Report to the Congress 

United States Government Accountability Office

GAO 

December 2006 2006 Report on 

GAO’s Use of 

Provisions in the 

GAO Personnel 

Flexibilities Act of 

2000 and the 

GAO Human Capital 

Reform Act of 2004 

GAO-07-289SP 
Section 6 of the GAO Personnel Flexibilities Act of 2000, Pub. L. No. 106-

303 (2000), and section 11 of the GAO Human Capital Reform Act of 2004,

Pub. L. No. 108-271 (2004), require GAO to report to the Congress 

regarding its use of certain of the provisions of these acts. Our report on 

these provisions is set forth below. 

Section 6 requires us to report on an annual basis during the 5-year period 

beginning on the date of the enactment of the act all actions taken under 

sections 1 through 3. Because the date of enactment was October 13, 2000, 

this report will be our last under this act and only covers 13 days of fiscal 

year 2006. (October 1 through October 13, 2005). 

Section 1, regarding voluntary early retirement authority, and section 2, 

regarding voluntary separation incentive payments, initially were not 

permanent. However, both sections were made permanent under the GAO 

Human Capital Reform Act of 2004, which incorporated the same 

reporting requirements for these sections. Therefore, we will report on our 

use of these sections below under Pub. L. No. 108-271. 

Section 3 amended our prior reduction in force procedures. We did not 

utilize this provision during the reporting period of October 1 through 

October 13, 2005. 

United States Government Accountability Office

Washington, DC 20548 

Public Law 106-303–

GAO Personnel 

Flexibilities Act of 

2000 

Public Law 108-271–

GAO Human Capital 

Reform Act of 2004 

Section 11 requires us to report on an annual basis during the 5-year 

period beginning on the date of the enactment of the act (July 7, 2004) on 

certain activities taken under sections 2, 3, 4, 6, 7, 9, and 10. 

Section 2 made permanent the authority of GAO to provide voluntary early 

retirements and voluntary separation incentive payments. While we have

used the early retirement authority on several occasions, we have chosen

not to implement the voluntary separation payments because of the costs 

associated with their use. In addition to voluntary separation payments, 

which can be as much as $25,000, GAO must pay the retirement fund an 

amount equal to 45 percent of the employee’s final base pay, a cost that 

has deterred us from using the authority. Nevertheless, we believe that this

authority could prove useful at some point in very limited circumstances. 

During fiscal year 2006, we granted voluntary early retirement to 

28 employees. As in the past, these early retirements helped GAO reshape 

Page 1 GAO-07-289SP 
its workforce by providing retirement to mostly high-graded staff. Fiscal 

year 2006 recruitment focused primarily on entry-level positions to be 

filled by employees possessing the skills and knowledge necessary to 

accomplish GAO’s work and provided assistance in GAO’s efforts to 

reshape its workforce. 

Section 3(a) of the 2004 act established a requirement that an employee 

must be performing at a satisfactory level in order to receive an annual pay 

adjustment. Regulations were issued in January 2005 to implement the 

satisfactory performance requirement for GAO’s analysts and attorneys 

and in January 2006 for remaining GAO staff in administrative, 

professional, and support staff (APSS) occupations. All employees had 

been covered by a validated competency-based appraisal system for at 

least one full appraisal cycle when the satisfactory performance 

requirement was first applied. 

In addition, section 3(a) of the 2004 act amended 31 U.S.C. § 732(c), which

required GAO employees’ pay to be adjusted at the same time and to the 

same extent as the pay of employees under the General Schedule. It gave 

the Comptroller General the authority to determine the amount of the 

annual pay adjustment for GAO employees independent of General 

Schedule increases. This authority was effective for any increase on or 

after October 1, 2005. 

For calendar year 2006, the Comptroller General provided an annual 

adjustment of 2.6 percent to those who were performing at a satisfactory 

level and who were paid within applicable competitive compensation 

limits, except for wage-grade employees, and GAO Personnel Appeals 

Board employees who received annual salary adjustments under 

alternative procedures provided by regulation.1

 Additionally, the Senior 

Executive Service and Senior Level employees received increases 

pursuant to section 3(b), discussed below. 

In determining the 2.6 percent annual adjustment, GAO considered the 

criteria set forth in section 3(a) of the act, including relevant information 

obtained from GAO’s market-based compensation surveys conducted by 

Watson Wyatt, a leading compensation consulting firm. The 2.6 percent 

 1

In addition, employees who were rated at meets expectations or higher were eligible for 

performance-based compensation, which included a merit increase to base pay or a lump

sum performance bonus. 

Page 2 GAO-07-289SP 
increase was the same as the salary structure adjustment factor that the 

survey relied upon by Watson Wyatt showed had been used for the 

consulting, professional, scientific, and technical service industries in 

2005. These industries are comparator organizations for GAO. The 

Comptroller General did not determine that extraordinary economic 

conditions or serious budget constraints existed in fiscal year 2006. 

Under section 3(b), the Comptroller General is required to consider the 

statutory criteria set out in section 3(a) in determining an annual increase

for members of the GAO Senior Executive Service and Senior Level 

employees. The Comptroller General considered these criteria and 

determined that each member performing at a satisfactory level would 

receive a 1.9 percent increase, the same increase that was provided to the 

Executive Schedule for calendar year 2006. The Comptroller General did

not determine that extraordinary economic conditions or serious budget 

constraints existed in fiscal year 2006. 

During fiscal year 2006, 329 employees were covered by the pay retention 

provision under section 4. Two hundred and fifty of these employees were 

above the pay range maximum for Band IIA. The remaining employees 

were above the pay caps for the Analyst Band I or APSS bands. 

Under section 6, certain key employees with less than 3 years’ service for 

purposes of leave accrual may be treated as if they had 3 years of federal 

service. Therefore, they would earn 160 hours on an annual basis instead 

of 104 hours. There were 5 employees who received this benefit during 

fiscal year 2006. 

Regarding the Executive Exchange Program provided for in section 7, 

GAO is in the process of actively seeking individuals to participate in the

program. However, during fiscal year 2006, GAO had no program 

participants from either GAO or the private sector. 

Section 9 relates to GAO’s performance management system and, among 

other things, requires a link between the performance management system 

and the agency’s strategic plan, adequate training on the implementation 

and operation of the system, and a process for ensuring ongoing 

performance feedback. Even before the imposition of these requirements, 

GAO’s performance management system was in conformity with the 

statutory requirements of section 9. GAO, however, continues to review 

and analyze the system and make improvements, when appropriate. 

Page 3 GAO-07-289SP 
Section 10 requires that before the implementation of any changes under 

the Human Capital Reform Act, the Comptroller General shall consult with 

any interested groups or associations representing officers and employees 

of GAO. The Comptroller General and other relevant agency officials meet 

periodically with the Employee Advisory Council (EAC) to discuss current 

and emerging issues of mutual interest and concern, especially those in the 

human capital area. GAO also uses focus groups, employee forums, and 

other mechanisms to obtain employee input on major proposals. In 

addition, GAO provides all employees with advance copies of draft orders 

concerning proposed policies and regulations for their comments prior to 

publication in final form. These steps were taken in regard to the 

promulgation of all policies and regulations to implement the provisions of 

the Human Capital Reform Act of 2004. We carefully considered the input 

from the comments of EAC members and other GAO employees before 

implementing any changes. 

In regard to human capital management at GAO, sections 2, 3, 4, 6, 7, 9, 

and 10 have provided GAO with valuable tools to reshape its workforce 

and acquire and retain the necessary talent to carry out its mission, meet 

its performance goals, and fulfill its strategic plan. These sections 

collectively are a part of the total human capital management tools at 

GAO, which enable GAO to be a world-class professional services 

organization. Without these provisions, GAO would have difficulty in 

competing in the marketplace for employees with the appropriate 

knowledge, skills, and abilities to do its work, a result that could have an 

adverse impact on GAO’s ability to fulfill its responsibilities to the 

Congress and the American people.

(976621) Page 4 GAO-07-289SP 
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