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24–933 PDF 2006

S. Hrg. 109–575

FROM PROPOSED TO FINAL: EVALUATING THE

REGULATIONS FOR THE NATIONAL SECURITY

PERSONNEL SYSTEM

HEARING

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

NOVEMBER 17, 2005

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs

(

(II)

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

SUSAN M. COLLINS, Maine, Chairman 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

LINCOLN D. CHAFEE, Rhode Island 

ROBERT F. BENNETT, Utah 

PETE V. DOMENICI, New Mexico 

JOHN W. WARNER, Virginia 

JOSEPH I. LIEBERMAN, Connecticut 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

MICHAEL D. BOPP, Staff Director and Chief Counsel 

JENNIFER A. HEMINGWAY, Professional Staff Member 

THERESA M. PRYCH, Professional Staff Member, Oversight of Government Management, the 

Federal Workforce, and the District of Columbia Subcommittee 

JOYCE A. RECHTSCHAFFEN, Minority Staff Director and Counsel 

LAWRENCE B. NOVEY, Minority Senior Counsel 

JENNIFER L. TYREE, Minority Counsel, Oversight of Government Management, the Federal 

Workforce, and the District of Columbia Subcommittee 

TRINA DRIESSNACK TYRER, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

Senator Collins ................................................................................................. 1

Senator Akaka .................................................................................................. 3

Senator Voinovich ............................................................................................. 6

Senator Levin .................................................................................................... 11

Senator Warner ................................................................................................ 34

Prepared statements: 

Senator Carper ................................................................................................. 37

Senator Lautenberg .......................................................................................... 37

WITNESSES 

THURSDAY, NOVEMBER 17, 2005

Hon. Gordon R. England, Acting Deputy Secretary of Defense, U.S. Department of Defense, accompanied by Brad Bunn, Deputy Program Executive 

Officer, National Security Personnel System .................................................... 8

Hon. Linda M. Springer, Director, U.S. Office of Personnel Management, 

accompanied by George Nesterczuk, Senior Advisor on Department of Defense, Office of Personnel Management ............................................................. 13

Hon. David M. Walker, Comptroller General, U.S. Government Accountability 

Office ..................................................................................................................... 16

Michael B. Styles, National President, Federal Managers Association .............. 26

John Gage, National President, American Federation of Government Employees, AFL–CIO, accompanied by Dan Schember, Counsel, Association of 

Civilian Techicians ............................................................................................... 29

Ronald Ault, President, Metal Trades Department, AFL–CIO ........................... 31

ALPHABETICAL LIST OF WITNESSES

Ault, Ronald: 

Testimony .......................................................................................................... 31

Prepared statement .......................................................................................... 148

England, Hon. Gordon R.: 

Testimony .......................................................................................................... 8

Prepared statement .......................................................................................... 39

Gage, John: 

Testimony .......................................................................................................... 29

Prepared statement .......................................................................................... 118

Springer, Hon. Linda M.: 

Testimony .......................................................................................................... 13

Prepared statement .......................................................................................... 50

Styles, Michael B.: 

Testimony .......................................................................................................... 26

Prepared statement .......................................................................................... 94

Walker, Hon. David M.: 

Testimony .......................................................................................................... 16

Prepared statement with attachments ........................................................... 60

Page

IV

APPENDIX 

Richard N. Brown, National President of National Federation of Federal 

Employees Affiliated with the IAMAW, AFL–CIO, prepared statement ........ 161

Responses to Post-Hearing Questions for the Record from: 

Mr. England ...................................................................................................... 169

Ms. Springer ..................................................................................................... 202

Mr. Walker ........................................................................................................ 212

Mr. Styles .......................................................................................................... 223

Mr. Gage ............................................................................................................ 230

Mr. Ault ............................................................................................................. 237

(1)

FROM PROPOSED TO FINAL: EVALUATING 

THE REGULATIONS FOR THE NATIONAL 

SECURITY PERSONNEL SYSTEM 

THURSDAY, NOVEMBER 17, 2005

U.S. SENATE, 

COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:03 a.m., in room 

SD–342, Dirksen Senate Office Building, the Hon. Susan M. Collins, Chairman of the Committee, presiding. 

Present: Senators Collins, Voinovich, Warner, Levin, and Akaka. 

OPENING STATEMENT OF CHAIRMAN COLLINS 

Chairman COLLINS. Good morning. Today, the Committee will 

examine the final regulations for the National Security Personnel 

System. 

When fully implemented, this system will cover approximately 

650,000 civilian employees of the Department of Defense. In 2003, 

the Department sought legislation to establish a new personnel 

system. The Department’s initial proposal, however, went too far 

and did not include important provisions to protect good employees. 

I worked hard with Senator Levin, Senator Voinovich, and other 

Members of this Committee to craft an alternative that addressed 

many of these concerns. In the end, Congress adopted a third 

version, a compromise that granted the Department considerable 

authority to craft a system to meet its national security mission 

while protecting the fundamental rights of the Department’s civilian employees. 

Our witnesses today will help the Committee understand whether or not the system set forth in the final regulations is consistent 

with congressional intent and whether it will achieve our goal of 

helping the Department of Defense recruit, reward, and retain the 

highest quality workforce. 

The civilian workforce of the Department is one of its most important assets. It is critical that the National Security Personnel 

System recognize that employees are vital to the accomplishment 

of the Pentagon’s mission. I have always maintained that the Department must work in partnership with its employees and their 

elected representatives for the NSPS to succeed. 

If the new system is to be ‘‘a win for employees,’’ as Secretary 

England clearly hopes, employees must see it as fair and based on 

merit principles. Some employees have told me that they continue 

2

to be frustrated by the lack of detail in the regulations. Until these 

employees have the information that enables them to fully understand how NSPS will work, they are likely to remain skeptical. 

While I understand that many details are under development 

and will be provided in the coming weeks, it is difficult to provide 

employees with the reassurances that they are seeking when much 

of the new system remains subject to further development. In many 

instances, the final regulations provide only a framework for the 

new system. 

It appears that the Department and the Office of Personnel Management appreciate the need to establish processes for a number 

of areas and the need to provide employees with additional guidance on how the system will work in practice. Transparent implementation and the active participation of employees in the development of these details will help ensure the efficacy and fairness of 

the new system. I look forward to hearing what actions the employee representatives recommend should be taken to ensure a 

smooth transition to the new system. 

During the formal comment period, I expressed my concerns concerning some of the provisions of the proposed regulations, such as 

the scope of collective bargaining and the new system for employee 

appeals. The Department, to its credit, did make some changes in 

response to the concerns that I and others raised. The final regulations, for example, now appropriately reflect the standard for review for employee appeals of adverse actions by the full Merit Systems Protection Board that was included in the authorizing legislation. 

After reviewing the final regulations, however, I believe that 

there is still room for continued improvement. For example, the 

current proposal gives the Secretary of Defense sole discretion to 

appoint the members of the Homeland Security Labor Relations 

Board with input from the labor unions. I believe that it would be 

wise to actually designate one of the slots for an employee representative. 

Despite the Department’s efforts to reach out to the unions during the meet and confer period, the coalition of employee representatives appears to have rejected pretty flatly the final regulations. 

I hope that as we continue to move forward, some common ground 

can be found. 

While there are real differences of opinion at this time over several of the provisions, shutting down the collaborative process is 

not the solution. Ultimately, the success of the new system will depend on the acceptance by the workforce. I hope that the employee 

representatives will continue to work with the Department and 

with OPM to strengthen the system and to build confidence in it. 

Implementation of the new system will be dependent on good 

management, proper execution, and robust training. I need to hear 

more from the Administration on how the Administration is going 

to assure that there are adequate resources to ensure that we have 

good management, proper execution, and robust training. This is 

an issue that I have talked with Secretary England about. I know 

that he is very committed to the training of managers as well, as 

is Ms. Springer. 

3

As the Department moves forward, the Committee will look for 

tangible evidence of the system’s success. There is no better guarantor of the success of any new personnel system than acceptance 

by the employees. 

I am very pleased that we have the two leaders on civilian workforce issues with us today. And indeed, Senator Voinovich is going 

to be taking over the gavel at some point. He has been such a leader in workforce areas. We have talked many times that it really 

comes down to having the right people understanding their responsibilities, supported by management, and able to carry out their 

mission. 

Similarly, Senator Akaka is such a leader and cares so deeply 

about these issues. So now I will turn to Senator Akaka for his 

opening statement. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. Thank you. Thank you very much, Madam 

Chairman. 

It is a pleasure working with you. As you know, I enjoy working 

with you and also with Senator Lieberman and Senator Voinovich 

on these important human capital issues, as well as Senators Warner and Levin, whose leadership on this Committee and the Armed 

Services Committee has been invaluable. 

Before I give my statement, I want to add my welcome to the 

panelists. I look upon you as good friends, and I enjoy working with 

you. I really appreciate what you are doing for our country. 

Today’s hearing provides us an opportunity to review the final 

regulations crafted by the Department of Defense and Office of Personnel Management for the National Security Personnel System. 

Since the enactment of legislation providing for NSPS, it has been 

my hope that DOD and OPM would engage in meaningful discussions with employee representatives to produce a personnel system 

that would be mutually agreeable. 

Although I voted against the creation of NSPS because I believed 

employee rights and protections would be greatly diminished, I 

kept open the possibility that I would be wrong. Sadly, the final 

regulations, mirroring most of the provisions in the proposed regulations, do great harm I feel to the civilian DOD workforce. 

I am extremely disappointed by the failure of DOD to comply 

with congressional intent and by the Department’s disregard for 

the welfare of the civilian employees. We should never forget that 

the civilian workforce at DOD is critical to our national security. 

The Department has taken the broad flexibility granted by Congress to create a system that eliminates employee collective bargaining rights, creates an unfair appeals process, and permits DOD 

to act without accountability. For example, Congress clearly stated 

that under NSPS, collective bargaining would be preserved and 

that Chapter 71 of Title 5 could not be waived. 

However, the Department has gone out of its way to erode the 

collective bargaining rights of employees. Under the regulations, 

collective bargaining is authorized at the discretion of the Secretary 

with no single issue immune from being eliminated from collective 

bargaining. 

4

The regulations also fail to provide a fair appeals process. Under 

NSPS, the independent Merit Systems Protection Board has limited review of DOD cases, and decisions by MSPB administrative 

judges will be reviewed by certain Department employees. Moreover, the regulations fail to identify the employees or list the qualifications of the individuals who will second-guess the findings of 

the independent AJ. 

I question how this change strengthens national security and 

why DOD alone, without a meaningful review by the agency 

charged with protecting merit system principles, is best able to determine the most appropriate penalty for misconduct or unacceptable performance. 

Last, the regulations provide few details as to how DOD will establish its compensation and performance management systems. 

While the current general schedule pay system is not perfect, there 

are clear rules on how employees are paid and under what circumstances pay increases are awarded. Without a detailed, transparent, accountable, and employee-supported system, which has 

adequate funding and training for employees, I am not convinced 

that the NSPS pay system will be an improvement. 

DOD has significant management challenges and has more programs on the GAO high-risk list than any other Federal agency. I 

am pleased to work with Senator Voinovich on addressing these 

issues. But I fear that given the limited checks on the Department 

under the final regulations, NSPS will become just another item on 

the high-risk list. 

Employees throughout the Federal Government, especially those 

charged with defending the Nation, deserve compensation, appraisal, labor management, and appeals systems that are fair. 

NSPS, I believe, is not fair. It gives DOD significant flexibility and 

authority without any real accountability. DOD employees deserve 

better. 

Thank you, Madam Chairman. I look forward to hearing our witnesses. I ask that my full statement be included in the record. 

Chairman COLLINS. Without objection. 

[The prepared statement of Senator Akaka follows:]

PREPARED STATEMENT OF SENATOR AKAKA 

Thank you, Madam Chairman. It is a pleasure working with you, Senator 

Lieberman, and Senator Voinovich on these important human capital issues. I also 

wish to express my appreciation to Senators Warner and Levin whose leadership 

on this Committee and the Armed Services Committee has been invaluable. 

Today’s hearing offers an opportunity to review with the Department of Defense 

(DOD) and the Office of Personnel Management (OPM) the final regulations they 

crafted which will serve as the framework for the National Security Personnel System (NSPS). I am pleased that we’ll also hear from Comptroller General Walker, 

two union leaders, and the president of the Federal Managers Association. 

This hearing is the third hearing I’ve attended on NSPS in the past year. Since 

the enactment of legislation providing for NSPS, it has been my hope that DOD and 

OPM would engage in meaningful discussions with employee representatives to 

produce a personnel system that would be mutually agreeable. Although I voted 

against the creation of NSPS because I believed employee rights and protections 

would be greatly diminished, I kept open the possibility that I would be wrong. 

Sadly, the final regulations do great harm to the civilian DOD workforce. I am 

extremely disappointed by the failure of DOD to comply with congressional intent 

and by the Department’s disregard for the welfare of its civilian employees. We 

should never forget that the civilian workforce at DOD is critical to our national 

security. 

5

The Department has taken the broad flexibility granted by Congress to create a 

system that:

• Eliminates employee collective bargaining rights; • Creates an unfair appeals process; and • Permits DOD to act without accountability.

Because a Federal judge has enjoined DHS from implementing the labor-management provisions of MaxHR, I expected to see significant changes from DOD’s proposed regulations. However, the introduction to the final NSPS regulations state 

that there are only 36 written changes from the proposed regulations and 14 clarifications which were a result of the meet and confer process. 

One area that saw little change is the labor-management relations provisions. 

Congress clearly stated that under NSPS collective bargaining would be preserved 

and that chapter 71 of Title 5 could not be waived. However, the Department has 

gone out of its way to erode the collective bargaining rights of employees. Under the 

regulations, collective bargaining is authorized at the discretion of the Secretary and 

no single issue is immune from being eliminated from collective bargaining. 

Moreover, NSPS drastically limits the matters open to collective bargaining—subject to further limits placed on this category by the Secretary—and provides for review of any labor-management issue by an internal board that I believe will not be 

independent and impartial. 

Although employee representatives may make suggestions to improve agency action or recommendations for membership on the National Security Labor Relations 

Board under NSPS. I fear that employee input will have little impact. The reliance 

on implementing issuances to flush out the details of this system makes it essential 

that employees have meaningful collective bargaining rights. 

Employees also deserve a fair appeals process. According to the final regulations, 

it is essential to the success of NSPS to ensure that employees perceive the system 

as fair. However, DOD is given broad authority to make adverse personnel actions 

without any accountability. The independent Merit Systems Protection Board 

(MSPB) has limited review of DOD cases and will only be able to mitigate penalties 

imposed by the Department when the penalty is totally unwarranted without any 

justification. 

Furthermore, decisions by MSPB administrative judges will be subject to review 

by certain Department employees, although the regulations fail to identify the employees or list the qualifications of the individuals who will second-guess the findings of the independent administrative judge (AJ). I question how this change 

strengthens national security and why DOD alone, without a meaningful review by 

the agency charged with protecting merit system principles, is best able to determine the most appropriate penalty for misconduct or unacceptable performance. 

By increasing the mitigation standard to such a high burden and allowing Departmental employees to overturn AJ decisions, the Department is creating an appeals 

system that is unfair and further erodes any substantive review of its actions for 

inappropriate conduct. 

Lastly, the regulations provide few details as to how DOD will establish its compensation and performance management systems. Although the regulations state 

that employees will be involved in the design and implementation of the performance management system, it is still unclear how this will be accomplished. 

While the current General Schedule (GS) pay system is not perfect, there are 

clear rules on how employees are paid and under what circumstances pay increases 

are awarded. Unfortunately, the GS system has not lived up to its potential as envisioned under the Federal Employees Pay Comparability Act. And yet I do not see 

how a new performance-based pay system will be an improvement given the lack 

of details on the new system, the lack of meaningful employee involvement in designing the new system, and the limitations on employees’ ability to challenge performance reviews and pay decisions. 

Training is a key to employee understanding and acceptance. I am further concerned about how the adequacy of training envisioned by DOD for managers and 

employees on the new pay-for-performance system will ensure fairness when 25 

years under a performance-based system, the Civil Service Reform Act, has done 

nothing in the opinion of DOD to encourage strong performance. 

DOD has significant management challenges and has more programs on the Government Accountability Office (GAO) high-risk list than any other Federal agency. 

I am pleased to work with Senator Voinovich on addressing these issues, but I fear 

that given the limited checks on the Department under the final regulations, NSPS 

will become just another item on the GAO high-risk list. 

Employees throughout the Federal Government, especially those charged with defending the nation, deserve compensation, appraisal, labor-management, and apVerDate 0ct 09 2002 11:14 Sep 18, 2006 Jkt 024933 PO 00000 Frm 00009 Fmt 6633 Sfmt 6621 C:\DOCS\24933.TXT SAFFAIRS PsN: PAT
6

peals systems that are fair. NSPS is not fair. It gives the Department significant 

flexibility and authority without any real accountability. DOD employees deserve 

better. 

Thank you, Madam Chairman. I look forward to hearing from our witnesses.

Chairman COLLINS. Senator Voinovich. 

OPENING STATEMENT OF SENATOR VOINOVICH 

Senator VOINOVICH. Thank you, Madam Chairman, for calling today’s hearing. First of all, I want to thank you for your continued 

support and partnership in understanding and addressing the 

needs of the Federal workforce in our human capital crisis. 

We are here today to discuss the human capital reforms underway at the Department of Defense. They are the result of 21⁄2 years 

of work by the Department of Defense, the Office of Personnel 

Management, Department employees, and their representative organizations to develop a ‘‘flexible and contemporary’’ personnel system that will assist the Department in meeting its national security mission. 

My Subcommittee held a hearing on March 15 to evaluate the 

proposed regulations for the National Security Personnel System. 

During that hearing, I expressed many concerns about the regulations to the Department and OPM. After reviewing the final regulations, I have to say I have mixed feelings. 

First, Secretary England, I congratulate you on the leadership 

that you have demonstrated throughout this process. You have 

really given this everything that you said you would give it. 

As you know, I have been concerned with the development of 

NSPS since the beginning. I know Secretary England will recall 

that I was so concerned that I went over to the Pentagon in March 

of last year and met with him, Deputy Secretary Wolfowitz, and 

Deputy Undersecretary Abell to convey to them my concerns that 

the Department was proceeding much too rapidly and that the 

massive change envisioned by NSPS would take years to properly 

implement. 

I was pleased to learn they agreed. After a hasty start, they decided to proceed with much greater deliberation. At that time, Secretary England was given a lead role in implementing NSPS. I 

think things improved tremendously because of your involvement, 

Secretary. 

Director Springer, you assumed your position at OPM as this 

process was well underway. You have taken over at a tough time. 

During our meetings and conversations, I have been impressed 

with your understanding of the issues and am pleased to hear your 

reassurances that, as Director of OPM, you will continue to be a 

partner in NSPS. 

Madam Chairman, I am pleased to see that the Department has 

made many revisions to the final regulations to address some of the 

concerns raised by employees and Members of this Committee. I 

appreciate the openness of DOD and OPM to make those changes. 

But Secretary England, as you and I have discussed, writing 

these regulations was the easy part and only the beginning. Implementation of what you have put on paper is going to be a lot more 

challenging. I remain concerned that the NSPS still does not possess a key element needed for successful reform, and I think I just 

7

underscore you, Madam Chairman, about employee participation 

and support. 

Furthermore, I cannot stress enough how important effective 

training will be as implementation begins, and that includes comprehensive training of supervisors in performance management, 

not just the nuts and bolts of NSPS, but the related soft skills that 

are needed. And I intend to spend some time with DOD employees 

in Ohio to see firsthand the type of training employees are receiving. Also crucial is continued open communication with all employees. 

Now that the regulations are final, I look forward to learning 

from the Federal employee unions their views on the new system 

and how they intend to work with DOD and OPM going forward. 

I hope there are some aspects of the system that unions see as 

positive. 

The changes embodied in the National Security Personnel System are vast and their impact great. As I have said before, failure 

is not an option. And Senator Akaka, you sent a shiver down my 

spine when you said that you thought this was going to ultimately 

end up on the high-risk list. We have got to make sure that doesn’t 

happen. 

We must continue working together to ensure success, and I do 

mean ‘‘we.’’ Today, I restate my commitment to working with the 

Department and employee organizations toward that end. This is 

important to me as Chairman of the Federal Workforce Subcommittee and as a Senator who represents approximately 12,000 

Department employees scheduled to transition into NSPS in Spiral 

One. 

The next 6 months to a year are crucial. This Committee will be 

watching. I anticipate knowing within that time whether or not we 

are on the road to success. I look forward to a continued dialogue 

with DOD, OPM, and employees as implementation commences, 

which continues with the testimony that we are going to hear 

today. 

And Mr. Walker, I also would like to spend some time with you 

as you monitor what is going on. I think that is very important. 

I just want to mention, Madam Chairman, that one of the things 

that I have been really pleased with in the last 6 months is the 

work that we are doing on DOD supply chain management. The Office of Budget and Management has come up with a wonderful 

plan. DOD has participated in it, and Mr. Walker has participated 

in it. There is a meeting of the minds. They are working on metrics 

that determine the progress that is being made, and we are doing 

the same thing with the security personnel clearance that is on the 

high-risk list. 

In these cases, we have laid out a plan. The Department, OPM, 

and Mr. Walker, are all involved. And so, there is a coordination 

here. And I think the more that they work together and the more 

they agree upon the milestones and benchmarks of success, the better off all of us are going to be. 

I think the same is true for the National Security Personnel System. I would hate to have a hearing 6 months from now and then 

have GAO say, what DOD is saying about their accomplishments 

is not true. I think there should be some meeting of the minds 

8

1The prepared statement of Secretary England appears in the Appendix on page 39. 

about how we are going to judge our progress in NSPS implementation. 

And we are going to be looking to Mr. Walker’s organization to 

give us their perspective. It would be really nice if everyone agreed 

on what it is that we were going to use to judge whether we are 

making the progress that we all would like to make. 

Thank you, Madam Chairman. 

Chairman COLLINS. Thank you, Senator. 

Our witnesses today are no strangers to this Committee, nor to 

the development of the National Security Personnel System. Our 

first witness is the Hon. Gordon England, the Deputy Secretary of 

the Department of Defense. 

Secretary England, your personal involvement in the personnel 

system set a tone of inclusiveness for which I commend you, and 

it led to a far more collaborative process than otherwise would have 

been the case. I look forward to hearing your testimony today. 

We will then hear from Linda Springer, who is the Director of 

the Office of Personnel Management. Director Springer, you will 

continue to play an absolutely critical role in ensuring that the implementation of the new system is consistent with employees’ fundamental rights and to the merit system on which our civil service 

is based. 

We will then hear from the Comptroller General, David Walker. 

Mr. Walker, you have been a leader in personnel reform, both within the GAO and also across the Federal Government. We very 

much appreciate your efforts to ensure that government manages 

its human capital effectively. 

I notice that our witnesses have brought advisors with them, and 

I will have you each introduce them, mainly because I always mispronounce George’s last name. Secretary England, please proceed. 

TESTIMONY OF HON. GORDON R. ENGLAND,1 ACTING DEPUTY 

SECRETARY OF DEFENSE, U.S. DEPARTMENT OF DEFENSE, 

ACCOMPANIED BY BRAD BUNN, DEPUTY PROGRAM EXECUTIVE OFFICER, NATIONAL SECURITY PERSONNEL SYSTEM 

Secretary ENGLAND. Madam Chairman and Members of the Committee, thanks very much. 

First, I want to tell you I do appreciate the hearing and the opportunity to be here. I will tell you the hearings that we have had 

have been very beneficial to us, and our discussions with the members privately, with your staffs, have been very beneficial in formulating the NSPS system. And I do thank you, and I thank you 

again today because, once again, this will be helpful to us as we 

move forward. 

You will, I believe, be impressed with the final regulations. I disagree, obviously, with Senator Akaka in terms of the final regulations. I believe they are very broad based, and they balance very 

well the needs of our employees, the needs of our Department, and 

frankly, the needs of our Nation. So we have worked very hard on 

this collaborative, open process to do the very best job we can for 

our employees, for the Department, and for the Nation. 

9

I am pleased that Linda Springer is here. She is our partner. 

OPM has been our partner since the very beginning, will continue 

to be so. And I appreciate the cooperation. We could not have done 

this without that partnership with OPM. 

I also appreciate the fact that David Walker is here. The General 

Accountability Office actually started this process well before us in 

their own organization. So they have a lot of experience and lessons learned, and that has been very beneficial to us. Professionally, David and his staff have been most helpful. 

I do have with me Brad Bunn, who is on my left. He is the Deputy Program Executive Officer for NSPS in the Department of Defense. And George Nesterczuk, who I also mispronounce his name, 

but he has gotten used to it from me. He is the principal advisor 

at OPM and has worked with us on a daily basis, and they have, 

frankly, a lot of the detailed knowledge and are here and available 

to answer detailed questions of the Committee. 

I thought it would be appropriate to give everyone an update of 

where we are on the NSPS system because it has been a rather dynamic event. The final regulations, as you know, Madam Chairman, were published in the Federal Register on November 1. And 

that publication initiated a 30-day period that the act prescribed 

for congressional review prior to implementation. 

As you probably also know, several unions recently filed a lawsuit challenging some aspects of NSPS. Yesterday, the DOD, OPM, 

Department of Justice, and the unions announced an agreement. 

That agreement is a timeline for the legal actions and how NSPS 

will proceed as the lawsuit is adjudicated. Again, I believe it is indicative of this collaborative process we have to work together. 

So, for example, while the lawsuit is in process, we have all 

agreed that DOD will continue the training on NSPS and will continue collaboration with them on implementation details. So we 

will continue some aspects of this as we move through the legal 

process. And working together, hopefully, we will get through that 

process quickly. 

We have agreed at DOD to delay implementing the NSPS until 

February 1, 2006—so, basically, 21⁄2 months—and again, with the 

understanding that we would continue this collaborative process in 

terms of implementation details, and that can start any time after 

December 1, 2005, those collaborative discussions. 

Also those implementing details, the issuances which everybody, 

of course, is anxious to hear about, they would not be effective until 

after February 1 also. So we have basically moved the program to 

the right while we work our way through the legal processes but, 

in the meantime, have agreed on certain things to work together 

regarding implementation. 

So, frankly, I feel that is a step forward in terms of proceeding 

with the program and not just being stopped by the courts. So I 

believe that is a beneficial move for both of us. 

Now, importantly, by the way, I will also say when Senator 

Voinovich came over and discussed the program with us, that was 

about 18 months ago—we said then this would be an event-driven 

and not a schedule-driven program. So while we have schedules on 

the programs, we do not proceed until we have completed all of the 

events. 

10

And this is the same situation. When we get through the lawsuit, 

we will be ready to go in February. So it is event-driven. We are 

not just forcing dates on the program. And that will continue to be 

fundamental premise of the program. When we are ready, we continue to proceed to the next step. 

I am not going to repeat all of the collaborative processes. We 

have had those discussions in the past. I mean, literally, all of the 

town hall meetings and everything. And I am not going to go 

through all of the benefits of NSPS. Rather, I will just wait for the 

discussion and the questions. 

But I do want to comment to the Members of the Committee that 

the Department has over 20 years of experience with these transformational personnel demonstration projects, and that has covered 

almost 45,000 employees. So this is not something that is new for 

us. We do have a significant background and experience in bringing 

about these kinds of personnel changes. 

Now those projects have clearly shown that the fundamental 

workforce changes being implemented will have positive results on 

the individual career growth and opportunities of our people on the 

workforce responsiveness and innovation. It will have a multiplier 

effect on mission effectiveness, and it will be good for our employees. 

It is a performance-based culture, and in that kind of a culture, 

the contributions of the workforce, frankly, are more fully recognized and rewarded, which is very important in terms of motivation of our people. 

Now let me mention one major incentive that the Congress has 

in the act, and I would like to mention it because, frankly, I believe 

it is very important in all of these discussions. The Congress wisely 

included in the NSPS enabling statute that in November 2009 the 

authority for the labor relations provisions expires, unless it is extended by the Congress. So all of the pressure, frankly, is on the 

Department of Defense to perform. 

I mean the consequence is that, frankly, the Department has 4 

years to demonstrate to the Congress that we can exercise the authorities you have given us and the flexibilities you have given us 

in a very responsible manner or the labor relations portion will revert back to the current Chapter 71 rules. So there is a very large 

check and balance in this system. 

And as I said before, it is a huge incentive. I mean, it puts the 

pressure on the Department of Defense to do this right. And we intend to demonstrate to you on an ongoing basis, we are pleased to 

do this in this open environment that we have fostered, that we 

will demonstrate to you, effectiveness and fairness, of the new system over the next 4 years. 

Now there is still much work to do. As everyone has mentioned, 

it has been hard work getting to where we are with the final regulations. But frankly, that has been the easy part. The hard part is 

still to come, and that is the implementation, and we know that. 

We know all of the challenges lie ahead, and we are preparing for 

that. 

But again, we have had pilot programs that have helped us over 

the past 2 decades. I am confident. I am also convinced that this 

is a win-win-win program. I mean, this is a win for DOD. It is a 

11

win for our employees, and it is a win for our Nation. And I am 

just pleased to have been able to have had a role in bringing this 

about. 

So, Madam Chairman and Members of the Committee, again I 

thank you for the opportunity to be here today. We do look forward 

to this continuing dialogue. You will find us completely open, completely responsive. Our sole objective is to have a system that is 

better for the Nation. 

So, again, I thank you for the opportunity to be here. I look forward to your questions today, and also I look forward to this continuing relationship as we all go forward on this journey. 

Thank you very much. 

Chairman COLLINS. Thank you, Mr. Secretary. 

Before calling on Director Springer, I would like to turn to Senator Levin, who has joined us. As I mentioned in my opening statement, Senator Levin worked extremely hard on these personnel 

issues, and we collaborated on a bill in 2003. Senator Levin brings 

a great deal of expertise to this issue, and I would like to call on 

him for some opening remarks. 

OPENING STATEMENT OF SENATOR LEVIN 

Senator LEVIN. Madam Chairman, thank you for your extraordinary leadership in this area. I may have collaborated with you, 

and I did so and do so proudly. But you are truly the one who has 

played the instrumental role in shaping what we had hoped would 

be a positive advance. 

I am afraid that it has not yet turned out that way. And despite 

hard work over many months devoted to this project by so many 

people, I just don’t believe the Department has met the challenge 

which we laid out for it. 

And I am also afraid that when we look back over the years 

ahead, the chances are real that we are going to find the Congress 

and the Department scrambling to try to patch up the problems 

that are arising out of the flawed implementation of the National 

Security Personnel System. 

The final regulation, so called, published by the Department of 

Defense earlier this month is very incomplete. It states that a long 

list of critical issues will be addressed in future so-called implementing issuances. These issues include the establishment of specific career groups and pay bands, the procedures for assigning pay 

to individuals, the procedures for the assignment, reassignment, reinstatement, detail, transfer, and promotion of employees within 

the personnel system. 

We were told as long ago as last May that the Department had 

prepared a huge package of implementing issuances, which would 

be made available in the near future. That was the near future 

back in May. Now, more than 6 months later, the Department is 

preparing to implement the system in a matter of weeks, and these 

implementing issuances are yet to be published. 

The Department’s approach of waiting until the last minute to 

release the nuts and bolts of how the system will work is not a sensible or a rational approach. These issuances are an essential part 

of the establishment of the system. That is the bottom line. 

12

And in my judgment, this is not consistent with the statutory requirement that the new system be planned, developed, and implemented ‘‘in collaboration with and in a manner that ensures the 

participation of employee representatives.’’ And it is going to make 

it difficult also for the Department, in my judgment, to train the 

thousands of managers and the tens of thousands of employees who 

are going to need to operate under a new system in just a matter 

of a few weeks. 

The first test, as a number of us have said over the years, of any 

new personnel system is how it is going to be received by the people who live under it and who have to operate it. And I just don’t 

believe the proposed system is likely to be successful without the 

broad support of the employees of the Department. 

The Department has insisted on including new rules that would 

deprive its civilian employees and their representatives of many of 

the rights that they enjoy today. And the first thing that happened 

when the Department issued its final regulation implementing this 

system is that it was sued by its own employees. That is not much 

of an indication that the new system has the broad support that 

it is going to need. 

The lawsuit challenging similar regulations issued by the Department of Homeland Security has resulted in a court order enjoining the Department from implementing its proposed new labor 

relations system. And despite some cosmetic changes in the final 

regulation, the Department of Defense’s regulation contained that 

same flaw. 

Even if the District Court’s order is overturned on appeal, the 

District Court judge’s words, I am afraid, speak volumes about both 

the Department of Homeland Security’s regulations as well as the 

Department of Defense’s regulations, and this is what the District 

Court judge wrote. 

‘‘The regulations fail because any collective bargaining negotiations pursuant to its terms are illusory. The Secretary retains numerous avenues by which he can unilaterally declare contract 

terms null and void without prior notice to the unions or employees 

and without bargaining or recourse. A contract that is not mutually 

binding is not a contract,’’ she wrote. 

‘‘Negotiations that lead to a contract that is not mutually binding 

are not true negotiations,’’ she said. ‘‘A system of collective bargaining that permits the unilateral repudiation of agreements by 

one party is not collective bargaining at all.’’ That was Judge 

Collyer. 

So regardless of whether the Department’s regulations are ultimately upheld or overturned in the courts, I think it would be a 

mistake to believe that a system that deprives employees and representatives of those employees of that kind of meaningful participation, as described by Judge Collyer, will succeed in gaining the 

widespread acceptance which is so important to a successful personnel system. 

Again, I am very sorry that I arrived late, Madam Chairman, 

and I appreciate your allowing me to insert this opening statement 

in the middle of the other presentations. And I do want to, though, 

say that I think the people who have been involved in this process 

have personally been open. And I appreciate, for instance, SecVerDate 0ct 09 2002 11:14 Sep 18, 2006 Jkt 024933 PO 00000 Frm 00016 Fmt 6633 Sfmt 6601 C:\DOCS\24933.TXT SAFFAIRS PsN: PAT
13

1The prepared statement of Ms. Springer appears in the Appendix on page 50. 

retary England’s willingness to have a long dialogue, and he has 

done that. I commend him for it. 

Even though the product is not one that I think is acceptable, I 

think I would be the first to acknowledge that there has been a 

spirit at least of openness in the process, although the product is 

not one that I find acceptable. 

Thank you. 

Chairman COLLINS. Thank you. 

We will now proceed to Director Springer’s testimony. 

TESTIMONY OF HON. LINDA M. SPRINGER,1 DIRECTOR, U.S. 

OFFICE OF PERSONNEL MANAGEMENT, ACCOMPANIED BY 

GEORGE NESTERCZUK, SENIOR ADVISOR ON DEPARTMENT 

OF DEFENSE, OFFICE OF PERSONNEL MANAGEMENT 

Ms. SPRINGER. Thank you, Madam Chairman and Members of 

the Committee. 

I am pleased to be here this morning to discuss the development 

of the final regulations that would establish the National Security 

Personnel System (NSPS) at the Department of Defense (DOD) and 

the continuing role of the Office of Personnel Management (OPM). 

Our collaboration with the Department has been a joint effort, 

and I do thank Secretary England and his staff for his leadership 

during this undertaking. As many have mentioned, it really was a 

turning point in the process and in the openness. 

I also want to acknowledge and thank OPM’s principal participant in that process, George Nesterczuk. He joins me here today, 

and his work on this effort really has been, I think, instrumental 

in leading to a product that OPM feels preserves the protections 

that the employees deserve. 

I would also like to express my gratitude, Madam Chairman, to 

you, to Senators Voinovich, Lieberman, and Akaka, as well, for 

your continued interest and involvement in this process. And we 

will look forward to an ongoing involvement to help ensure that 

this contemporary and flexible human resources (HR) system maintains the proper balance between the mission requirements of the 

Department and the needs of the workforce. 

From the outset, OPM has been interested in using an open and 

inclusive process to develop these regulations, and we joined the 

Department of Defense in reaching out to a broad community of interests. Before the regulations were even proposed, we met extensively with labor organizations to solicit their views. 

The Department held extensive town hall meetings with employees. They had over 100 focus groups with both bargaining and nonbargaining unit employees, with representative groups of managers 

and supervisors, and with various subsets of human resources 

practitioners and labor and employee relations specialists. 

When the NSPS proposal was published, we received over 58,000 

public comments. We had in-depth meetings with the DOD unions, 

and OPM participated in all of those for nearly 2 months, about 

twice the amount of time provided for the meet-and-confer period 

of 30 days in the statute. 

14

We held numerous meetings and briefings with congressional 

staff, and we have met with veterans groups, public interest 

groups, and other stakeholders. All of these meetings and sources 

of input were of great benefit as the final changes were crafted to 

the regulations. 

The NSPS authorizing statute called for the creation of a contemporary and flexible system to support the DOD mission. Putting 

mission first is a fundamental guiding principle inherent in the design of NSPS. But at the same time, OPM’s role was to make sure 

that there was a proper balance between that requirement and the 

needs of the workforce. After all, it is the people in government 

who make the government work. 

We also recognize that the government’s HR system must protect 

and promote fairness and transparency and guarantee equal access 

for all. In modernizing the HR system for the Department, we 

made sure that these core values are sustained. 

So, in that regard, NSPS not only guards against prohibited personnel practices, it continues to protect whistleblowers from recriminations. It maintains all of the safeguards against discrimination. It fully ensures employee rights to due process, and it maintains their right to representation and to bargain collectively. Finally, the NSPS honors and promotes veterans’ preference, a privilege that has been dearly earned through personal sacrifice by our 

men and women in uniform. 

The enabling legislation also seeks to ensure that the NSPS supports the DOD mission and does so with a pay-for-performance system that meets a number of objectives. I think we have accomplished these objectives. 

NSPS promotes accountability. It does so through a performance 

management system that is linked to the agency mission that encourages excellence and rewards achievement. NSPS streamlines 

staffing and workforce-shaping rules that put the right person in 

the right place at the right time. NSPS promotes compensation 

based on market-sensitive means to pay-setting and adjustments 

that reflect performance and reward results. 

NSPS is flexible. It allows the Department to compete for talent, 

and it provides greater latitude in making changes as mission priorities evolve. With DOD, we have blended these features into 

NSPS while fully preserving, and I say this again, the due process 

rights of the employees. It achieves the balance of employees’ rights 

to representation and collective bargaining with the mission requirements of the Department. 

Secretary England mentioned earlier that many of these concepts 

and elements crafted into the regulations have come from previously tried and true ideas. In crafting the NSPS, we were mindful of the challenges inherent in transforming a new organization 

the size of the Department of Defense, and to help mitigate that, 

we turned to many of the ideas that have already been used for 

decades, in some cases, in the Department. 

DOD has been a laboratory, in effect, for testing new concepts in 

personnel management for years. Over 45,000 DOD employees 

have been covered under various alternative personnel systems. 

Many of the lessons that we have learned from those experiences 

helped to inform the NSPS regulations. OPM has documented 

15

many of those lessons, and we have recently commented on those 

at hearings, and that document is available publicly. 

As we move into the implementation phase for NSPS, we are 

anxious for DOD to succeed. Implementing it is a huge undertaking, and the Department civilian staff comprises roughly 40 percent of the Federal employee workforce. But in light of DOD’s years 

of experience, we are confident the Department will succeed. 

Many of the elements already necessary for success are in place. 

In effect, they have a running start on this process. Training is of 

the utmost importance, and ultimately, it will be a major key to 

success. 

DOD is well versed in developing training strategies and training 

methodology. They probably do it as well, if not better, than almost 

any other Cabinet agency. They do it routinely. They do it well. 

And they have a robust existing training infrastructure. 

Furthermore, they are uniquely situated in being able to draw on 

the in-house expertise that they have developed during those previously established alternative personnel systems. They don’t have 

to go out and just buy expertise. It is already in place. 

OPM will support the Department in every way, throughout the 

entire process. Our job didn’t stop with the issuance of regulations. 

It has just begun. And we will make sure that this implementation 

occurs smoothly and fairly in the coming months and years. 

While we are enthusiastic and supportive of DOD, we are nevertheless mindful at OPM of our broader responsibilities as the central human resources management agency in the Federal Government. Accordingly, we stipulated in the regulations a number of 

specific matters that are subject to continuing coordination between 

us and the Department in such areas as classification, establishing 

qualification standards, creating new appointing authorities, and in 

setting and adjusting pay, just to cite a few examples. The complete list is actually found in Section 105 of the regulations. 

Furthermore, the statute restricts initial coverage of the NSPS to 

no more than 300,000 Department employees. That is the first spiral. Before that can be extended, the regulations require the Department to coordinate with OPM on certification that the Department is, in fact, ready to continue to extend that. OPM’s role as 

a guarantor of the merit system will never change. That is an assurance role that we have and that you look to us for, and we take 

it very seriously. 

Our partnership with DOD has given OPM a valuable experience 

as we learned firsthand what aspects of our current human resources management systems may not be in the best interests of 

the men and women of the Federal workforce. The enhancements 

gained by the Department of Defense will be sought, we believe, by 

many other agencies and members both at the leadership level and 

the employee level. They deserve the same benefits, and we believe 

that there are many benefits for employees in this new system. We 

believe that other agencies will look to us to extend those, and we 

are ready to help to do just that. 

We look forward to working with the Congress to help ensure 

that all Federal workers will have the same advantages of a contemporary personnel system that the DOD employees will have. 

16

1The prepared statement of Mr. Walker with attachments appears in the Appendix on page 

60. 

That concludes my remarks, and I look forward to your questions, Madam Chairman. 

Chairman COLLINS. Thank you very much. 

I am now going to turn the gavel over to Senator Voinovich, who 

will be the Chair for the remainder of the hearing. 

I want to apologize to Mr. Walker and also to the second panel 

that I am going to have to leave now. I do want to assure all of 

the remaining witnesses that I have read your written testimony. 

And I also want to tell my friends in the audience from the 

Portsmouth Naval Shipyard in Kittery, Maine, that I have spotted 

you out there, and I am very aware of your deep interest in this 

issue and in this hearing. So thank you for coming down from 

Maine to be here today as well. 

Senator VOINOVICH [presiding.] Thank you, Madam Chairman. 

Mr. Walker. 

TESTIMONY OF HON. DAVID M. WALKER,1 COMPTROLLER 

GENERAL, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. WALKER. Madam Chairman, Senator Voinovich, Senator 

Levin, and Senator Akaka, it is a pleasure to be back before you 

again, this time to talk about the final regulations for the Department of Defense’s National Security Personnel System. 

I would note at the outset that DOD has made a number of positive changes from the proposed regulations. We believe that DOD’s 

final regulations contain many of the basic principles that are consistent with proven approaches to effective and modern human 

capital management practices. For instance, the final regulations 

provide for a flexible, contemporary, market-based, and performance-oriented compensation system, such as pay bands and pay-forperformance approaches. 

They also give greater priority to employee performance in retention decisions in connection with workforce right-sizing and reductions-in-force. They also provide for the involvement of employee 

representatives throughout the implementation process, such as 

having opportunities to participate in the development of implementing issuances. However, as we all know, future actions will determine whether such labor relations efforts will be meaningful, effective, and credible. 

Despite these positive aspects of the regulations, there are several areas of concern that I would bring to the Committee’s attention. First and foremost, DOD has significant work ahead of itself 

to define the important details necessary for effectively implementing this new system, such as how employee performance expectations will be aligned with the Department’s overall mission 

and goals and other measures of performance. 

Also what safeguards DOD will incorporate into the new system 

in order to assure consistency and provide general oversight of the 

performance management and pay-for-performance systems to assure that they are implemented in a fair and transparent manner. 

These and other critically important details must be defined in conjunction with key stakeholders. 

17

Second, the regulations merely allow, rather than require, the 

use of core competencies that can help to provide consistency and 

clearly communicate to employees what is expected of them. 

Third, although the regulations do provide for continuing collaboration with employee representatives, they do not identify a process 

for continuing involvement of and feedback from individual employees in the implementation of NSPS. 

Going forward, GAO believes that the Department of Defense 

would benefit from developing a comprehensive communication 

strategy. We also believe that DOD should assure that it has the 

necessary institutional infrastructure in place, including adequate 

safeguards to assure the fair, equitable, and nondiscriminatory implementation of the program, before this new authority is operationalized. 

We believe that DOD should develop procedures and methods to 

initiate implementation efforts relating to the NSPS on an installment basis. And, in fact, it is my understanding they plan to do 

so through a so-called spiral process. 

We do, however, believe that it would be prudent for certain of 

the key implementation issuances to be subject to notice and comment. There are a lot of very important details that have yet to be 

defined. We have gone through this process, Mr. Chairman, and I 

can tell you that while not every important issue should be subject 

to notice and comment, there are a number of significant gaps here 

that I believe should be subject to notice and comment rather than 

just consultation. 

While GAO strongly supports human capital reform in the Federal Government, how it is done, when it is done, and the basis on 

which it is done can make all the difference as to whether or not 

such efforts are successful. DOD’s regulations are especially critical 

and need to be implemented properly because of the potential implications for related government-wide reform. 

In this regard, as I have testified before, in our view, classification, compensation, critical hiring, and workforce restructuring reforms should be pursued on a government-wide basis both before 

and separate from any broad-based labor management or due process reforms. 

Thank you, Mr. Chairman. And I am happy to answer any questions that you and the other Senators may have. 

Senator VOINOVICH. Thank you very much, Mr. Walker. 

One thing I would like to point out is that this Committee had 

real concern that OPM would not be involved with the NSPS. Just 

to refresh everyone’s memory, when the NSPS system was considered by Congress, it went through the Armed Services Committee, 

went to the floor, and there was a great deal of concern on the part 

of this Committee that we didn’t have an opportunity to participate 

in developing the legislation. 

We did have a hearing and made some revisions. Senator Akaka, 

I don’t know whether you were on the conference committee or not, 

but I know that our Chairman was, and she really worked hard to 

make sure that our input was folded into the final legislation. I 

just want to say that our concern of OPM not being involved didn’t 

happen. 

18

I think everyone should understand that the regulations being 

discussed today have been published by the Department of Defense 

and the Office of Personnel Management. 

Second, I think I should underscore the point that Secretary 

England made today, that if in November 2009, the labor-management system is not working, it will revert back to Title 5. So there 

is going to be a great deal of pressure, I think, on the Department 

of Defense to make sure that this is a successful endeavor. 

I think I should underscore also that you have the ball, Secretary 

England. But the fact is that whether this is a success or failure 

is going to really rest upon your shoulders and on the shoulders of 

the Office of Personnel Management. 

Secretary England, monitoring of the NSPS by DOD and OPM 

from the initial stages of implementation is imperative. We must 

identify and address any deficiencies in the system before they become actual problems. In other words, problems will occur. We 

know that, and changes will have to be made. Being prepared to 

make adjustments will have a major impact on the receptivity of 

the employees to the new system. And early on, it is going to be 

very important. 

I tell folks that you never get a chance in this business to make 

a second impression. So the first impression about how this is 

going to work is going to have a lot to do with how successful you 

are, particularly about some of the concerns that have been expressed by Senator Akaka in his opening statement. I am sure we 

are going to be hearing a lot more concerns when the union representatives come to the table. 

I would like to know how you are going to monitor the implementation to make sure that you have got a finger on the pulse as it 

moves on. I would also like to hear from Linda Springer on the 

same issue. 

Secretary ENGLAND. Senator, it is a very key point, and I thank 

you for the opportunity to discuss it because, recognizing that the 

implementation, we do have to make sure that this works when we 

pull the trigger. We put together a spiral implementation program, 

and that spiral program is designed for feedback. I agree with Mr. 

Walker in this case. Employee feedback is very valuable. 

So we are going through a spiral process specifically to get feedback so that we can make that a learning experience, and we will 

do that throughout 2006. And we do not then actually implement 

like pay-for-performance, the HR system, until the following year. 

So if we have issues as we proceed, again, we will listen to our employees. I mean, we will get that feedback, and we will plug it into 

the system. 

Now also you mentioned the soft skills. And frankly, to me it is 

always the ‘‘soft stuff’’ is the ‘‘hard stuff.’’ Now recognizing that, we 

have been training people in the soft skills literally for the last 

year and a half, and we are now in training of the trainers to be 

ready for this. 

So we have had extensive training programs to be ready. We 

have spiral programs designed for feedback, and we are looking forward and expecting to get feedback from employees that we can 

then use to modify the system appropriately. So we have those 

checks and balances built into the system. 

19

We also have vehicles for employees to communicate with us. 

And we have Web sites. We have training tools on the Web. So we 

have opportunities for them to feed back directly into the system. 

And as Ms. Springer commented earlier, we received 58,000 comments just during our preliminary regulations, which we evaluated 

and considered at that time. So this whole system has literally 

been put together for collaboration and feedback because we know 

that we need to learn as we go. And I just want to tell you, we are 

very receptive to do that. We want this system to work, and those 

venues are built into the program, Senator. 

Senator VOINOVICH. Have you sat down with the employee representatives to talk about a formalized consultation so that not 

only do you get feedback from the employees, but also from the 

folks that represent them? 

Secretary ENGLAND. I don’t know how formalized because, again, 

we will be in the issuances. We have a collaboration period between 

now and February 1 that we have agreed to in terms of the 

issuances to collaborate on that. 

Senator, I will comment, I am not sure that ever in the history 

of the Department we have had the kind of collaboration and discussion between the leadership of the Department and the leadership of our unions that we have had during the past 2 years. We 

have had open channels of communication at every level, and our 

plan is to continue that. So, we will continue this program the way 

we have been doing it for the past 2 years, which is open dialogue. 

Senator VOINOVICH. I would just like to ask one more question 

to follow up with Mr. Walker. You have led GAO through this. I 

don’t know whether you have unionized employees at the Government Accountability Office, but do you have a formalized process 

for communication so that you get regular feedback, particularly in 

the initial stages when you implemented the new system? 

Mr. WALKER. Senator, none of our employees are covered by a 

collective bargaining agreement. However, we have a very inclusive 

process for determining what our policies are going to be. We have 

a very rigorous employee feedback and evaluation process with regard to these types of changes. 

Candidly, one of the concerns that I have is there are a lot of 

very important details that have not been defined in these regulations. For example, the nature of the performance appraisal and 

management system and what type of safeguards will be put in 

place to make sure that it is fairly, equitably, and credibly implemented. 

Second, how the performance-based compensation system will 

work, what type of methodology will be used? If these issues 

haven’t been addressed, it is hard to really get a sense for this full 

program. Furthermore, if they are not going to be subject to notice 

and comment, then I have a little bit of concern about whether or 

not you are going to have as much input as is appropriate to make 

informed judgments. 

I note that not all of the individuals who will be subject to this 

new system are covered by collective bargaining agreements. My 

understanding is, a fairly significant percentage of DOD employees 

are not covered by collective bargaining agreements. How are their 

20

views going to be considered if there is not going to be a notice and 

comment period? 

Importantly, irrespective of what you finally decide to do—it is 

not going to be universally popular. I can tell you that right now; 

ultimately, you have to do what you think is right, not what is popular. You need to have feedback mechanisms to understand how it 

is being received and to try to continue to make improvements in 

future cycles. 

Senator VOINOVICH. I would like to know what programs that 

you are going to put in place to get feedback. What mechanisms 

are in place for those in the initial stages? 

And it would be interesting also to have you review what Mr. 

Walker has done. I am interested in metrics and determining 

whether or not NSPS is really working. 

Secretary ENGLAND. We agree. Could I have Brad Bunn discuss 

a little bit some of the specifics in place? I think it might be useful. 

Senator VOINOVICH. I am way beyond my time here. 

Secretary ENGLAND. OK. So, Senator, we will follow up——

Senator VOINOVICH. No, Senator Akaka says it is OK. Why don’t 

you do that? And then Senator Akaka, you will have 15 minutes 

or so. 

Mr. BUNN. Mr. Chairman, I will be brief. My name is Brad Bunn. 

I am the Deputy Program Executive Officer for the National Security Personnel Program. 

In my role as the deputy PEO, we have a formalized program 

evaluation process that we are standing up as we speak that will 

formalize how we are going to assess, evaluate how the NSPS is 

implemented and whether it is meeting the requirements set out 

both in statute as well as set out in our requirements document 

that we developed as part of the design process. 

And that will include feedback mechanisms that are more formal 

than simply doing employee feedback sessions. It is also doing formal employee surveys, statistically valid surveys. It is monitoring 

the data systems so that we can monitor how the performance appraisal system is actually working out there, whether there is consistency, whether there are trends that are troubling. And we are 

standing that up as we speak. 

We are also working with the Office of Personnel Management. 

They have a lot of experience in that area, as they did the evaluations for our demonstration projects. We are using a lot of the same 

methodologies that they used in evaluating those programs. 

Thank you. 

Senator VOINOVICH. Senator Akaka. 

Senator AKAKA. Yes, thank you very much, Mr. Chairman. 

Secretary England, it seems as though employee feedback certainly plays a part in this. Secretary England, Director Springer, 

and Mr. Walker, I have the deepest respect for you, and I look forward to continuing to work with you on this. I just want to speak 

my mind here on this particular subject. 

Secretary England, I have been receiving feedback from constituents as well. And I know you have mentioned, and I thank you for 

this, that there are opportunities to receive feedback from employees. My question to you, after considering the kind of feedback I 

21

have received, is why is there a strong opposition to NSPS by so 

many employees? 

Secretary ENGLAND. Senator, I am not sure there is all that opposition from so many employees. I mean, there may be a small 

vocal number. But frankly, I find in my discussions with employees 

that a lot of employees are very excited about this. 

This is an opportunity for us to, frankly, streamline the system. 

We have pay for performance, which is very positive. We can hire 

people, frankly, at more competitive rates. We can do it faster. 

There are a lot of attributes of this system, which is a very modern 

personnel system. 

I mean, frankly, change is difficult. And no matter what this system was, no matter how we did it, frankly, people would be worried 

and concerned because it is a change to the system, and we understand that. So it will take a lot of interface with our employees for 

them to truly appreciate the benefits of this program. 

But I am convinced this is a program that is good for all of the 

employees. We would not proceed if this was not good for our employees. At the end of the day, it is not about NSPS. NSPS is merely a means to an end. The end is to have a better, more highly motivated workforce, and NSPS is merely the vehicle to get there. 

So, I mean, it is not really about NSPS. It is all about providing 

a personnel system that results in improved performance for the 

Department and better remuneration for our employees when they 

perform well. 

So I will tell you, I am convinced that our employees will find 

this system very beneficial as it is rolled out and implemented. 

Senator AKAKA. I thank you for your response, Mr. Secretary. 

You mentioned that this is from a limited group, but I just wanted 

you to know that I have been receiving feedback from a large group 

of Federal workers. 

Secretary England, witnesses on our second panel state in their 

written testimony that under the regulations, DOD could institute 

a RIF, reduction in force, of a work unit and limit the RIF solely 

to employees with veterans’ preference. 

If this is true, it is an affront to the veterans the regulations 

claim to protect. Will you give us your assurance that the Department will not limit RIFs to employees with veterans’ preference nor 

target veterans under the NSPS RIF process? 

Secretary ENGLAND. Brad, I think you are more familiar with the 

specifics as that has been negotiated to conclusion. If I could have 

Brad answer that, Senator? 

Mr. BUNN. Senator Akaka, we do have changes in our regulations with regard to the reduction in force procedures that we absolutely protect veterans’ preference in both reduction in force and 

hiring. Veterans’ preference is not diminished at all. 

And in fact, if there was a situation where veterans were targeted in such a fashion, we would consider that to be a prohibited 

personnel practice, which remains illegal. So we have taken great 

pains to ensure that veterans’ preference rights are preserved as 

they are today. 

Senator AKAKA. Thank you so much for that. You know I am the 

ranking member on the Veterans Affairs. So I am hearing from 

that sector as well. Thank you. 

22

Mr. BUNN. Yes, sir. I understand and appreciate that. 

Senator AKAKA. Director Springer, DOD employees have discussed with me the need to recognize and reward teamwork in any 

pay-for-performance system. Teamwork is an integral part of the 

success of the employees working at any shipyard, especially Pearl 

Harbor Naval Shipyard. 

I understand that the final regulations will recognize teamwork 

under NSPS. Can you explain how teamwork will be rewarded 

under NSPS and how outstanding members or poor-performing 

members of the team are appropriately awarded? 

Ms. SPRINGER. Senator Akaka, I am going to address that at one 

level and maybe ask Mr. Nesterczuk to give you some details. 

But let me just say I have been in systems where not just my 

performance increase, my salary increase, but my actual compensation and significant portions of it were affected by the performance 

of a team of which I was a part. It was not just my own performance. It was the whole team. And the result of that was that the 

whole team performed at a higher level than it otherwise would 

have because we had skin in the game, if you will. 

And we worked better collaboratively. We had more communication than we ever would have. We had common goals. They were 

in writing, which was one of the enhancements, incidentally, as a 

result of our meet and confer. We listened to the requests of the 

union representatives about having performance requirements in 

writing that would be done as a team, in this case, as opposed to 

on an individual basis. 

The reward, at the end of the day, was a function of close collaboration within the team structure. And it worked. And I think that 

in this case, it will as well. 

Now I am going to ask Mr. Nesterczuk if he could comment just 

a bit further on the details? 

Mr. NESTERCZUK. The regulations envision team activities on the 

part of employees, although the performance evaluation is directed 

at an individual’s performance. If the activity is a group activity, 

that is dealt with in the regulations. It is not a problem. It is recognized as a valid way to do business. 

Senator AKAKA. My time has expired, Mr. Chairman. Thank you. 

Senator VOINOVICH. Senator Levin. 

Senator LEVIN. Thank you, Mr. Chairman. 

Pay for performance is required by the law, which we have approved. But it could be a backward step instead of a forward step 

unless the Department is able to make distinctions in employee 

performance that are fair and meaningful. This system is vulnerable, bottom line. 

It is vulnerable to those who would use it to reward loyalty over 

quality of performance, if it is used to provide pay and promotions 

to those who tell senior officials what they want to hear rather 

than what they need to know. So this is a system which can work 

either way. It can be a step forward, or it could be a step backward, 

depending on how it is implemented. 

The track record of the Department of Defense has not been particularly good relative to pay for performance, which has been already in law established. The General Accountability Office said 

the following, that, ‘‘Most existing Federal performance appraisal 

23

systems, including a vast majority of the Department of Defense’s 

systems, are not currently designed to support a meaningful performance-based pay system.’’

In other words, we haven’t done that well with existing systems 

where performance is supposed to be rewarded, and the Department of Defense did not successfully implement a performance 

management system which was established for senior executives, 

which is just a few thousand people. Congress had to step in earlier 

this year, enact special legislation barring the Department from 

automatically giving higher raises and bonuses to political appointees rather than to career civil servants. 

I think you may remember this, Secretary England, where there 

was an automatic pay increase for political appointees. For everybody else, it wasn’t automatic. Political appointees got it automatically. We had to step in and reverse that. That was a misuse of 

a performance-based system. So trying to implement a performance 

management system for half a million civil servants is exponentially more difficult than what was permitted there. 

So let me first ask you, Mr. Walker, what is the likelihood that 

the Department of Defense is going to be able to institute a system 

that makes meaningful distinctions in employee performance and 

is accepted as fair by the Department’s employees in time, and this 

is a timing question now, for the projected launch of the new system in the next few months? 

Mr. WALKER. It is possible to do that, Senator, and it can and 

has been done. I have not seen the performance appraisal systems 

that are associated with the Spiral 1 process. We would be happy 

to take a quick look at them to be able to provide an informed comment on it. 

I will tell you this, if you don’t have modern, effective, and credible and, hopefully, validated performance appraisal systems that 

provide meaningful feedback to employees to help them maximize 

their potential, that result in meaningful distinctions in performance, then you shouldn’t implement pay for performance unless 

and until you have that. 

I can’t comment on the specific ones here because I haven’t seen 

them. However, I believe it is critically important that they be in 

place before pay for performance is implemented. 

Senator LEVIN. How long before? 

Mr. WALKER. We have had a notice and comment period for our 

employees and at least, in the case of our analysts, used our new 

performance appraisal system at least one time before we went to 

a more pay for performance oriented approach. 

They may be talking about using the current system they have. 

I don’t know. Importantly, I don’t know whether or not the current 

system would meet those criteria, but I would be happy to take a 

look. 

Senator LEVIN. Let us ask Secretary England. Will that be 

shared with the GAO? 

Secretary ENGLAND. Certainly, it will be shared. Everything we 

do is shared, Senator. 

Senator LEVIN. No, but I mean in advance of them being issued? 

24

Secretary ENGLAND. Certainly. All the time. And they are always 

welcome to deal with us, and we have an open dialogue with GAO 

and OPM and everyone, Senator. But let me comment——

Senator LEVIN. Well, no. You are going to be free to comment. 

I will assure you of that. But I want to get back to what I think 

is a specific comment that was made by Mr. Walker, which is that 

they would be willing to critique those issuances, providing they 

get them. My question is will they get them before you drop them 

on the employees? 

Secretary ENGLAND. Certainly. We would be happy to consult 

and have them help us in any way they can. We have already had 

those consultations. 

Senator LEVIN. Now I interrupted you. So you go ahead. 

Secretary ENGLAND. OK. Senator, I just wanted to clarify, we do 

not start pay for performance right away. Pay for performance will 

go through a 1-year spiral process. That is, there is no pay for performance sort of ‘‘for keeps’’ until literally 1 year. 

So we will go through a spiral process. We will go through a 

mock process, so to speak. That is, we will have people go through 

it with employees so we make sure we have this system proven before we start it. 

I also want to comment, we do have a requirement—and your 

comment about the prior system. You are absolutely right. It did 

not work. That is part of the reason that we are going to this new 

system because the old system was fundamentally flawed. 

Senator LEVIN. I was talking about the performance-based part 

of the old system. 

Secretary ENGLAND. Fundamentally flawed. I mean, there is no 

question about it. We were using old rules and trying to implement 

pay for performance. It didn’t work, which is one of the reason we 

had to modify that system. 

But, Senator, we will have a specific criteria. Each employee sits 

down with their supervisor and discusses specific criteria and how 

that will be measured. So there are both measurements and criteria to be agreed upon in advance, and then that becomes the 

basis for decisions later. So it is a quantitative approach, and there 

is also appeals built into the system. 

So just for clarification, Senator, I do believe we have thought 

this out. And again, we will work closely with the Government Accountability Office in this regard. 

Senator LEVIN. I just had one more question. Are you going to 

have a second round for this panel? 

Senator VOINOVICH. No, I am not. 

Senator LEVIN. Would it be all right if I add one question? I am 

over my time. 

Senator VOINOVICH. Yes, why don’t you? Sure. 

Senator LEVIN. The DOD’s final regulation provides that, ‘‘Any 

provision of a collective bargaining agreement that is inconsistent 

with implementing issuances is unenforceable on the effective date 

of those issuances.’’ And according to your Web site, the term 

‘‘issuances’’ includes Department directives, directive-type memorandum, DOD instructions, administrative instructions, and publications including catalogues, directories, guides, handbooks, inVerDate 0ct 09 2002 11:14 Sep 18, 2006 Jkt 024933 PO 00000 Frm 00028 Fmt 6633 Sfmt 6601 C:\DOCS\24933.TXT SAFFAIRS PsN: PAT
25

dexes, inventories, lists, manuals, modules, pamphlets, plans, regulations, and standards. 

Now, Judge Collyer—who, by the way, was an appointee of President Bush, current President Bush—who is an expert on labor law, 

served as general counsel to the National Labor Relations Board in 

the Reagan Administration, struck down a similar provision in the 

regulations of the Homeland Security Department last summer. I 

have read some of what she said in my opening statement. 

But I am just wondering, Secretary England, why you are retaining in your regulations a provision which specifically was held by 

Judge Collyer to make collective bargaining negotiations pursuant 

to its terms ‘‘illusory.’’ I am wondering if you could comment on 

that, or your lawyer? 

Mr. BUNN. I would be happy to. I am not an attorney. 

Senator LEVIN. It says ‘‘counsel.’’ But you are not? 

Mr. BUNN. Yes. It is more like consigliere maybe. 

Senator LEVIN. I think we owe you an apology for labeling. I am 

a lawyer. So I can say this. [Laughter.] 

Mr. BUNN. I accept your apology, and I am flattered as well. 

Senator Levin, the implementing issuances are those instructions 

and directives that actually implement the National Security Personnel System. So they are limited to implementing the provisions 

of the regulation. 

They are actually extensions of the regulations that will go 

through the continuing collaboration process that is actually based 

in the statute that says that there is an exclusive process for collaborating with employee representatives in the development, further development, and implementation of the system. 

In addition, it was necessary to exclude those issuances from provisions of collective bargaining agreements in order to have a comprehensive uniform approach to implementing the system. So that 

is the purpose of giving that status to implementing issuances. 

We did hear the concerns during the meet and confer process 

about unilaterally overturning collective bargaining agreements, 

and what we have done in the final regulation is we have limited 

the authority for issuing those kinds of directives and instructions 

to very few people in the Department, for example, the Secretary 

of Defense, the Deputy Secretary of Defense, principal staff assistants, and the secretaries of the military Departments. 

So it is a very short list of people who actually have the authority to issue, promulgate those kinds of issuances that will have the 

effect of overturning provisions of collective bargaining agreements. 

Senator LEVIN. I don’t think it cures the problem. But nonetheless, thank you for you answer. Thank you, Mr. Chairman. 

Senator VOINOVICH. My final comment would be that there is a 

lot of apprehension surrounding implementing issuances. I think 

Mr. Walker raised a couple of very good questions. The sooner that 

we see those, I think the better we will all feel. I think it is real 

important that in the process of finalizing the issuances, you touch 

base with some of the folks that are representing the unions. 

I want to thank you very much. I still have many more questions 

I would like to ask. I am going to submit them to you in writing. 

But I think in fairness to the next panel, we should bring them forward. We also have a vote, Senator Akaka, at 11:45. 

26

1The prepared statement of Mr. Styles appears in the Appendix on page 94. 

I really appreciate your being here today. I appreciate all of the 

time you have put in. We are looking forward to a successful implementation. 

And Mr. Walker, we are going to be looking to you to continue 

oversight and to give feedback to us about how you view things are 

progressing. The more dialogue we can get between GAO and DOD, 

I think, the better. Thank you very much. 

Secretary ENGLAND. Senator, thank you, sir. 

Senator VOINOVICH. Testifying on our second panel today is Michael Styles, National President of the Federal Managers Association. Testifying on behalf of the United DOD Workers Coalition are 

John Gage, President of the American Federation for Government 

Employees, and Ron Ault, President of the Metal Trades Department of the AFL–CIO. 

We are very pleased to have you appear today. And Mr. 

Schember is here to act as counsel for Mr. Gage. 

Mr. SCHEMBER. Senator, thank you. I am here on behalf of the 

United DOD Workers Coalition and, in particular, my long-time client, a member of that coalition, the Association of Civilian Technicians. 

Senator VOINOVICH. Thank you very much. And thank you for 

coming today. Mr. Styles, we will start with your testimony. 

TESTIMONY OF MICHAEL B. STYLES,1 NATIONAL PRESIDENT, 

FEDERAL MANAGERS ASSOCIATION 

Mr. STYLES. Thank you, Mr. Chairman. 

As we begin, I would like to echo Madam Chairwoman’s remarks 

regarding your leadership, and your leadership also, Senator 

Akaka. Both of you have been staunch supporters of the Federal 

employee, and we certainly appreciate your dedicated work on our 

behalf. 

I thank you for this opportunity to come before you today to 

present the views of managers and supervisors in the Department 

of Defense who will be subject to the final regulations for the National Security Personnel System. I am the National President of 

the Federal Managers Association. Our organization represents a 

preponderance of managers and supervisors at agencies throughout 

the Department, including naval shipyards, Air Force materiel 

commands, naval aviation depots, Marine Corps logistics bases, 

Army depots and arsenals, and so on. 

The premise for creating any new HR system should be based on 

a mission-oriented approach which enhances the agency’s overall 

operational capabilities. Too often we dwell on the negative aspects 

of why we need a new personnel system. Poor performance of employees or managers. Even the statement that we have to get the 

drunks out of the Federal workforce in an appropriate fashion. 

I have traveled around the country and observed the men and 

women of America’s workforce. They are an incredibly talented 

group of individuals who are doing a great job of supporting our 

war fighters. These individuals are fully engaged in fighting the 

war against tyranny in Afghanistan, Iraq, and many other locations throughout the world. 

27

We talk often about hiring the best and the brightest. Quite 

frankly, just looking around this room, you can see that many of 

the best and brightest are represented here. My thanks to them for 

the work that they do for America on a daily basis. To keep knocking them all of the time is rhetoric we don’t need. It only serves 

to undermine the morale of our employees and the good work that 

is being done throughout the Department of Defense and the Federal Government. 

Our mission should not only be to hire the best and brightest, 

but to retain them as well. Market-based pay and pay banding lend 

themselves to these goals. One of the false assumptions in the critique of the current system is that employees receive an automatic 

increase in pay whether they are performing well or not. This simply is not the case. 

Any supervisor who has an employee whose performance is not 

up to standard has the ability to deny that person a pay increase. 

We also have a process of rewarding high-performing employees. 

However, if there is not enough money in the budget, you can’t adequately reward deserving individuals in any system. 

The anticipation of the release of the final regulations that will 

govern the management system for human capital in DOD is over. 

The National Security Personnel System has finally been outlined, 

with many details yet to come. As the regulations even stipulate, 

detailed accounts of the classification, pay and pay administration, 

performance management, staffing and employment, and workforce 

shaping or reductions in force remain to be seen. 

However, we remain concerned with two key additional components that could make or break the new system, training and funding. Developing a human resources system from the macro view 

provides a good framework for analyzing the final regulations. But 

successful implementation comes from providing managers and employees with the skills necessary to manage the new system. In 

order to do this, we need a comprehensive ongoing training program that is funded at appropriate levels. 

While the training plan is in place and we have been assured 

that funding is available for that training, given our current state 

of affairs, we are still apprehensive about the availability of those 

funds. Even this year, Congress cut DHS’s request for the personnel system funding by $20 million, despite the efforts of many 

Members of this Committee. 

Further, we must stress the fact that this must be an ongoing 

training and not just a one-time hit. Managers and employees must 

be aware of their new responsibilities, and the leadership within 

agencies and from Congress must reassure the men and women on 

the ground that they support their efforts through adequate funding. 

When we talk about funding, we are talking about the entire 

budget. We want to ensure that the dollars allocated for HR training are not diverted for other purposes, such as skills or vocational 

training and vice versa. 

We support the idea of pay for performance. We always have and 

always will. Employees and managers should be compensated properly for their performance. Nonperformers should not receive any 

28

pay increase for their lack of performance, and high performers 

should be rewarded accordingly. 

The DOD has long been a proponent of total quality processes 

throughout all agencies. All stakeholders must work in a collaborative manner in order to ensure that we create the most efficient 

organization and provide the American public with the finest goods 

and services. 

Managers and employees must work together in determining 

what mission-oriented goals and objectives an employee is responsible for. By working together on these objectives, you have included the people closest to the process and the strategic vision—

our employees and our managers. 

Managers have also been given greater authorities in the performance review process that more directly links employees’ pay to 

their performance. We believe that transparency leads to transportability. And interdepartment job transfers could be complicated by 

the lack of a consistent and uniform methodology for performance 

reviews. 

Evaluations must be objective in nature and utilized as a positive 

tool in increasing the effectiveness and efficiency of the organization. We support the Administration’s proposal under job classification for positions to be grouped in broad career clusters and pay 

schedules based on the nature of work, career patterns, and competencies. 

We are especially pleased with the design of pay bands, specifically for managers and supervisors, and a separate pay band for 

science and technical professions. Too often people move into management ranks from highly technical arenas for the sake of upward 

mobility. Within this system, however, we will be able to reward 

high achievers in those fields to prevent a worst-case scenario of 

creating an ineffective manager and losing a highly competent 

technician in the field. 

However, if we just combine two GS levels into one pay band, 

that can be helpful for initial hiring, but it doesn’t allow us to compete at the highest levels, nor is it true market-based pay if you 

don’t raise the levels of funding. We cannot compete with companies like Hughes Aircraft, General Dynamics, McDonnell Douglas, 

or Lockheed Martin for exceptional talent unless we are willing to 

raise our own bar. 

According to the Bureau of Labor Statistics, the average pay gap 

still remains at 32 percent between public and private sector. 

While we recognize that some jobs in the Federal sector may exceed the private sector wage, the majority of Federal sector jobs 

does not. Market-based pay should compare like occupations in 

order to combat this. 

FMA supports an open and fair labor relations process that protects the rights of employees and creates a work environment that 

allows employees and managers to do their jobs without fear of retaliation or abuse. In fact, we have met with our union counterparts on numerous occasions to discuss common areas of concern 

regarding the proposed regulations. We have shared those concerns 

with OPM, DOD, and in testimony presented before Congress. 

The new system has relegated the authority for determining collective bargaining rights to the Secretary. Toward this end, recVerDate 0ct 09 2002 11:14 Sep 18, 2006 Jkt 024933 PO 00000 Frm 00032 Fmt 6633 Sfmt 6601 C:\DOCS\24933.TXT SAFFAIRS PsN: PAT
29

1The prepared statement of Mr. Gage appears in the Appendix on page 118. 

ognition of management organizations such as FMA is a fundamental part of maintaining a collaborative and congenial work environment. 

Title 5 CFR 251 allows FMA, as an example, to come to the table 

with DOD leadership and discuss issues that affect managers and 

supervisors like these regulations. While this process is not binding 

arbitration, the ability for managers and supervisors to have a 

voice in the policy development within the Department is crucial to 

its long-term vitality. 

There has also been a commitment on the part of OPM and DOD 

to hold close the merit system principles and allow for employees 

and managers to seek out the independent third-party review of 

grievances in cases. We cannot stress adherence to and the importance of these time-tested standards and the Merit Systems Protection Board enough. 

We, at FMA, are cautiously optimistic that the new personnel 

system will be dynamic, flexible, and helpful in allowing DOD to 

respond to emerging threats when it needs to. While we remain 

concerned with some areas at the dawn of the system’s rollout, the 

willingness of OPM and DOD to reach out to employee organizations such as FMA is a positive indicator of collaboration and 

transparency. 

We look forward to continuing to work closely with OPM, department and agency officials, union representatives, and Members of 

Congress. 

Thank you again, Mr. Chairman, for the opportunity to testify 

before your Committee and for your time and attention to this important matter. Should you need any additional feedback or have 

any questions, we would be glad to provide assistance. 

Senator VOINOVICH. Thank you, Mr. Styles. Mr. Gage. 

TESTIMONY OF JOHN GAGE,1 NATIONAL PRESIDENT, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL–CIO, 

ACCOMPANIED BY DAN SCHEMBER, COUNSEL, ASSOCIATION 

OF CIVILIAN TECHNICIANS 

Mr. GAGE. Thank you, Mr. Chairman. It is a pleasure to appear 

before you again today. 

Mr. Chairman, you have our written testimony. 

Senator VOINOVICH. And it will be made part of the record. 

Mr. GAGE. And I would like to deviate from my remarks this 

morning to talk about some things that Secretary England said and 

especially with regard to an agreement that was made just yesterday. And I think it is illustrative of the frustration that the unions 

have, and also it is very illustrative of the assault on collective bargaining. 

I met with Secretary England and his staff the night before the 

regulationss were put into the Federal Register. We were told that 

there were minimal changes to the draft regulations. For instance, 

on the mitigation, the standard for mitigation was changed from 

‘‘wholly without justification’’ to ‘‘totally unwarranted.’’ Clearly, a 

distinction between the two that my members don’t understand. 

30

We were told that on December 7, the labor relations regulations 

would be implemented and our contracts would be void. I asked 

what parts of the contracts, and I received rather a flip answer 

that ‘‘read the regs.’’ Obviously, I objected to Secretary England 

and said that it would be much more collaborative if we could sit 

down and go through these contracts and decide what provisions 

would remain. 

Secretary England said that he thought that would be a good 

idea. Then we received our first issuance, which was the procedures for the new board, this board that is not set up yet. We were 

told that the board would be set up by December 7. 

These regulations were incredible. They say that, first of all, they 

turned the whole process into one that would just gut additional 

union rights, for instance, and contradicted even the final NSPS 

regulations. For instance, in the final regulations, it comes down 

that the unions have a 60-day period to receive management’s declarations of things that are not negotiable and given within this period to try to make our contracts in conformance, whatever that 

means, with the new regulations. 

But then these competing issuances say that when the union is 

told that something is nonnegotiable right on December 7, they 

have 20 days to contest this to the new board. However, in the regulations, the whole idea of how negotiability is overturned. Under 

the FLRA right now, the union, when it is told that something is 

nonnegotiable, we put in a form, a filing with the FLRA, and then 

management is asked to deliver why the provision is nonnegotiable. 

This is completely turned on its head with these new issuances. 

The union has 20 days to submit a brief of why an issue is negotiable before even being told why it is not being negotiable. It turns 

the whole due process around. Plus, with 357 locals, for us to respond in a 20-day period to really a large amount of issues that 

will be unclear and needing to be contested is simply impossible, 

and I believe the regulations were set up that way to make it impossible. 

So I called, specifically, over to Mr. Curry, who put out these regulations, and explained to him the controversy between the NSPS 

and these new board issuances. He could not explain it. 

We asked for an immediate meeting. We did not receive it. And 

finally, our attorneys had to go through the Justice Department attorneys handling the lawsuit to finally look at what the union was 

saying, and they agreed to move for a stipulation with the judge 

to postpone the implementation of the labor part from December 7 

to February 1. 

Senator not only do the regulations reduce the scope of bargaining, the implementing regulations further cut into the unions 

to be able to make any type of collective bargaining approach with 

management. And with the 60-day provision in the NSPS, when it 

says you have only that period to bring your contracts into conformance and implies that if you don’t, that issue is gone forever 

from collective bargaining. 

Senator this is a set-up. Our people are extremely concerned 

about it. There is no way for us to provide representation to our 

members in such a scheme. And I really resent Secretary England 

talking about collaboration when the regulations, the face of them, 

31

1The prepared statement of Mr. Ault appears in the Appendix on page 148. 

come down to a set-up to take away the unions’ rights in the future. Not only are our future rights taken away, but agreements 

that we have will be wiped out with the stroke of a pen because 

of completely unreasonable timeframes. 

Senator we continue to urge this Committee to take legislative 

action to resolve our six flashpoint issues that we describe in our 

testimony. The scope of collective bargaining must be fully restored. DOD must not be permitted the ability to unilaterally void 

provisions of signed collective bargaining agreements. Any DOD 

specific labor management board must be independent from DOD 

management. Standards for mitigation of penalties need to be fair. 

Performance appraisals must be subject to grievance and arbitration in order to ensure fairness. Strong and unambiguous safeguards must be established to prevent either a general reduction 

or stagnation in DOD salaries. And finally, sir, RIF procedures 

must be based beyond factors of a worker’s single performance appraisal. 

Senator, I wish I could relay to you the indignation of our members across the country because of these regulations and how they 

have been put out. The meet and confer, all the efforts we put into 

trying to make this process work have simply been discarded. I 

don’t believe we have even been listened to. 

Yet we have put very strong, practical suggestions on how bargaining could be speeded up, how we could do post implementation 

bargaining, how we could speed up adverse actions and discipline 

issues, how we would sit down and work out a pay-for-performance 

system. And we simply, the final regulations do not indicate any 

of these suggestions and show that it was truly a waste of time for 

us to work and try to deal with the Department on these very important issues. 

Sir, again, we need congressional action. These regulations will 

hurt DOD. They will hurt employees. They will take away from the 

great mission in national security for years to come. 

Thank you, sir. 

Senator VOINOVICH. Thank you, Mr. Gage. 

The only comment I have is that, at least from my perspective, 

we will take your concerns and ask the Department to respond. It 

is too bad that in hearings we have these groups separate. 

Mr. GAGE. I would appreciate that, Senator. It is a very immediate issue. 

Senator VOINOVICH. We will be glad to look into that. I know 

there is a great deal of apprehension surrounding the implementing of the issuances. So I just want to assure you that we will 

look into that. 

Mr. GAGE. Thank you. 

Senator VOINOVICH. Mr. Ault. 

TESTIMONY OF RONALD AULT,1 PRESIDENT, METAL TRADES 

DEPARTMENT, AFL–CIO 

Mr. AULT. Good morning, sir. Good morning, Senator Warner. It 

has been a long time since you and I have had the opportunity to 

say hello, since the days that I was the President of the Tidewater, 

32

Virginia, Federal Employees Metal Trades Council, and I appreciate you being here this morning. 

Senator Voinovich, the folks from Ross, Ohio, at the Fernald 

Atomic Trades and Labor Council told me this morning to make 

sure we passed along our greetings to you as well. 

Senator Akaka, Matt Hamilton, our president from Pearl Harbor, 

said the same. So it is good to be here. 

And Senator Voinovich, I want to just expound a little bit on 

what you just said a second ago, and it is a shame that there are 

just two completely different versions of events when you have a 

varied group of people testifying. And maybe some time in the future we could kind of have a debating society of actually what went 

on because I like their version a lot better than the version I was 

in for almost 2 years. [Laughter.] 

Mr. AULT. I have got a 5-year-old daughter, believe it or not. And 

she comes and sits in my lap at night, and she asks me to read 

her books. And one of the books I read the other night was ‘‘The 

Emperor’s New Clothes.’’ And NSPS is the emperor’s new clothes. 

And the version I hear put forth in all those great spin words—

and I am just an old country boy from Arkansas, so you have to 

forgive me. I am not as smooth and polished as some of the other 

speakers, and I am pretty direct. And if I offend anyone, it is not 

on purpose. 

Senator VOINOVICH. May I interrupt you? The emperor’s new 

clothes? That can describe a lot of stuff that we do here in Congress. [Laughter.] 

Senator WARNER. But I have to say, Mr. Chairman, the NSPS 

may be taking off all your clothes with regard to pay. [Laughter.] 

Mr. AULT. I do feel somewhat naked, Senator Warner. 

But I do want to thank you folks for having an opportunity for 

the Department, the United Defense Workers to have an opportunity to address this Committee. We are a large and varied group 

of folks from 36 different labor organizations that are historic. I 

think the fact that DOD united organizations that have never been 

united before into a common cause is indicative of the way that we 

see things coming forth on NSPS. 

They had a spin on the 58,000 public comments that was kind 

of interesting, like there was an outreach program that they went 

out and talked to all these folks. But I think the 58,000 public comments that I read, it was only 12 of them in favor of NSPS, and 

those 12 appeared to be from a group of retirees up in Columbia, 

Maryland, of all places. So the other 58,000 were people who were 

outraged that the system was being so radically changed from the 

present system that they know. 

One of the things that I think is interesting in all of this is the 

National Security Personnel System is not about security. It is 

about control. As you know, the blueprint for NSPS was written by 

the Heritage Foundation folks in January some 9 months before 

September 11. The principal architect is George Nesterczuk. It was 

proposed not as a result of anything having to do with national security, but it is social engineering, and we are seeing some of that 

happening in the Gulf Coast as we speak, when different groups 

are trying to socially re-engineer the rebuilding of New Orleans. 

33

There is a fundamental disconnect in the leadership of the Pentagon, embodied in the views of Secretary Rumsfeld, and the workers that we represent. Secretary Rumsfeld holds workers in disdain. He distrusts our motive. He demeans our knowledge and contribution. He clearly believes in command and control supervision. 

These are the views held widely within the Executive Branch, 

clearly articulated by Mr. Nesterczuk, the key architect of NSPS, 

reflecting a broad suspicion of unions—us guys—as interlopers at 

the work site. 

Mr. Nesterczuk described unions in government, ‘‘At worst, they 

represent the permanent government, acting on its own self-interest rather than the desires of the electorate.’’

We have heard Secretary England, Secretaries Chu and Rumsfeld repeatedly defend the NSPS by describing what it is not. But 

we have also had in their own words a description of what it is, 

and that description should give lawmakers and citizens alike a 

substantial cause for alarm. 

Again, in the words of Mr. Nesterczuk, ‘‘The core Federal workforce would include expert, highly compensated individuals who 

serve as executives and managers. The spokes of the new system 

would be a new class of temporary employees to deal with increased workloads or changing priorities of government and the 

professional experts to do the specific jobs or projects in-house. The 

rim would be contractors performing the great majority of the work 

on the rim of Federal Government.’’

A new class of temporary employees? These are the folks that we 

are supposed to represent. There is no description in our unit recognition of those employees, and we believe that is exactly the objective, is to get rid of these career civil service employees. 

We strenuously disagree with the viewpoints. Giving voice to 

workers to both exercise their inherent rights and to express insight and experience about how work is accomplished can increase 

productivity and efficiency. Furthermore, and importantly, that attitude disparages the concept of freedom of association and representation as a fundamental workplace right and a significant element of a democratic society. 

The Metal Trades Department’s experience in the collaborative 

work process within the Department of Defense supports our contention. For example, we have negotiated with the Navy to develop 

a wide-ranging cross-training program within Federal shipyards a 

few years ago to improve efficiency and reduce downtime. 

We collaborated with the Navy to establish an innovative safety 

and training program for crane operations, which standardized all 

crane operations Navy wide. We have also negotiated a highly regarded apprenticeship training program with the Navy to address 

the chronic problem of our aging workforce in the area of ship repair and maintenance. 

And let me just say something about that really quickly. We represent wage-grade expert craft and trades people who are 65 percent ready to retire today. And I think that is something that needs 

to be looked at very carefully is you start messing with these folks’ 

pay, and they can walk across the street to Newport News. They 

can go down the street to all these other shipyards that we represent, and we are 1,600 employees short right now at Avondale 

34

and Ingalls—you can quickly get yourself in lots of trouble when 

you start messing with people’s money. 

Second, the institutions of collective bargaining and union representation present no threat to national security. Consequently, 

there is no reason to reduce or further limit the union representation for Defense Department personnel. 

Senator WARNER. If you want to go ahead? Yes, we will do that. 

Sure. Why don’t you announce how we are going to do this? 

We didn’t mean to interrupt you, but given our vote, we only 

have but 7 minutes left to make it. Mr. Chairman, you are going 

to go now. I am going to remain a few minutes to receive his testimony, and then you will be back. Is that correct? 

Senator VOINOVICH. I think we are going to have to end the hearing. 

Senator WARNER. Oh, I see. 

Senator VOINOVICH. Yes. 

Senator WARNER. Well, I would like a few minutes, if I may, Mr. 

Ault? I don’t want to invade your time. 

Mr. AULT. My time, we only get one shot at it. So I would like 

to finish. 

Senator VOINOVICH. Let me inform them. I am sorry about the 

time, and I really wished that I had even terminated the first panel 

earlier than we did. 

Mr. AULT. I like that term. [Laughter.] 

Senator VOINOVICH. Well, there is certainly a difference of opinion about this new system. So I would assure the witnesses that 

I am going to follow through on some of the points that you made 

here today. 

And Mr. Gage, I will get something back from them in writing. 

And what I would like to do then is turn the gavel over to Senator Warner. 

OPENING STATEMENT OF SENATOR WARNER 

Senator WARNER [presiding.] Well, I would just say a few words. 

But I would say to my friends here—and they are friends. I have 

known you, Mr. Ault, and I have spent many a day with John 

Gage, and I have the highest personal and professional regard for 

your leadership and what you are trying to do. 

But I would say about this Senator, when he makes a commitment, he keeps it. He is one of the most tenacious, hard-working 

Members of this body. Now, with that, you can leave. [Laughter.] 

Mr. AULT. That is what Gene Branham says about him, from 

Ross, Ohio, too. 

Senator WARNER. Yes, well, he is tough. Let me tell you. 

Senator VOINOVICH. I refer to Senator Warner as ‘‘Squire.’’ 

Thank you, Squire. 

Senator WARNER. But you know, I have to draw on my own experiences in the Department of Defense, 1969 through 1974, 5 years 

as Under Secretary and Secretary of the Navy. It might surprise 

you, I had over 600,000 civil servants in the Department of the 

Navy, just the Department of the Navy. And we had a real rough 

war going on. We have got a rough war going on now. 

I just remember, as I traveled through the halls of the Pentagon, 

that you would go into any office, and there is a uniformed person 

35

and a civilian. They are side by side. There were partnerships. 

They worked together as a team. 

And we cannot, as a consequence of NSPS or whatever we end 

up in the final phase of this, have that civilian feeling somewhat 

disenfranchised. Nor would the military person want that civilian 

to feel disenfranchised and not properly represented. And I can 

speak to the Department of Defense. I mean, I have devoted my life 

to it, and it is the greatest institution I have ever seen. Just magnificent. And we can’t have that. 

So we have here in the Congress to weigh in on this situation. 

It is very important. I also take note, and I just left the floor giving 

a speech about Iraq with Senator Stevens. The two of us old-timers 

teamed up over there just now. Our military people are at one of 

the highest OPTEMPOs ever experienced with a substantially 

lower number in uniform. And I could foresee fewer uniformed people in those desks and, therefore, having more reliance on the civilian team to fill those gaps. 

So this is not a time to bring into the system any feeling that 

would result in a less than magnificent operation we have had all 

these years in the Department of Defense. So that is where I come 

from. 

I will submit my questions which I have for the record. What I 

am concerned about, this pay thing, and the law prevents this reduction in a way, and I don’t want to see us circumvent that. We 

can’t do that. 

I might add that the bill that we passed here, the Armed Services bill, which I have been working on with my colleagues on the 

Committee for a year, 98–0. That was a record vote in the history 

of the Senate. Every single senator supporting the men and women 

in the Armed Forces and their civilian partners of the Department 

of Defense. So let us take heart and see if we can’t work this thing 

out and give us a shot at it. 

Thank you for coming today. Sorry I haven’t had more time to 

be here. But the Senate and the Congress have a wonderful way 

of trying to do everything at once, and we are all trying to do everything at once this week. 

So this hearing stands in recess subject to the call of the Chair. 

[Whereupon, at 11:59 a.m., the Committee was recessed subject 

to the call of the Chair.] 

(37)

A P P E N D I X 

PREPARED STATEMENT OF SENATOR CARPER 

Thank you, Madam Chairman, for holding this hearing. It’s important that we review this proposed new personnel system for the Department of Defense before it 

goes into effect. Like many of us on this Committee, I have major defense installations in my State and am eager to learn more about how the new system will affect 

my constituents. 

I’d like to start out by thanking everyone at the Department of Defense, OPM, 

GAO, and the various organizations and unions representing the employees who’ll 

be working under the new system for all of the work they put into these regulations. 

I don’t know that any of us up here think the regulations are perfect—I have some 

serious concerns about parts of them myself—but I appreciate the dedication on the 

part of everyone involved in this process to getting it right. 

I don’t think I need to remind anyone in this room that the proposed regulations 

we’re examining today represent a massive change in the way personnel at the Department of Defense are managed. Some of the changes may very well be worthwhile and could serve as an example for other departments and agencies. 

Based on the feedback my staff and I have heard from Delawareans working at 

the Dover Air Force Base and elsewhere, however, some key parts of the regulations 

don’t appear to be very fair. Fear of their upcoming implementation appears to be 

creating significant morale problems among Department of Defense employees—at 

least those I’ve been in contact with. 

I mentioned the Dover Air Force Base, Madam Chairman. My colleagues and I 

from the Delaware Congressional delegation just spent months of our time keeping 

that base and the Delaware Air National Guard base in New Castle off of the final 

closing and realignment recommendations submitted by the BRAC commission. I 

know others on this Committee just finished similar work on behalf of defense installations in their States. 

During that time—and during my entire time in the Senate, frankly—I haven’t 

heard about a single instance in which a provision or procedure enshrined in current personnel law has hindered the ability of the Delawareans working in Dover, 

New Castle, or elsewhere to carry out their important national security missions. 

This isn’t to say that we don’t need personnel reform at the Department of Defense. I’d be among the first to tell you that we’d be foolish not to look at how we 

can do things better government-wide as we look to recruit, retain, and effectively 

manage the most qualified Federal workforce we can find. 

Part of what I hope to hear then, Madam Chairman, is at least some solid justification for the more controversial parts of this new personnel system. 

Thank you again for holding this hearing. I look forward to hearing from our witnesses.

PREPARED STATEMENT OF SENATOR LAUTENBERG 

Madam Chairman: Thank you for convening this Committee hearing to examine 

the final regulations for the new personnel system of the Department of Defense—

the National Security Personnel System (NSPS). 

The centerpiece of NSPS is ‘‘pay for performance’’ and the virtual elimination of 

Federal workers’ right to bargain collectively. 

The Administration ‘‘sold’’ this personnel system to Congress using the argument 

that the post September 11 period somehow required senior executives and managers to disregard the concerns of rank-and-file workers. 

To this day, I fail to understand the Administration’s reasoning. In fact, I believe 

that one of the most important lessons to be learned from the tragedy of September 

38

11 is that there must be better communication between the senior levels of management and the rank-and-file. 

I also question the apparent prejudice against workers who belong to labor 

unions. 

Recall that the first responders who rushed up the emergency stairwells in the 

World Trade Center on September 11—while civilians filed past them on the way 

down—were union workers. 

I’m a strong believer in treating our Federal workforce fairly. As someone with 

extensive experience in the private sector, I know that workers are most productive 

when they receive fair pay and benefits, and when they can make their ideas heard. 

The GAO put out a report last summer stating that the Pentagon had not done 

enough to reach out to the 700,000 Defense civil service workers who would ultimately be affected by NSPS. 

Several member unions last week announced a lawsuit against the Pentagon for 

doing away with collective bargaining rights for workers. 

Given the importance of the Defense Department’s mission, we need to attract the 

‘‘best and brightest’’ to work in its civilian workforce. 

Beating people down and taking away their rights isn’t going to build the DOD 

workforce—we need to keep America safe. I hope we can work together to fit the 

problems with this new plan. 

Finally, Madam Chairman, I believe that our current whistleblower protection 

system is not working. 

All too often, when devoted Federal employees make the hard choice to courageously report wrongdoing that threatens us all, they are viciously attacked by the 

bureaucracy and their careers are ruined. 

Retaliating against whistleblowers is illegal, but the current system is so rigged 

in favor of management that whistleblowers prevail less than 10 percent of the time. 

That is wrong, and I will soon introduce legislation to do something about it. 

I’m interested from hearing more from our witnesses on this issue as well. I welcome our witnesses and look forward to hearing their testimony about it. Thank 

you, Madam Chairman.

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