GAO-04-570R DHS Human Capital Reform 

United States General Accounting Office

Washington, DC 20548 

Comptroller General

of the United States

March 22, 2004 

The Honorable George V. Voinovich 

Chairman 

The Honorable Richard Durbin 

Ranking Minority Member 

Subcommittee on Oversight of Government 

 Management, the Federal Workforce, and the 

 District of Columbia 

Committee on Governmental Affairs 

United States Senate 

The Honorable Jo Ann Davis 

Chairwoman 

The Honorable Danny Davis 

Ranking Minority Member 

Subcommittee on Civil Service and 

 Agency Organization 

Committee on Government Reform 

United States House of Representatives 

Subject: Posthearing Questions Related to Proposed Department of Homeland 

Security (DHS) Human Capital Regulations 

On February 25, 2004, I testified before your subcommittees at a hearing entitled “The 

Key to Homeland Security: The New Human Resources System.”1 This letter 

responds to your request that I provide answers to posthearing questions. The 

questions and responses follow. 

1. In your testimony, you indicated that there were safeguards 

recommended for the personnel system at the Department of Defense that 

were not included in the Homeland Security Act. What safeguards do you 

think should be included in the regulations for the DHS personnel system 

that are not included currently? 

We have proposed an initial list of safeguards based on our extensive body of work 

looking at the performance management practices used by leading public sector 

organizations both in the United States and in other countries, as well as our own 

 

1

U.S. General Accounting Office, Human Capital: Preliminary Observations on Proposed DHS 

Human Capital Regulations, GAO-04-479T (Washington, D.C.: Feb, 25, 2004). 
Page 2 GAO-04-570R DHS Human Capital Reform 

experiences at GAO in implementing a modern performance management system. 

These safeguards include: 

• Assure that the agency’s performance management systems (1) link to the 

agency’s strategic plan, related goals, and desired outcomes, and (2) result in 

meaningful distinctions in individual employee performance. This should include 

consideration of critical competencies and achievement of concrete results. As I 

noted in my testimony, DHS plans to align individual performance management 

with organizational goals. 

• Involve employees, their representatives, and other stakeholders in the design of 

the system, including having employees directly involved in validating any related 

competencies, as appropriate. In September 2003 we reported that DHS’s 

personnel system design effort provided for collaboration and employee 

participation.2 Employees were provided multiple opportunities to be included in 

the design process, including participation in the Core Design Team, the Town 

Hall meetings, the field team, the focus groups, an e-mail mailbox for employee 

comments, and now through the public comment period on the proposed system. 

 

• Assure that certain predecisional internal safeguards exist to help achieve the 

consistency, equity, nondiscrimination, and nonpoliticization of the performance 

management process (e.g., independent reasonableness reviews by Human 

Capital Offices and/or Offices of Opportunity and Inclusiveness or their equivalent 

in connection with the establishment and implementation of a performance 

appraisal system, as well as reviews of performance rating decisions, pay 

determinations, and promotion actions before they are finalized to ensure that 

they are merit-based; internal grievance processes to address employee 

complaints; and pay panels whose membership is predominately made up of 

career officials who would consider the results of the performance appraisal 

process and other information in connection with final pay decisions). DHS is 

proposing Performance Review Boards (PRBs) to review ratings in order to 

promote consistency and provide general oversight of the performance 

management system to ensure it is administered in a fair, credible, and 

transparent manner. While much remains to be determined about how the DHS 

PRBs will operate, we believe that the effective implementation of such a board is 

important to assuring that predecisional internal safeguards exist to help achieve 

consistency and equity, and assure nondiscrimination and nonpolitization of the 

performance management process. 

• Assure reasonable transparency and appropriate accountability mechanisms in 

connection with the results of the performance management process. This can 

include reporting periodically on internal assessments and employee survey 

results relating to the performance management system and publishing overall 

results of performance management and individual pay decisions while protecting 

individual confidentiality. Publishing the results in a manner that protects 

individual confidentiality can provide employees with the information they need 

to better understand the performance management system. As we recently 

 

2

U.S. General Accounting Office, Human Capital: DHS Personnel System Design Effort Provides for 

Collaboration and Employee Participation, GAO-03-1099 (Washington, D.C.: Sept. 30, 2003). 
Page 3 GAO-04-570R DHS Human Capital Reform 

reported, several of OPM’s personnel demonstration projects publish information 

for employees on internal Web sites about the results of performance appraisal 

and pay decisions, such as the average performance rating, the average pay 

increase, and the average award for the organization and for each individual unit. 3

 

There are also important safeguards in areas other than performance management. 

For example, I noted in my testimony that, as an additional safeguard, DHS should 

consider identifying mandatory removal offenses in regulations as a means to ensure 

appropriate due process. I also believe that the independence of the panel to hear 

appeals of violations of the mandatory removal offenses could be strengthened. As 

we note in the response to question 4 below, the independence of the DHS labor 

relations board deserves serious consideration. 

2. The regulations don’t allow collective bargaining on matters that do not 

“significantly affect a substantial portion of the bargaining unit.” What 

do you think would be a reasonable percentage or number to be 

considered a “substantial portion?” 

As I noted in my testimony, leading organizations involve employees and unions in 

major changes such as redesigning work processes, changing work rules, or 

developing new job descriptions. Such involvement can avoid misunderstandings, 

speed implementation, and more expeditiously resolve problems that occur. I also 

noted that DHS employees suggested having informal mechanisms in place to resolve 

issues before escalating them to the formal process. However we do not have a 

specific percentage to recommend for this provision. 

3. In your testimony you stated concern for the Department of Defense’s 

intention to implement a personnel system by the Fall of 2004. What do 

you believe would be an appropriate implementation timetable for the 

Department of Homeland Security? 

We have found that a key practice for successful transformations is to set 

implementation goals and establish a timeline to build momentum and show progress 

from day one. 4 A transformation, such as the one being undertaken by DHS, is a 

substantial commitment that could take years before it is completed, and therefore 

must be carefully and closely managed. As a result, it is essential to establish and 

track implementation goals and establish a timeline to pinpoint performance 

shortfalls and gaps so that midcourse corrections can be made. 

According to DHS’s proposed regulations, the labor relations, adverse actions, and 

appeals provisions will be effective 30 days after issuance of the interim final 

regulations later this year. DHS plans to implement the job evaluation, pay, and 

 

3

U.S. General Accounting Office, Human Capital: Implementing Pay for Performance at Selected 

Personnel Demonstration Projects, GAO-04-83 (Washington, D.C.: Jan. 23, 2004). 4

U.S. General Accounting Office, Results-Oriented Cultures: Implementation Steps to Assist Mergers 

and Organizational Transformations, GAO-03-669 (Washington, D.C.: July 2, 2003). 
Page 4 GAO-04-570R DHS Human Capital Reform 

performance management system in phases to allow time for final design, training, 

and careful implementation. Although we do not recommend a specific 

implementation timetable for DHS, we strongly support a phased approach to 

implementing major management reforms. A phased implementation approach 

recognizes that different organizations will have different levels of readiness and 

different capabilities to implement new authorities. Moreover, a phased approach 

allows for learning so that appropriate adjustments and midcourse corrections can be 

made before the regulations are fully implemented organizationwide. However, it is 

important to note that the proposed regulations do not apply to nearly half of all DHS 

civilian employees, including more than 50,000 screeners in the Transportation 

Security Administration (TSA). Based on the department’s progress in implementing 

the system and any appropriate modifications made based on their experience, DHS 

should consider moving all of its employees under the new human capital system. 

4. Would you characterize the proposed Labor Relations Board in these 

regulations as “independent”? 

I did not directly comment on this matter in my statement. However, in my statement 

I did raise independence concerns about a separate panel to be created to hear 

appeals for mandatory removal offenses. Members of that panel are appointed by the 

DHS Secretary for three-year terms and may be removed by the Secretary “only for 

inefficiency, neglect of duty, or malfeasance.” These appointment and removal 

procedures are identical to the appointment and removal provisions for the members 

of the proposed DHS Labor Relations Board. As I noted in my statement with regard 

to the mandatory removal offense panel, removal of the panel members by the 

Secretary may potentially compromise the real or perceived independence of the 

panel's decisions. We suggested, as an alternative, that the Department should 

consider having members of the panel removed only by a majority decision of the 

panel. We also said that DHS might wish to consider staggering the terms of the 

members to ensure a degree of continuity on the board. Such changes might also 

strengthen the independence of the Labor Relations Board. 

- - - - - 
Page 5 GAO-04-570R DHS Human Capital Reform 

We are sending copies of this report to the Chair and Ranking Minority Member, 

Senate Committee on Governmental Affairs; the Chairman and Ranking Minority 

Member, House Committee on Government Reform; the Chairman and Ranking 

Minority Member, House Select Committee on Homeland Security; and other 

interested congressional parties. We will also send copies to the Secretary of the 

Department of Homeland Security and the Director of the Office of Personnel 

Management. Copies will be made available at no charge on the GAO Web site at 

http://www.gao.gov. For additional information on our work on federal agency 

transformation efforts and strategic human capital management, please contact me 

on (202) 512-5500 or J. Christopher Mihm, Managing Director, Strategic Issues, on 

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

Sincerely, 

David M. Walker 

Comptroller General 

of the United States 

(450312) 
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