GAO-01-690R DC Compensation Simplification

United States General Accounting Office

Washington, DC 20548

May 16, 2001

The Honorable Joe Knollenberg

Chairman

The Honorable Chaka Fattah

Ranking Minority Member

Subcommittee on the District of Columbia

Committee on Appropriations

House of Representatives

The Honorable Mike DeWine

Chairman

The Honorable Mary Landrieu

Ranking Member

Subcommittee on the District of Columbia

Committee on Appropriations

United States Senate

Subject: District of Columbia: Compensation Simplification Contracting

 Requirements

The District of Columbia Appropriations Act, 2001 (Appropriations Act) (Public Law

106-522, Nov. 22, 2000) provided a federal payment of $250,000 to the Mayor of the

District of Columbia (DC) for a contract to study and then develop a plan to simplify

the compensation systems, schedules, and work rules applicable to DC government

employees. The act placed several conditions on the appropriation, one of which was

that the Comptroller General review the proposed solicitation for the contract to

ensure that it adequately addressed all of the elements stipulated in the act. As

requested by your staff, this letter summarizes the actions that we took in response to

this mandated review.

Results in Brief

District government officials initially told us that they planned to apply the $250,000

payment to existing contracts that were being used in the District’s independent

effort to reform its classification and compensation systems—and therefore would

not carry out the conditions that Congress had established for receipt of the funds.

However, the officials more recently said the District no longer planned to use the

funds because doing so would delay its reform effort. The City Administrator said
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that he would request the District’s Chief Financial Officer to make a formal

rescission request to Congress.

Requirements in the Appropriations Act

The Appropriations Act provided a $250,000 payment to the District Mayor for a

contract “for the study and development of a plan to simplify the compensation

systems, schedules, and work rules applicable to employees of the District

government.” The act placed several conditions on the appropriation.

First, the plan developed pursuant to the contract was required to include, at a

minimum, (1) a review of the current compensation systems, schedules, and work

rules applicable to DC government employees, (2) a review of the best practices

of state and local governments and other appropriate organizations regarding

compensation systems, schedules, and work rules, (3) a proposal for simplifying

the systems, schedules, and rules applicable to DC government employees, and

(4) the development of strategies for implementing the proposal, including the

identification of any statutory, contractual, or other barriers to implementing the

proposal and an estimated time frame for implementation.

Second, the Appropriations Act required the contractor to submit the plan to the

Mayor and to the committees on appropriations of the House of Representatives

and the Senate.

Third, the act required the Mayor to develop a proposed solicitation within 90

days after enactment and submit a copy of the proposed solicitation to the

Comptroller General at least 90 days before its issuance.

Fourth, the act provided that within 45 days after receipt of the proposed

solicitation, the Comptroller General must review the solicitation to ensure that it

adequately addresses all of the required elements and report on the results to the

committees on appropriations of the House and the Senate.

The conference report for the Appropriations Act indicated that the conferees

expected the District government to supplement the $250,000 appropriated, if

necessary, with local funds, and that the Mayor would allocate the contract costs as

he deemed appropriate.1

District Government No Longer Plans To Use Funds

Because the Appropriations Act required the Mayor to develop the proposed

solicitation within 90 days after the act’s enactment (i.e., by February 20, 2001), we

began checking with the DC Office of Personnel in late February 2001 to determine

whether the proposed solicitation had been developed. In early March 2001, officials

from the Office of Personnel told us that the District government did not plan to

develop a solicitation. Instead, they said the District planned to use the funds to help

pay the costs associated with existing contracts related to human resources reform

initiatives that had been started before the Appropriations Act was passed. They said

 1

H.R. Rep. No. 106-1005, at 54-55 (2000).
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the DC Office of Personnel began to rethink its civil service classification and

compensation systems in 1999, and that the language in the Appropriations Act was

based on an erroneous assumption that nothing was being done to improve the

condition of the District’s human resource management system. Therefore, one

official said, the appropriators were trying to provide “seed money” to initiate a

process that had already begun.

The officials said that the goals of their contracting initiative were substantively

similar to the goals delineated in the Appropriations Act. They provided us with a

copy of the June 26, 2000, request for proposals (RFP) that led to the existing

contracts. The RFP stated that the DC Office of Personnel “seeks a contractor to

assist with a variety of workforce initiatives including the redesign of its

compensation and classification system and its collective bargaining agreements,”

and stipulated a minimum (40 work hours) and a maximum ($900,000) requirement

under the contract. Particular requirements delineated in the RFP included (1) a

compensation analysis comparing the cost and competitiveness of employee

compensation in various occupational groups with other governments and with other

employers in the Washington, D.C., area and elsewhere, (2) benchmarking and best

practices research looking for successful practices in the public or private sectors

that can be used as models or guides, and (3) assisting management in the

development of implementation plans and strategies.

On March 23, 2001, we met with the Director of the DC Office of Personnel and other

DC government officials to discuss the District government’s actions in response to

the requirements in the Appropriations Act. At that meeting, the officials again told

us that the District government planned to use the $250,000 to pay for tasks pursuant

to existing contracts related to its human resources reform initiatives and did not

plan to develop a new RFP. They said the $250,000 had been deposited in a general

fund account controlled by the Mayor, but no federal money had been spent under

the existing contracts.

The DC government officials said that “indefinite delivery/indefinite quantity”

contracts had been awarded in September 2000 to three firms that submitted bids in

response to the June 2000 RFP: (1) PricewaterhouseCoopers; (2) the Segal Company,

and (3) Public Financial Management, which partnered with Fox Lawson and Star

Mountain for its bid. They also said that as of March 23, 2001, five task orders had

been issued pursuant to the contracts: (1) a preliminary assessment of the

classification and compensation practices in the District, (2) an evaluation of a

possible transition to the federal government’s classification and pay system, (3)

phases I and II of a plan to simplify District pay schedules, (4) the development of

training on rewarding high performance, and (5) the delivery of training on rewarding

high performance. They said that three other task orders had been developed but not

issued for (1) phase III of the plan to simplify District pay schedules, (2) the

development of a classification and compensation strategy, and (3) the identification

and review of best practices in classification, compensation, and rewards in similar

governments or organizations.

On April 2, 2001, the Director of the DC Office of Personnel sent us a letter stating

that “we are no longer planning to use the $250,000 allocated to us in (the

Appropriations Act).” She said that her office decided not to use the money because
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the District was further ahead in its classification and compensation reform effort

than the functional requirements of the act contemplated, and that the office could

not fulfill the detailed requirements outlined in the act without delaying its project.

She also said that she would formally notify Congress of the District’s plans to no

longer use the money “in a letter to be sent later this week.”

On May 2, 2001, the Director of the DC Office of Personnel sent a letter to a staff

member of the Subcommittee on the District of Columbia, House Committee on

Appropriations, stating that “we have decided not to use the $250,000 allocated to us

by the Congress.” The Director described the progress that her office had made in

the District’s classification and compensation reform initiative, issuing the RFP the

previous summer, signing contracts with three firms, issuing 13 task orders pursuant

to the contracts, and gaining the support of two large labor unions. She said that her

office would lose valuable time if it stopped its work to refocus on another

procurement effort, and that it was unlikely that it could have a new contract in place

in time to responsibly spend the money allocated to the District. However, she said

her office expects to have the “deliverables required by the Congress” by the end of

this fiscal year. Enclosed with the letter were, among other things, the three

contracts that the District had signed as part of the initiative.

The Director’s May 2, 2001, letter to a congressional staff member did not represent

formal notification of Congress. We informed District government officials that they

should report the withholding of these funds from obligation as either a rescission or

a deferral in a manner similar to that outlined in the Impoundment Control Act of

1974.

Agency Comments

We provided a draft of this letter to the City Administrator of the District of Columbia

for his review and comment. In a May 10, 2001, letter, the City Administrator said

that the Director of the District Office of Personnel had informed him that she no

longer planned to use the $250,000, and that he would request the District’s Chief

Financial Officer to make a formal rescission request to Congress.

Scope and Methodology

We conducted this review by interviewing DC government officials and, where

possible, obtaining and reviewing relevant documents. We conducted this review

from February through mid-May 2001 in accordance with generally accepted

government auditing standards.

- - - - -

We are sending copies of this letter to Representative Constance A. Morella,

Chairwoman, and Representative Eleanor Holmes Norton, Ranking Minority Member,

Subcommittee on the District of Columbia, House Committee on Government

Reform; Senator George V. Voinovich, Chairman, and Senator Richard J. Durbin,

Ranking Member, Subcommittee on Oversight of Government Management,

Restructuring and the District of Columbia, Senate Committee on Governmental
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Affairs; the Honorable Anthony A. Williams, Mayor, District of Columbia, and the

Honorable John A. Koskinen, City Administrator, District of Columbia. The letter is

also available on GAO’s home page at http://www.gao.gov. If you have questions,

please contact me or Curtis Copeland at (202) 512-6806.

J. Christopher Mihm

Director, Strategic Issues

(450023)