buyouts granted to employees

eligible for regular optional retirement . . . . . . . . . . 23, 472 n= 24

Buyouts granted to employees

who resigned . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8, 408 n= 24

5. What was the average grade, age, and years of government service of buyout takers? (If data are not

available, please check the appropriate box.)

Average grade level (GS or GS equivalent) .......... 10.05 n=23 or Data not available

Average grade level (WG) ...................... 8.24 n=20 or Data not available

Average age of employee ....................... 54.88 n=17 or Data not available

Average years of government service ............... 25.75 n=16 or Data not available

6. The National Performance Review (NPR) has targeted certain occupational job series for reductions.

Please indicate your percentage reduction goals for the NPR targeted occupational groups below, the

number of employees in your FY 1993 base, the number you expect to have on board by the end of

FY 1995 (9/30/95), and the total number of buyouts granted during fiscal years 1994 and 1995 in the

these occupational groups. (Exclude any buyouts with deferred separation dates after September 30,

1995.)

Occupational Series Reduction

Goals (in %s)

Agency

response

range:

Number of

Buyouts

(through

9/30/95)

Personnel (GS-200 series

except 204 and 205)

high - 51.5%

low - 4.0%

avg. - 31.7%

_____________

1,197

___________

Accounting and auditing

(all GS-500 series except

512, 526, 545, 560, 561,

570, 592, and 593)

high - 50.0%

low - 4.0%

avg. - 24.6%

_____________

619

___________

Page 52 GAO/GGD-96-62 Federal Downsizing
Appendix II 

Aggregate Questionnaire Responses

Acquisition (GS-1101,

1102, 1103, 1105, 1106,

1150, and 1910)

high - 50.0%

low - 4.0%

avg. - 24.3%

_____________

3,898

___________

Budget specialist

(GS-560 and 561 series) high - 50.0%

low - 4.0%

avg. - 26.0%

_____________

434

___________

7. The NPR set a goal of reducing the supervisor to subordinate ratio in the federal government to 1:15

by FY 1999. Please indicate your agency’s reduction goals for the number of supervisors (GS, GS

equivalent, and Wage Grade), the ratio expected by the end of FY 1995, the number of supervisors in

your FY 1993 base, the number expected to be on board by the end of FY 1995 (9/30/95), and the

total number of buyouts granted to supervisors during fiscal years 1994 and 1995. (Exclude any

buyouts with deferred separation dates after September 30, 1995.)

Reduction

goal as

a ratio

Ratio expected by

end of FY 1995

Number FY

1993 base

Number of

buyouts

9/30/95

high - 1:16

low - 1:10

n = 22

__________

high - 1:15

low - 1:6

n = 21

___________

81,715

n = 23

___________

7,768

n = 20

__________

8. By Executive Order, the Administration established a goal of reducing the number of upper level

employees in GS/GM-14, 15, and SES positions by 10 percent by FY 1999. Please indicate your

agency’s reduction goal (the percent reduction targeted), the percent reduction expected by the end of

FY 1995, and the total number of buyouts granted to these employees during fiscal years 1994 and

1995. (Exclude any buyouts with deferred separation dates after September 30, 1995.)

Reduction goal for

upper-level

employees (%) FY

1999

high - 33.0%

low - 5.0%

avg. - 12.77%

n = 18

Number

FY 1993

base

38,588

n = 22

Number on

board

9/30/95

34,463

n= 24

Number of

buyouts

9/30/95

4,174

n = 24

___________ ___________ ___________ __________

Page 53 GAO/GGD-96-62 Federal Downsizing
Appendix II 

Aggregate Questionnaire Responses

9. Are you aware of any work previously performed by a bought-out employee that has been subsequently

contracted out? (Check one.)

1. Yes --> Continue with next question. 5 n = 24

2. No --> Skip to Question 11. 19

10. For those cases where work was contracted out, please provide the agency organizational units where

this occurred, the location, the job series involved, and the name and phone number of an agency

official who can provide additional information.

Organizational unit Location Job Series Contact person

Phone

number

11. Do you anticipate contracting out work in the future to cover work previously performed by a boughtout employee? (Check one.)

1. Yes --> Continue with next question. 3 n = 24

2. No --> Skip to Question 13. 21

12. Where do you anticipate this contracting out might likely take place? (Please provide the following

information.)

Organizational unit Location Job Series Contact person

Phone

number

Page 54 GAO/GGD-96-62 Federal Downsizing
Appendix II 

Aggregate Questionnaire Responses

13. Are you aware of any employees who took buyouts and then returned to the agency under a contract?

(Check one.)

1. Yes --> Continue with next question. 7 n = 23

2. No --> Skip to Question 15. 16

14. Please provide the following information for cases where employees took buyouts and then returned to

the agency under a contract.

Organizational unit Location Contact person

Phone

number

15. Please indicate how your agency’s use of the buyout authority has impacted its operations. (Check all

that apply. If no impacts have occurred, check box 12, "None of the above".)

n=20 1. Assisted in aligning our workforce with changing mission requirements

n=10 2. Assisted in improving our diversity profile

n=20 3. Allowed us to meet our mandated workforce ceilings

n=23 4. Allowed us to avoid or reduce the number of RIFs

n= 4 5. Lowered productivity of remaining workforce

n=11 6. Created work backlogs due to loss of key personnel

n=15 7. Loss of corporate memory and expertise due to buyouts

n= 5 8. Agency projects have been delayed or cancelled because of staffing deficiencies

n= 2 9. Reduced ability to oversee contractor operations

n= 8 10. Lowered morale of remaining employees

n= 3 11. Other impacts (Please specify:_______________________________________)

n= 0 12. None of the above

Page 55 GAO/GGD-96-62 Federal Downsizing
Appendix II 

Aggregate Questionnaire Responses

16. Please provide examples of the impacts you indicated in the prior question. (Please include the names

and phone numbers of any agency officials who might have more information on these impacts.)

17. Please indicate steps your agency is taking, if any, to compensate for a smaller workforce.

(Check all that apply. If no steps are being taken, check box 5, "None of the above".)

n=24 1. We are relying on reengineering/reinvention initiatives to streamline our operations

n=20 2. We are increasing our use of automation

n= 6 3. We are increasing our use of contract services

n= 5 4. Other (Please specify:________________________________________________)

n= 0 5. None of the above

18. Please provide examples of the steps you indicated in the prior question. (Please include the names

and phone numbers of any agency officials who might have more information on these impacts.)

19. Compared to FTE levels identified in Question #1 on page 1, what FTE level do you consider optimum

for accomplishing your agency’s mission (notwithstanding budget restrictions)?

Number of FTEs considered optimum.... n=10

Page 56 GAO/GGD-96-62 Federal Downsizing
Appendix II 

Aggregate Questionnaire Responses

Four agencies indicated their optimum FTE levels were higher than their FY 1995 actual FTE level; five

said their optimum FTE levels were were lower than their FY 1995 levels and 1 said they were the same.

20. As part of your workforce restructuring effort, have supervisors in your agency been converted to nonsupervisors or team leaders? (Check one.)

1. Yes --> Continue with next question. 19 n = 24

2. No --> Skip to Question 22. 4

3. Don’t know --> Skip to Question 22. 1

21. Of the total reductions in the number of agency supervisors to date, approximately what percent would

be cases where supervisors were converted to non-supervisory roles? (Enter percent.)

Conversions of agency supervisors to non-supervisory roles represent about ______ percent of total

reductions in supervisors to date. agency response range: high - 41.0% n= 7

low - 5.0%

avg. - 26.2%

22. In your agency, how many individuals were separated as a result of RIFs carried out in the following

years? (If no RIFs, enter 0 for both years and skip to Question 24.)

FY 1994 ......... n=23 4,466 individuals were separated as a result of RIFs

FY 1995 (to date) . . n=22 868 individuals were separated as a result of RIFs

23. If you had RIFs, in which organizational units, job series, and locations did these occur?

Organizational units Job series Locations

24. In your agency, are RIFs expected:

- during the remainder of FY 1995?

Page 57 GAO/GGD-96-62 Federal Downsizing
Appendix II 

Aggregate Questionnaire Responses

1. 10 Yes ---> Please provide an estimate of the number of RIFs and where they might occur.

_________________________________________________________________

_________________________________________________________________

2. 14 No

3. 0 Don’t know

n=24

- during FY 1996?

1. 9 Yes ---> Please provide an estimate of the number of RIFs and where they might occur.

_________________________________________________________________

_________________________________________________________________

2. 6 No

3. 9 Don’t know

n=24

25. Describe your agency’s placement efforts for displaced employees. Please include any available reports

or other documentation, including the number registered and placed, and any experiences you have had

with other placement programs, such as OPM’s Interagency Placement Program or DoD’s Defense

Outplacement Referral Service).

26. In your opinion, has downsizing helped, hindered, or had no effect on your agency’s ability to

accomplish its mission. (Check one.)

n = 0 1. Greatly helped meet mission requirements

n = 1 2. Somewhat helped meet mission requirements

n = 1 3. Has had no effect on meeting mission requirements

n =10 4. Somewhat hindered meeting mission requirements

n = 2 5. Greatly hindered meeting mission requirements

-------------

n =10 6. Cannot say at this time

27. Please provide any comments you may have on your agency’s downsizing efforts, or the federal

government’s downsizing efforts, including use of the buyout authority.

Thank you for completing this questionnaire.

Please fax you completed survey to Geraldine Beard at (202) 512-4516.

Page 58 GAO/GGD-96-62 Federal Downsizing
Appendix III 

Comments From the National Performance

Review

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

See comment 1.

Page 59 GAO/GGD-96-62 Federal Downsizing
Appendix III 

Comments From the National Performance

Review

See comment 1.

See comment 1.

See comment 1.

See comment 1.

Now on p.30.

See comment 2.

Now on p. 19.

Now on pp. 48-49.

See comment 2.

Now on p. 17.

Now on p. 22.

See comment 3.

Page 60 GAO/GGD-96-62 Federal Downsizing
Appendix III 

Comments From the National Performance

Review

See comment 3.

See comment 4.

See comment 5.

Now on p. 6.

See comment 5.

Now on p. 6.

Now on p. 6.

See comment 5.

See comment 5.

Now on p. 2.

See comment 6.

Page 61 GAO/GGD-96-62 Federal Downsizing
Appendix III 

Comments From the National Performance

Review

See comment 6.

Now on p. 5.

Now on pp. 41-42.

See comment 6.

Now on p. 44.

See comment 6.

See comment 7.

See comment 8.

See comment 9.

Page 62 GAO/GGD-96-62 Federal Downsizing
Appendix III 

Comments From the National Performance

Review

Page 63 GAO/GGD-96-62 Federal Downsizing
Appendix III 

Comments From the National Performance

Review

The following are GAO’s comments on the National Performance Review’s

letter dated June 14, 1996.

GAO Comments 1. NPR commented that the buyout authority was used for three different

purposes and that our analyses did not adequately distinguish these

purposes. They also suggested that table 2.5 be modified to report DOD’s

and non-DOD agencies’ experiences in reducing management control

positions separately.

We agree that the buyout authority was used for three purposes (DOD

civilian force reductions, reductions in certain categories of employees,

and staff reductions associated with decreasing budgets), and we

addressed those purposes as they related to the objectives of our work.

For example, the purpose of using buyouts to implement overall budget

reductions was addressed under our first objective—whether the

downsizing goals of the Federal Workforce Restructuring Act were being

achieved. The purpose of using buyouts to achieve reductions in certain

categories of employees was addressed under our second

objective—whether agencies’ use of buyouts reflected the administration’s

workforce restructuring goals as articulated by NPR.

Because our analyses involved governmentwide use of buyouts, the

separate purpose of using buyouts for civilian force reductions in DOD

might not have been as clearly addressed. Accordingly, we have added

some language to better describe that purpose, and consistent with NPR’s

suggestion, we modified table 2.5 to show results for DOD and non-DOD

agencies separately. We note, however, that these results show that, while

non-DOD agencies set higher reduction goals for NPR management control

positions than did DOD agencies, actual percentage reductions in total for

these positions were similar for DOD and non-DOD agencies. However, the

distribution of reductions among occupations was different. For example,

the data show that DOD agencies had more reductions in accounting and

auditing occupations, while non-DOD agencies had more reductions in

personnel occupations.

2. NPR stated that we used three different data sets “interchangeably” and

questioned our analyses because the data sets covered varying groups of

agencies. They also said that our use of data on both FTE and on-board

personnel mixed different types of data.

Page 64 GAO/GGD-96-62 Federal Downsizing
Appendix III 

Comments From the National Performance

Review

We acknowledge that we used data from three sources (the CPDF, certain

agencies’ streamlining plans, and our own survey of agency experiences in

using buyouts). However, all three of these data sources covered most of

the major agencies we describe in our report. For example, all but 1 of the

24 agencies included in our survey correspond to the 15 departments and

agencies for which we reviewed streamlining plans, and the CPDF includes

data from all of the agencies in our study. We used these data for different

albeit related purposes. For example, CPDF data were used to analyze the

overall reductions achieved through use of buyouts, while the survey was

used to obtain information on how agencies were affected by downsizing.

Thus, the data were not used interchangeably but rather in related

corroborative or explanatory analyses.

With regard to our use of FTEs and on-board personnel levels, we used FTEs

when analyzing downsizing in the context of the Workforce Restructuring

Act because the act set workforce ceilings using FTEs. Elsewhere in the

report, we used on-board personnel levels from the CPDF because those are

more direct measures of actual reductions.

3. NPR pointed out that our analyses covered the use of buyouts spanning

periods of time in which DOD and non-DOD agencies had differing buyout

authorities and constraints and that, as a result, our findings may imply

agencies engaged in inappropriate behavior. We recognize that agencies

had differing authorities and constraints during the period covered by our

work, and have taken care to identify the periods and agencies covered in

the data we present. For example, in figure 2.1 and table 2.4, we used data

from fiscal year 1994 through the first half of fiscal year 1995, a period

when the DOD and non-DOD buyout windows overlapped. However, we

necessarily included data from the period after the non-DOD buyout

window closed to report on the latest available information on the total

number of buyouts granted governmentwide.

4. NPR commented that the period covered by our review (October 1992

through November 1995) is inappropriate to assess progress in achieving

the NPR recommendations to reduce certain occupational categories,

because it starts before the recommendations were made and does not

reflect the more recent progress agencies have made since the end of 1995.

The time period covered by our review was chosen to address several

objectives related to government downsizing (the goals of the Federal

Workforce Restructuring Act and the use of buyouts, as well as the NPR

objectives), and included the entire period of the non-DOD buyout

authority—which was requested by the administration in part to assist

Page 65 GAO/GGD-96-62 Federal Downsizing
Appendix III 

Comments From the National Performance

Review

agencies in achieving the NPR recommendations. Thus, we believe it was

appropriate to assess progress toward those objectives during that period.

NPR stated that additional downsizing of management control positions

occurred from July 1995 through June 1996. We have no basis to evaluate

that statement because that time period was not within the scope of our

work and data from that period is not yet available from the CPDF.

5. NPR noted that our report did not include “basic” data (in addition to

percentages) to reflect agency-by-agency results in using buyouts or

achieving reductions in management control positions, and stated that

additional information would be helpful in understanding the reasons why

agencies did not further reduce management control positions. NPR also

stated that the Presidential Memorandum on Streamlining the Federal

Workforce did not require a reduction in the ratio of supervisors to

employees from 1:7 to 1:15, and thus we should not state that goal as an

administration mandate.

We agree that actual numbers could be helpful to the reader in

understanding the use of buyouts, and have added those numbers in

addition to the percentages presented in the report. We also agree that

additional information might have been helpful in further understanding

agencies’ reasons for their decisions with respect to management control

positions, but time constraints did not permit additional follow-up work

along those lines in this review.

NPR is correct that the Presidential Memorandum on Streamlining did not

require the specific reduction of the management span of control cited in

our report. However, several other administration guidance documents

(the September 1993 NPR report and an August 19, 1994, OMB

memorandum) did state the goal with specificity, and it is those

documents we used in our characterization of the goal.

6. NPR suggested that our discussion of agencies’ use of contractors to

replace federal employees who had taken buyouts and employees’ return

to work in the agency after taking buyouts needed to be better placed in

the context of the overall number of buyouts, and raised a concern that

our report implied that use of contractors following buyout offers was

illegal. We agree that it is important to recognize that the extent of

contracting out that we found was relatively small compared to the overall

use of buyouts, and we have revised the text to show that the cases of

reemployment we identified appeared to be isolated and that we did not

find any evidence that the practice is pervasive. To further clarify this

Page 66 GAO/GGD-96-62 Federal Downsizing
Appendix III 

Comments From the National Performance

Review

section, we added that the Workforce Restructuring Act did not prohibit

buyout recipients from returning to federal agencies as employees of

service contractors, and—as suggested by NPR—we also added

information on steps agencies have taken to prevent inappropriate

reemployment of buyout recipients.

We did not intend to imply that contracting-out of activities performed by

employees who took buyouts was illegal, and have clarified that point.

However, we were and remain concerned that, because the Workforce

Restructuring Act specifically provided that there be no increase in service

contracts as a result of the use of buyouts, unless a cost comparison

indicated such contracts were financially advantageous to the government,

the lack of clear guidance requiring a cost comparison prior to

implementing a service contract could lead to contracts that were

inconsistent with the clear intent of the act.

7. NPR commented that our recommendation for additional guidance about

the requirement for cost comparisons in contracting-out would be

unnecessarily burdensome. We did not intend to create additional

administrative burden. Rather, because we observed that NASA and FAA

interpreted the contracting provisions of the Workforce Restructuring Act

differently, we believed that clarification of the requirement would reduce

confusion for agencies in future procurements. We continue to believe

that, since agencies have different interpretations, clarification is needed.

8. NPR noted that, in recognition that the administration does not support

the wholesale conversion of government positions to service contracts, the

administration’s most recent proposed buyout legislation continues to

require cost comparisons, although exempting functions of 10 or fewer

FTEs from that requirement. We note that, as of the end of July 1996, the

administration had withdrawn that legislation.

9. NPR expressed concern that our matters for congressional consideration

may create more problems than we describe in this report, in part because

workforce planning may be difficult to achieve and may take additional

time that would make prompt implementation of buyout legislation, as we

recommend, impossible. We based our recommendations to do strategic

and workforce planning, and to give priority to retaining those employees

possessing the knowledge and skills necessary to accomplish the agency’s

work, on the experiences of other organizations that have downsized. We

agree that such planning may be challenging, but lessons learned from

other organizations suggest that it is critical to retaining a viable and

Page 67 GAO/GGD-96-62 Federal Downsizing
Appendix III 

Comments From the National Performance

Review

productive organization after the downsizing. We have long recommended

that such planning precede authorization of buyout authorities so that

prompt implementation would not be affected.

Page 68 GAO/GGD-96-62 Federal Downsizing
Appendix IV 

Comments From the Office of Personnel

Management

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

Page 69 GAO/GGD-96-62 Federal Downsizing
Appendix IV 

Comments From the Office of Personnel

Management

Page 70 GAO/GGD-96-62 Federal Downsizing
Appendix IV 

Comments From the Office of Personnel

Management

See comment 1.

See comment 1.

See comment 1.

See comment 2.

Page 71 GAO/GGD-96-62 Federal Downsizing
Appendix IV 

Comments From the Office of Personnel

Management

See comment 3.

See comment 4.

See comment 5.

Page 72 GAO/GGD-96-62 Federal Downsizing
Appendix IV 

Comments From the Office of Personnel

Management

The following are GAO’s comments on the Office of Personnel

Management’s letter dated June 21, 1996.

GAO Comments 1. OPM expressed concern that the report mixed the use of buyouts and the

overall objective of downsizing, and offered several examples of instances

where it believed effects of downsizing could be confused with the use of

buyouts. We agree that it is important to make a distinction between

buyouts as a tool to achieve downsizing, and the broader concept of

downsizing itself, which includes staff reductions that may result from

voluntary attrition or other causes. Indeed, the objectives of our work

specifically included both the overall results of downsizing efforts and the

use of buyouts as a tool toward that objective. Thus, we report on the

operational impacts that were attributed by agencies to downsizing, as

well as the benefits of buyouts as a tool to avoid the need for RIFs and to

reduce staffing levels without adversely affecting the representation of

women and minorities. Where appropriate, we have revised the report to

further clarify the distinction between buyouts as a tool and the overall

impacts of downsizing.

2. OPM stated that we failed to consider that buyouts were intended to

serve multiple purposes, such as reducing the size of government and

avoiding costly and disruptive RIF actions, and that we did not differentiate

among these purposes. We agree that buyouts can be intended to serve

multiple purposes, but many of the purposes cited by OPM are interrelated.

For example, lessening the impact of mandatory base closures is a subset

of reducing the size of government. Another purpose that could be

identified is optimizing the capability of the remaining organization to

carry out the mission of the agency. The existence of multiple purposes

reinforces the importance of planning in the use of buyouts as a tool, to

ensure that the goal of reductions can be achieved without creating

unintended consequences, such as loss of critical expertise.

3. OPM commented that, although we conclude that buyouts produced

varying results in reducing the occupational areas identified by NPR for

reduction, other data show that reductions did take place in many of those

occupational families. We agree that more specific data show that

agencies often used buyouts to reduce management control positions

consistent with NPR’s recommendations, and, as noted in appendix III, we

adjusted the presentation of the data in table 2.5 to more clearly show

some of those reductions. However, although staffing levels have been

reduced in some of these areas in some agencies, there were no significant

Page 73 GAO/GGD-96-62 Federal Downsizing
Appendix IV 

Comments From the Office of Personnel

Management

decreases in these categories of occupations overall, as a percentage of

the total workforce. If such reductions are desirable, we continue to

believe that better workforce planning could make buyouts a more

effective tool in meeting these goals.

4. OPM, like NPR, expressed concern that we used data “interchangeably”

from three different sources. As noted in comment 2, appendix III, these

data sources cover the agencies included in our review and were obtained

to address the specific objectives of our work. The data were not used

interchangeably, but rather to provide descriptive, corroborative, or

explanatory analyses, as necessary.

5. OPM observed that the data we report on management control positions

are different from data it obtained directly from the CPDF. Although the

differences reported by OPM are relatively small, we believe they may arise

because of differences in the specific definitions of occupational

categories included. We used OMB’s definition of management control

positions, which excluded certain types of occupations within each

occupational family. For example, OMB defined personnel positions as the

GS-200 series, excluding GS-204 and GS-205. We also excluded supervisors

from each occupational series and counted them as a separate category. It

is not clear that OPM made such adjustments in the data it presented.

Page 74 GAO/GGD-96-62 Federal Downsizing
Appendix V 

Major Contributors to This Report

General Government

Division, Washington,

D.C.

Steven J. Wozny, Assistant Director,

 Federal Management and Workforce Issues

Robert Goldenkoff, Evaluator-in-Charge

Geraldine Beard, Senior Evaluator

Gregory Wilmoth, Senior Social Science Analyst

Jerome T. Sandau, Social Science Analyst

Denver Regional

Office

Thomas R. Kingham, Senior Evaluator

Robert Pickering, Senior Evaluator

(966646) Page 75 GAO/GGD-96-62 Federal Downsizing
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