GAO

United States General Accounting Office

A

Testimony

Before the Subcommittee on Civil Service and Agency 

Organization, Committee on Government Reform, House 

of Representatives

For Release on Delivery

Expected at 10:00 a.m. CDT

Monday, June 7, 2004

HUMAN CAPITAL

Status of Efforts to 

Improve Federal Hiring

Statement of J. Christopher Mihm

Managing Director, Strategic Issues

GAO-04-796T
www.gao.gov/cgi-bin/getrpt?GAO-04-796T.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact J. Christopher 

Mihm at (202) 512-6806 or mihmj@gao.gov. 

Highlights of GAO-04-796T, a testimony 

before the Subcommittee on Civil Service 

and Agency Organization, Committee on 

Government Reform, House of 

Representatives 

June 7, 2004

HUMAN CAPITAL

Status of Efforts to Improve Federal 

Hiring 

Congress, the Office of Personnel Management (OPM), and agencies have all 

taken steps to improve the federal hiring process. In particular, Congress 

has provided agencies with additional hiring flexibilities, OPM has taken 

significant steps to modernize job vacancy announcements and develop the 

government’s recruiting Web site, and most agencies are continuing to 

automate parts of their hiring processes. Nonetheless, problems remain 

with a job classification process and standards that many view as antiquated, 

and there is a need for improved tools to assess the qualifications of job 

candidates. Specifically, the report being released today discusses 

significant issues and actions being taken to: 

• reform the classification system, 

• improve job announcements and Web postings, 

• automate hiring processes, and 

• improve candidate assessment tools. 

In addition, agencies appear to be making limited use of the two new hiring 

flexibilities contained in the Homeland Security Act of 2002—category rating 

and direct-hire authority—that could help agencies in expediting and 

controlling their hiring processes. GAO surveyed members of the 

interagency Chief Human Capital Officers Council who reported several 

barriers to greater use of these new flexibilities. Frequently cited barriers 

included (1) the lack of OPM guidance for using the flexibilities, (2) the lack 

of agency policies and procedures for using the flexibilities, (3) the lack of 

flexibility in OPM rules and regulations, and (4) concern about possible 

inconsistencies in the implementation of the flexibilities within the 

department or agency. 

The federal government is now facing one of the most transformational 

changes to the civil service in half a century, which is reflected in the new 

personnel systems for Department of Homeland Security and the 

Department of Defense and in new hiring flexibilities provided to all 

agencies. Today’s challenge is to define the appropriate roles and day-to-day 

working relationships for OPM and individual agencies as they collaborate 

on developing innovative and more effective hiring systems. Moreover, 

human capital expertise within the agencies must be up to the challenge for 

this transformation to be successful and enduring. 

The executive branch hired nearly 

95,000 new employees during fiscal 

year 2003. Improving the federal 

hiring process is critical given the 

increasing number of new hires 

expected in the next few years. 

In May 2003, GAO issued a report 

highlighting several key problems 

in the federal hiring process. That 

report concluded that the process 

needed improvement and included 

several recommendations to 

address the problems. 

Today, GAO is releasing a followup report requested by the 

subcommittee that discusses 

(1) the status of recent efforts to 

help improve the federal hiring 

process and (2) the extent to which 

federal agencies are using two new 

hiring flexibilities—category rating 

and direct-hire authority. Category 

rating permits an agency manager 

to select any job candidate placed 

in a best-qualified category. Directhire authority allows an agency to 

appoint individuals to positions 

without adherence to certain 

competitive examination 

requirements when there is a 

severe shortage of qualified 

candidates or a critical hiring need. 

The report GAO is issuing today 

includes no new recommendations, 

but it does underscore prior GAO 

recommendations to which 

additional attention is needed. 

 
Page 1 GAO-04-796T 

Chairwoman Davis, Mr. Davis, and Members of the Subcommittee:

I appreciate the opportunity to be here today to discuss efforts to improve 

the federal hiring process. As you are keenly aware, federal agencies must 

have effective hiring processes to compete for talented people in a highly 

competitive job market. Given the number of new federal hires expected in 

the next few years, improving the government’s hiring process is critical. In 

fact, the executive branch hired nearly 95,000 new employees in fiscal year 

2003. Still, there has been widespread recognition that the federal hiring 

process all too often does not meet the needs of agencies in achieving their 

missions, the needs of managers in filling positions with the right talent, 

nor the needs of applicants for a timely, efficient, transparent, and meritbased process. Clearly, things needed to change. 

In May 2003, we issued a report highlighting several key problems in the 

federal hiring process.1

 That report concluded that the federal hiring 

process needed improvements, and we made several recommendations to 

address problems with key parts of the hiring process. Specifically, we 

recommended that the Office of Personnel Management (OPM) take 

additional actions to assist agencies in strengthening the hiring process. 

Also, we reported that agencies must take greater responsibility for 

maximizing the efficiency and effectiveness of their individual hiring 

processes within the current statutory and regulatory framework that 

Congress and OPM have provided. 

Today, we are issuing a follow-up report, done at the request of the 

Chairwoman and Mr. Davis, that focuses on recent governmentwide efforts 

to improve the federal hiring process.2

 My testimony today summarizes the 

work we have done for this report. Specifically, you asked us to (1) provide 

information on the status of recent efforts to help improve the federal 

hiring process and (2) determine the extent to which federal agencies are 

using new hiring flexibilities authorized by the Homeland Security Act of 

2002.3

 Our work to address these objectives was based on interviews with

1

U.S. General Accounting Office, Human Capital: Opportunities to Improve Executive 

Agencies’ Hiring Processes, GAO-03-450 (Washington, D.C.: May 30, 2003).

2

U.S. General Accounting Office, Human Capital: Additional Collaboration Between OPM 

and Agencies Is Key to Improved Federal Hiring, GAO-04-797 (Washington, D.C.: June 7, 

2004).

3

These hiring flexibilities are contained in the Chief Human Capital Officers Act of 2002, 

Title XIII of the Homeland Security Act of 2002. Pub. L. No. 107-296 (Nov. 25, 2002).
Page 2 GAO-04-796T 

officials from OPM and the interagency Chief Human Capital Officers 

(CHCO) Council, the results of our survey of 22 of the 23 agency members 

serving on the CHCO Council,4

 and our review of OPM documents as well 

as data from OPM’s central database of governmentwide personnel 

information. We conducted our work in accordance with generally 

accepted government auditing standards, during March through May of this 

year.

In summary, we found the following:

• Congress, OPM, and agencies have recognized that federal hiring has 

needed reform, and they have all undertaken efforts to do so. In 

particular, Congress has provided agencies with additional hiring 

flexibilities, OPM has taken significant steps to modernize job vacancy 

announcements and develop the government’s recruiting Web site, and 

most agencies are continuing to automate parts of their hiring 

processes. Nonetheless, problems remain with a job classification 

process and standards that many view as antiquated, and there is a need 

for improved tools to assess the qualifications of job candidates. 

• Agencies appear to be making limited use of the two new hiring 

flexibilities contained in the Homeland Security Act of 2002. One of 

these hiring flexibilities, known as category rating, permits an agency to 

select any job candidate placed in a best-qualified category rather than 

being limited to three candidates under the “rule of three.” The other 

hiring flexibility, often referred to as direct hire, allows an agency to 

appoint people to positions without adherence to certain competitive 

examination requirements when there is a severe shortage of qualified 

candidates or a critical hiring need.

The report we are issuing today includes no new recommendations, but it 

does underscore our prior recommendations to which we believe 

additional attention is needed. In response to a draft of the report we are 

issuing today, OPM said that it has done much to assist agencies to improve 

hiring and increase agency officials’ knowledge about the hiring flexibilities 

available to them. OPM stressed that agencies themselves must rise to the 

challenge, provide consistent leadership at the senior level, take advantage 

4

The CHCO Council member from the Central Intelligence Agency (CIA) did not respond to 

the survey because his representative said the agency was an excepted service agency and 

thus the survey questions were not relevant.
Page 3 GAO-04-796T 

of the training opportunities offered by OPM, and make fixing the hiring 

process a priority.

OPM and Agencies Are 

Taking Steps to 

Improve the Hiring 

Process

OPM and agencies are continuing to address the problems with the key 

parts of the hiring process we identified in our May 2003 report. Significant 

issues and actions being taken include the following.

Reforming the classification system. In our May 2003 report on hiring, 

we noted that many regard the standards and process for defining a job and 

determining pay in the federal government as a key hiring problem because 

they are inflexible, outdated, and not applicable to the jobs of today. The 

process of job classification is important because it helps to categorize jobs 

or positions according to the kind of work done, the level of difficulty and 

responsibility, and the qualifications required for the position, and serves as 

a building block to determine the pay for the position. As you know, 

defining a job and setting pay in the federal government has generally been 

based on the standards in the Classification Act of 1949, which sets out the 

15 grade levels of the General Schedule system.

To aid agencies in dealing with the rigidity of the federal classification 

system, OPM has revised the classification standards of several job series 

to make them clearer and more relevant to current job duties and 

responsibilities. In addition, as part of the effort to create a new personnel 

system for the Department of Homeland Security (DHS), OPM is working 

with DHS to create broad pay bands for the department in place of the 15-

grade job classification system that is required for much of the federal civil 

service. Still, OPM told us that its ability to more effectively reform the 

classification process is limited under current law and that legislation is 

needed to modify the current restrictive classification process for the 

majority of federal agencies. As we note in the report we are issuing today, 

15 of the 22 CHCO Council members responding to our recent survey 

reported that either OPM (10 respondents) or Congress (5 respondents) 

should take the lead on reforming the classification process, rather than 

the agencies themselves.

Improving job announcements and Web postings. We pointed out in 

our May 2003 report that the lack of clear and appealing content in federal 

job announcements could hamper or delay the hiring process. Our 

previous report provided information about how some federal job 

announcements were lengthy and difficult to read, contained jargon and 

acronyms, and appeared to be written for people already employed by the 
Page 4 GAO-04-796T 

government. Clearly, making vacancy announcements more visually 

appealing, informative, and easy to access and navigate could make them 

more effective as recruiting tools. 

To give support to this effort, OPM has continued to move forward on its 

interagency project to modernize federal job vacancy announcements, 

including providing guidance to agencies to improve the announcements. 

OPM continues to collaborate with agencies in implementing Recruitment 

One-Stop, an electronic government initiative that includes the USAJOBS 

Web site (www.usajobs.opm.gov) to assist applicants in finding 

employment with the federal government. As we show in the report we are 

issuing today, all 22 of the CHCO Council members responding to our 

recent survey indicated that their agencies had made efforts to improve 

their job announcements and Web postings. In the narrative responses to 

our survey, a CHCO Council member representing a major department said, 

for example, that the USAJOBS Web site is an excellent source for posting 

vacancies and attracting candidates. Another Council member said that 

the Recruitment One-Stop initiative was very timely in developing a single 

automated application for job candidates. 

Automating hiring processes. Our May 2003 report also emphasized that 

manual processes for rating and ranking job candidates are time 

consuming and can delay the hiring process. As we mentioned in our 

previous report, the use of automation for agency hiring processes has 

various potential benefits, including eliminating the need for volumes of 

paper records, allowing fewer individuals to review and process job 

applications, and reducing the overall time-to-hire. In addition, automated 

systems typically create records of actions taken so that managers and 

human capital staff can easily document their decisions related to hiring.

To help in these efforts, OPM provides to agencies on a contract or fee-forservice basis an automated hiring system, called USA Staffing, which is a 

Web-enabled software program that automates the steps of the hiring 

process. These automated steps would include efforts to recruit 

candidates, use of automated tools to assess candidates, automatic referral 

of high-quality candidates to selecting officials, and electronic notification 

of applicants on their status in the hiring process. According to OPM, over 

40 federal organizations have contracted with OPM to use USA Staffing. 

OPM told us that it has developed and will soon implement a new Webbased version of USA Staffing that could further link and automate agency 

hiring processes. As we mention in the report we are issuing today, 21 of 

the 22 CHCO Council members responding to our recent survey reported 
Page 5 GAO-04-796T 

that their agencies had made efforts to automate significant parts of their 

hiring processes. 

Improving candidate assessment tools. We concluded in our May 2003 

report that key candidate assessment tools used in the federal hiring 

process can be ineffective. Our previous report noted that using the right 

assessment tool, or combination of tools, can assist the agency in 

predicting the relative success of each applicant on the job and selecting 

the relatively best person for the job. These candidate assessment tools 

can include written and performance tests, manual and automated 

techniques to review each applicant’s training and experience, as well as 

interviewing approaches and reference checks. 

In our previous report, we noted some of the challenges of assessment 

tools and special hiring programs used for occupations covered by the 

Luevano consent decree.5

 Although OPM officials said they monitor the 

use of assessment tools related to positions covered under the Luevano 

consent decree, they have not reevaluated these assessment tools. OPM 

officials told us, however, that they have provided assessment tools or 

helped develop new assessment tools related to various occupations for 

several agencies on a fee-for-service basis. Although OPM officials 

acknowledged that candidate assessment tools in general need to be 

reviewed, they also told us that it is each agency’s responsibility to 

determine what tools it needs to assess job candidates. The OPM officials 

also said that if agencies do not want to develop their own assessment 

tools, then they could request that OPM help develop such tools under the 

reimbursable service program that OPM operates. As we state in the report 

we are issuing today, 21 of the 22 CHCO Council members responding to 

our recent survey indicated that their agencies had made efforts to improve 

their hiring assessment tools.

Although we agree that OPM has provided assistance to agencies in 

improving their candidate assessment tools and has collected information 

5

The Luevano consent decree is a 1981 agreement that settled a lawsuit alleging that a 

written test, Professional and Administrative Careers Examination (PACE), had an adverse 

impact on African Americans and Hispanics. See Luevano v. Campbell, 93 F.R.D. 68 (D.D.C. 

1981). The consent decree called for the elimination of PACE and required replacing it with 

alternative examinations. In response to the consent decree, OPM developed the 

Administrative Careers with America examination. The consent decree also established 

two special hiring programs, Outstanding Scholar and Bilingual/Bicultural, for limited use in 

filling former PACE positions.
Page 6 GAO-04-796T 

on agencies’ use of special hiring authorities, we believe that major 

challenges remain in this area. OPM can take further action to address our 

prior recommendations related to assessment tools. OPM could, for 

example, actively work to link up agencies having similar occupations so 

that they could potentially form consortia to develop more reliable and 

valid tools to assess their job candidates.

Agencies Appear to Be 

Making Limited Use of 

New Hiring 

Flexibilities

Despite agency officials’ past calls for hiring reform, agencies appear to be 

making limited use of category rating and direct-hire authority, two new 

hiring flexibilities created by Congress in November 2002 and implemented 

by OPM in June of last year. Data on the actual use of these two new 

flexibilities are not readily available, but most CHCO Council members 

responding to our recent survey indicated that their agencies are making 

little or no use of either flexibility (see fig. 1). OPM officials also confirmed 

with us that based on their contacts and communications with agencies, it 

appeared that the agencies were making limited use of the new hiring 

flexibilities. The limited use of category rating is somewhat unexpected 

given the views of human resources directors we interviewed 2 years ago. 

As noted in our May 2003 report, many agency human resources directors 

indicated that numerical rating and the rule of three were key obstacles in 

the hiring process. Category rating was authorized to address those 

concerns. 
Page 7 GAO-04-796T 

Figure 1: CHCO Council Members’ Responses on the Extent to Which Their 

Agencies Are Using Category Rating and Direct Hire

The report we are issuing today also includes information about barriers 

that the CHCO Council members believed have prevented or hindered their 

agencies from using or making greater use of category rating and direct 

hire. Indeed, all but one of the 22 CHCO Council members responding to 

our recent survey identified at least one barrier to using the new hiring 

flexibilities. Frequently cited barriers included 

• the lack of OPM guidance for using the flexibilities, 

• the lack of agency policies and procedures for using the flexibilities, 

• the lack of flexibility in OPM rules and regulations, and 

• concern about possible inconsistencies in the implementation of the 

flexibilities within the department or agency. 

0

2

4

6

8

10

12

14

Number of agencies

Category rating

Direct hire

Little or

no extent

Some

extent

Moderate

extent

Great

extent

Very great

extent

No basis/

not applicable

Source: CHCO Council members' responses to GAO questionnaire.
Page 8 GAO-04-796T 

Our Prior 

Recommendation Calls 

Attention to Additional 

Action Needed

In a separate report we issued in May 2003 on the use of human capital 

flexibilities, we recommended that OPM work with and through the new 

CHCO Council to more thoroughly research, compile, and analyze 

information on the effective and innovative use of human capital 

flexibilities.6

 We noted that sharing information about when, where, and 

how the broad range of personnel flexibilities is being used, and should be 

used, could help agencies meet their human capital management 

challenges. As we recently testified, OPM and agencies need to continue to 

work together to improve the hiring process, and the CHCO Council should 

be a key vehicle for this needed collaboration.7

 To accomplish this effort, 

agencies need to provide OPM with timely and comprehensive information 

about their experiences in using various approaches and flexibilities to 

improve their hiring processes. OPM—working through the CHCO 

Council—can, in turn, help by serving as a facilitator in the collection and 

exchange of information about agencies’ effective practices and successful 

approaches to improved hiring. Such additional collaboration between 

OPM and agencies could go a long way to helping the government as a 

whole and individual agencies in improving the processes for quickly hiring 

highly qualified candidates to fill important federal jobs.

In conclusion, the federal government is now facing one of the most 

transformational changes to the civil service in half a century, which is 

reflected in the new personnel systems for DHS and the Department of 

Defense and in new hiring flexibilities provided to all agencies. Today’s 

challenge is to define the appropriate roles and day-to-day working 

relationships for OPM and individual agencies as they collaborate on 

developing innovative and more effective hiring systems. Moreover, for 

this transformation to be successful and enduring, human capital expertise 

within the agencies must be up to the challenge.

Madam Chairwoman and Mr. Davis, this completes my statement. I would 

be pleased to respond to any questions that you might have.

6

U.S. General Accounting Office, Human Capital: OPM Can Better Assist Agencies in 

Using Personnel Flexibilities, GAO-03-428 (Washington, D.C.: May 9, 2003).

7

U.S. General Accounting Office, Human Capital: Observations on Agencies’ 

Implementation of the Chief Human Capital Officers Act, GAO-04-800T (Washington, D.C.: 

May 18, 2004). 
Page 9 GAO-04-796T 

Contacts and 

Acknowledgments

For further information on this testimony, please contact J. Christopher 

Mihm, Managing Director, Strategic Issues, (202) 512-6806 or at 

mihmj@gao.gov. Individuals making key contributions to this testimony 

include K. Scott Derrick, Karin Fangman, Stephanie M. Herrold, Trina 

Lewis, John Ripper, Edward Stephenson, and Monica L. Wolford.

(450293)
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