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S. Hrg. 109–166

EMPLOYING FEDERAL WORKFORCE FLEXIBILITIES:

A PROGRESS REPORT

HEARING

BEFORE THE

OVERSIGHT OF GOVERNMENT MANAGEMENT, 

THE FEDERAL WORKFORCE AND THE DISTRICT 

OF COLUMBIA SUBCOMMITTEE

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

APRIL 21, 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 

JOYCE A. RECHTSCHAFFEN, Minority Staff Director and Counsel 

AMY B. NEWHOUSE, Chief Clerk 

OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL 

WORKFORCE AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE 

GEORGE V. VOINOVICH, Ohio, Chairman 

TED STEVENS, Alaska 

NORM COLEMAN, Minnesota 

TOM COBURN, Oklahoma 

LINCOLN D. CHAFEE, Rhode Island 

ROBERT F. BENNETT, Utah 

PETE V. DOMENICI, New Mexico 

JOHN W. WARNER, Virginia 

DANIEL K. AKAKA, Hawaii 

CARL LEVIN, Michigan 

THOMAS R. CARPER, Delaware 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

ANDREW RICHARDSON, Staff Director 

RICHARD J. KESSLER, Minority Staff Director 

NANCI E. LANGLEY, Minority Deputy Staff Director 

TARA E. BAIRD, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

Senator Voinovich ............................................................................................. 1

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

Senator Carper ................................................................................................. 13

Senator Pryor .................................................................................................... 34

WITNESSES

THURSDAY, APRIL 21, 2005

Marta Brito Pe ́rez, Associate Director for Human Capital Leadership and 

Merit System Accountability, U.S. Office of Personnel Management .............. 5

Eileen Larence, Director, Strategic Issues, U.S. Government Accountability 

Office ..................................................................................................................... 7

Evelyn M. White, Principal Deputy and Acting Assistant Secretary for Administration and Management, Department of Health and Human Services ....... 19

Jeffery K. Nulf, Deputy Assistant Secretary for Administration, U.S. Department of Commerce ............................................................................................... 21

Rafael Deleon, Director, Office of Human Resources, Environmental Protection Agency ........................................................................................................... 25

Vicki A. Novak, Assistant Administrator for Human Capital Management 

and Chief Human Capital Officer, National Aeronautics and Space Administration ................................................................................................................. 27

ALPHABETICAL LIST OF WITNESSES

Deleon, Rafael: 

Testimony .......................................................................................................... 25

Prepared statement .......................................................................................... 86

Larence, Eileen: 

Testimony .......................................................................................................... 7

Prepared statement .......................................................................................... 53

Novak, Vicki A.: 

Testimony .......................................................................................................... 27

Prepared statement .......................................................................................... 91

Nulf, Jeffery K.: 

Testimony .......................................................................................................... 21

Prepared statement .......................................................................................... 77

Pe ́rez, Marta Brito: 

Testimony .......................................................................................................... 5

Prepared statement .......................................................................................... 43

White, Evelyn N.: 

Testimony .......................................................................................................... 19

Prepared statement .......................................................................................... 73

APPENDIX

Letter to Senators Voinovich and Akaka, dated April 25, 2005, from Carol 

A. Bonosaro, President, and William Bransford, General Counsel, Senior 

Executives Association ......................................................................................... 98

Questions and Responses for the Record from: 

Ms. Pe ́rez ........................................................................................................... 101

Ms. Larence ....................................................................................................... 113

Ms. White .......................................................................................................... 119

Mr. Nulf ............................................................................................................. 124

Ms. DeLeon ....................................................................................................... 133

Ms. Novak ......................................................................................................... 138

(1)

EMPLOYING FEDERAL WORKFORCE 

FLEXIBILITIES: A PROGRESS REPORT 

THURSDAY, APRIL 21, 2005

U.S. SENATE, 

OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL

WORKFORCE AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE, 

OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS,

Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:35 a.m., in 

room SD–562, Dirksen Senate Office Building, Hon. George V. 

Voinovich, Chairman of the Subcommittee, presiding. 

Present: Senators Voinovich, Akaka, Carper, and Pryor. 

OPENING STATEMENT OF SENATOR VOINOVICH 

Senator VOINOVICH. This hearing will please come to order. 

Good morning. Today’s hearing, ‘‘Employing Federal Workforce 

Flexibilities: A Progress Report,’’ is one that I have been looking 

forward to. 

The purpose of today’s hearing is to examine the implementation 

of a series of human capital reform bills that have been enacted 

over the last 2 years. All of these bills originated in our Subcommittee, and I am proud to say that working closely with Senator Akaka and other Members of this Committee, they have become law. 

Again I want to thank Senator Akaka, and his staff, for all the 

time and effort they have put into working on legislation that is 

so very important to our country’s future. While passing these reforms was difficult, it is only the first of Congress’s responsibilities. 

On July 20, 2004, we convened a hearing of the Subcommittee 

with a similar oversight agenda, and we will hold additional oversight hearings in the future. I want to let everybody know that I 

will be serving in the Senate for another at least 51⁄2 years. I intend to stay on top of this issue. 

I cannot emphasize enough the need for continued congressional 

oversight of these reforms. On November 25, 2002, the Homeland 

Security Act of 2002 became law. Included in that legislation were 

provisions that equaled the most significant reforms to the civil 

service in a quarter of a century. They included the establishment 

of agency Chief Human Capital Officers and a Chief Human Capital Officer’s Council. The permanent authorization of the workforce reshaping authorities, voluntary early retirement authority, 

voluntary separation incentive payments, and a long overdue modiVerDate 0ct 09 2002 13:21 Nov 03, 2005 Jkt 021432 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 C:\DOCS\21432.TXT SAFFAIRS PsN: PHOGAN
2

fication to the hiring process that allows Federal agencies to use 

category rating instead of the over 100 year-old ‘‘rule of three.’’

On November 11, 2003, the Federal Employee Student Loan Assistance Act became law. The law raises to $10,000 from $6,000 

and to $60,000 from $40,000 respectively, the annual and aggregate limits of student loan repayment Federal agencies may offer 

employees as recruitment and retention incentives. I am pleased to 

see that the Office of Personnel Management (OPM) has reported 

that for fiscal year 2003 agencies spent three times as much on 

student loan repayment than they did in fiscal year 2002. In total, 

24 agencies provided more than $9.1 million in student loan repayments to 2,077 Federal employees. 

On November 24, 2003, the purpose of the Senior Executive 

Service Reform Act was accomplished by a provision of the fiscal 

year 2004 Defense Authorization Bill. This provision relieves pay 

compression within the Senior Executive Service by allowing agencies to establish a pay-for-performance system for their senior executives. We are all familiar with the problem that 75 percent of 

our senior executives all received the same pay. 

Proper and effective implementation of a performance management system is imperative to the long-term ability of Federal departments and agencies to meet their mission. I look forward to the 

testimony regarding the certification process for the performance 

management systems for senior executives, and how implementation is proceeding. 

On February 24, 2004, the NASA Flexibility Act of 2004 became 

law. The law provides several new flexibilities to the National Aeronautics and Space Administration to help that agency recruit and 

retain the best and brightest scientists and engineers for the agency’s high technology mission. I know that the President has challenged NASA with a new mission and that NASA has been working 

to realign its workforce to meet the new mission. Unfortunately, 

there have been numerous reports of proposed actions by NASA 

that have raised concern as to whether or not the agency is using 

the flexibilities as Congress intended. I look forward to discussing 

this matter in greater detail. 

Last, but not least, the President signed into law on October 30, 

2004, the Federal Workforce Flexibility Act. That legislation enacted such reforms as compensatory time for travel, enhanced leave 

for individuals who join public service mid career, and an increased 

focus on training within agencies. It has only been 6 months since 

enactment, but OPM has been working to implement these reforms, including the publication of interim regulations for the compensatory time off for travel provision on January 28 of this year. 

I look forward to learning how OPM has been working with agencies to assist the agencies understand these reforms and how agencies have begun to implement them. 

As I said earlier, I am proud of what we have accomplished and 

the changes we made in the civil service code. This Subcommittee 

has set aside partisan differences and worked together to modernize the Federal civil service. All of these changes have been 

carefully considered and have been sought to provide greater flexibility to the existing civil service framework. 

3

Through these hearings, I hope to establish a sense of what is 

working, what is not, and how lessons learned from implementation can assist other Federal departments and agencies as they 

work to implement their reforms. 

I would like to now yield to my Ranking Member of this Subcommittee, my good friend, Senator Akaka. 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. Thank you very much, Chairman Voinovich. I 

want to thank you for holding this hearing today which builds on 

the one that we held in July of last year. 

When I chaired the Postal Subcommittee, I continued the longstanding tradition of holding an annual hearing on the state of the 

U.S. Postal Service, and I am glad that we will continue to hold 

at least a yearly hearing on workforce flexibilities as we are doing 

now to review the implementation, use, and training for these new 

flexibilities. 

Mr. Chairman, I appreciate what you are doing as Chairman of 

this Subcommittee, and as a leader in the U.S. Senate. I want to 

thank your staff, as well as my staff, for all the work that they 

have been doing in this area. 

You and I have worked hard to ensure that agencies have the 

tools and resources needed to recruit, retain, and manage their 

workforce. As you noted, we joined together to add governmentwide flexibilities to the Homeland Security Act to give agencies increased authority to manage their workforce. Among these flexibilities were permanent use of Volunteering Separation Incentive Payments (VSIP) and Voluntary Early Retirement Authority (VERA); 

the use of categorical ratings instead of the rule of three for hiring; 

and the creation of Chief Human Capital Officers and the Chief 

Human Capital Officers Council. 

I was also pleased to join you, Mr. Chairman, as a cosponsor to 

the substitute amendment to the Federal Workforce Flexibility Act 

last year, which included my provision allowing employees to 

receive compensatory time off for time spent in travel outside of the 

normal work hours. Compensatory time for travel is a good worklife program, and it is one that I believe will help attract and retain quality employees. 

I would like to note that in 2002, the Government Accountability 

Office (GAO) reported on the government’s flexibilities and said 

that those most effective in managing the workforce are work-life 

programs such as alternative work schedules, child care assistance, 

transit subsidies, cash, and time-off awards. 

Last year we heard that agencies were not using the flexibilities 

Congress granted them and that OPM had given little guidance in 

terms of training and general information about the flexibilities 

that were available. 

Despite OPM implementing a 45-day hiring process, applicants 

for Federal jobs still complain that it takes too long to get hired. 

We need to figure out why the tools currently available to agencies 

are not making a difference. 

However, judging from the President’s Human Capital Scorecard, 

and the testimony submitted for today’s hearing, it appears that 

some progress is being made in the use of VSIP and VERA for 

4

agency restructuring, the use of annual leave enhancements to recruit mid-level hires and provisional certification for participation 

in the Senior Executive Service (SES) pay-for-performance system. 

I am still concerned, however, that agencies continue to lack 

funds to implement these flexibilities. Similar to the questions over 

funding for the pay-for-performance system and employee training 

on flexibilities at the Department of Defense (DOD) and Department of Homeland Security (DHS), we need to know how agencies 

are paying for the government-wide flexibilities. Agencies need adequate funding to implement pay-for-performance systems, award 

bonuses, utilize critical pay authority, provide academic degree 

training, and provide student loan repayment. 

With agencies still not making the most effective use of the workforce flexibilities granted by Congress, in addition to a lack of adequate funding, I find it premature to discuss at this time expanding the broad flexibilities granted to DHS and DOD to the rest of 

the Federal Government, especially in the areas of collective bargaining and appeals—which have never been tested. 

Mr. Chairman, we have with us a distinguished group of witnesses today, and I look forward to hearing from them on how their 

agencies are using these flexibilities, as well as any barriers they 

may have encountered relating to their use. Thank you so much, 

Mr. Chairman. 

Senator VOINOVICH. Thank you, Senator Akaka. I agree with 

you. I am really glad that you are here; you are part of what I refer 

to as the A team. Your commitment is what gets the job done. 

Senator AKAKA. I should add that the Chairman did mention to 

me that I am going to be surprised at what we are going to hear 

today, so I am looking to be surprised. [Laughter.] 

Senator VOINOVICH. How is that for putting the jacket on you? 

[Laughter.] 

I ask all the witnesses to stand and raise their right hand. It is 

the custom of this Subcommittee to swear in all witnesses. 

Do you swear that the testimony that you are about to give to 

this Subcommittee is the truth, the whole truth, and nothing but 

the truth, so help you, God? 

Witnesses. I do. 

Senator VOINOVICH. Let the record show that all the witnesses 

answered in the affirmative. 

I would like to welcome Marta Pe ́rez, the Associate Director for 

Human Capital Leadership and Merit System Accountability at the 

Office of Personnel Management; and Eileen Larence, Director of 

Strategic Issues at the Government Accountability Office. 

Ms. Pe ́rez and Ms. Larence, I thank you for appearing before the 

Subcommittee, and we look forward to your testimony today. While 

oral statements traditionally are limited to 5 minutes, but if you 

go a bit longer, it is fine. Your written testimony will be included 

in the record. Also, if we do not ask all of our questions, we will 

submit them and ask you to respond in writing. Thank you. Ms. 

Pe ́rez, will you please proceed. 

5

1The prepared statement of Ms. Pe ́rez appears in the Appendix on page 43. 

TESTIMONY OF MARTA BRITO PE ́ REZ,1 ASSOCIATE DIRECTOR 

FOR HUMAN CAPITAL LEADERSHIP AND MERIT SYSTEM ACCOUNTABILITY, U.S. OFFICE OF PERSONNEL MANAGEMENT 

Ms. PE ́ REZ. Very good. Thank you, Mr. Chairman. Good morning 

to everyone. Thank you for having me here today. I am pleased to 

appear on behalf of the Office of Personnel Management and share 

this panel with Eileen Larence. I have a written statement and I 

ask that it be included for the record, and I am happy to summarize for the Subcommittee as well. 

I am equally pleased to be here with my colleagues from the Department of Commerce, the Environmental Protection Agency, the 

Department of Health and Human Services, and the National Aeronautics and Space Administration. OPM is honored that the President has given us a responsibility to lead the transformation of 

human capital management in the Federal Government. Through 

our technical assistance and compliance programs, we work very 

closely with the agencies to ensure their progress. When they succeed, the American people benefit. I am grateful for the support 

and the partnership agencies have had with OPM over the last 3 

years. 

Today, my testimony will focus on three areas: First, the development and implementation of the pay-for-performance regulations 

for the Senior Executive Service; next, the training and education 

OPM has done to encourage the agencies to make use of workforce 

flexibilities; and third, I will comment on the use of workforce flexibilities at NASA and what OPM has done to ensure they are implemented consistent with congressional intent and OPM-approved 

workforce plans. 

The Senior Executive Service Reform Act pay-for-performance 

legislation gives opportunities to ensure that accountability for performance management resides at the highest level of government. 

How we are getting there is as important as the results we are 

achieving. 

The law provides broad flexibility, clear objective, and a strict accountability. OPM matched the statutory framework with a regulatory framework that features clear and rigorous criteria, close 

consultation with agencies in implementing those criteria, and provisional and full certification of agencies’ plans. 

The result of this effort is a system of Federal executive compensation featuring an open pay range while ensuring agencies 

have a system in place for making meaningful distinctions in performance, and basing all compensation adjustments on performance. In fiscal year 2004, 32 agencies received full or provisional 

certification for the SES or equivalent performance management 

plans which held executives and managers accountable for results, 

and based compensation on the outcomes. To date, 15 agencies 

have received certification for fiscal year 2005, with another 12 requests undergoing review. 

In general, for the agencies that are requesting second year certification, we are seeing fiscal year 2004 data that shows agencies 

are making distinctions in levels of performance, pay adjustments, 

and awards, and where we see weaknesses in their programs, we 

6

require them to take corrective action. Rating distributions are 

more closely aligned to the performance of the organization, and organizational performance has become a key factor in pay distinctions. 

As you have so accurately pointed out in the past, Mr. Chairman, 

strategic human capital management must become institutionalized in the executive agencies. OPM strategically restructured and 

created the position of Human Capital Officers in our agency to 

work with the agencies across the Federal Government, one 

Human Capital Officer per agency. OPM provides technical assistance to the agencies and monitors the implementation of requirements that were laid out in the human capital initiative of the 

President’s Management Agenda, Mr. Chairman, including the implementation of your flexibilities. 

Additionally, OPM is proactive in providing agencies with guidance and training after it publishes regulations. This includes 

memoranda for implementing and administering new provisions, 

briefings for the Chief Human Capital Officers Council, forums and 

symposiums for human resources directors and human resources 

practitioners, and follow-up technical assistance and individual attention by our Chief Human Capital Officers. 

A review of agencies’ efforts suggests they have improved in their 

management of human capital, that the fundamental concepts of 

workforce planning, succession planning, performance management 

for results and leadership development are integral parts of agencies’ human capital management planning process. Nearly onethird of the executive agencies, nine in all, have achieved the green 

status on their human capital management efforts, and almost all 

are making some use of many of the flexibilities available to them. 

But we, at OPM, believe in flexibility with accountability. The 

additional human resources flexibilities being given to agencies reinforce the need for stronger agency internal accountability systems 

that hold executives and managers responsible for the effective 

management of their workforce. This evolution places a greater responsibility for accountability at the level within each agency 

where authorities are delegated and where decisions are being 

made. Strengthening accountability government-wide ensures adherence to merit system principles and results in efficient, effective, 

and responsible administration of government services. OPM takes 

its responsibility for accountability very seriously, and expects the 

same from the agencies. 

We work closely with the Chief Human Capital Officers Council 

and their representatives across the agencies. Mr. Chairman, your 

leadership and authoring the legislation establishing these important positions is already having a substantial impact on Federal 

human capital management. In addition, the CHCO Council is 

playing a major role in the administration’s efforts to modernize 

the civil service. 

Mr. Chairman, you asked OPM to comment on NASA’s use of 

workforce flexibilities, and you asked what have we done to ensure 

NASA’s implementation is consistent with congressional intent and 

the agency’s workforce plan. 

7

1The prepared statement of Ms. Larence appears in the Appendix on page 53. 

Senator VOINOVICH. Ms. Pe ́rez, your time has expired. I will ask 

you to respond to that question during the question-and-answer period. 

Ms. PE ́ REZ. Very good. 

I would only say that we feel they are meeting the expectations 

of the Congress in their use of their flexibility. 

Because of the work of the Subcommittee, agencies now have the 

additional flexibilities which are being used to recruit and retain 

employees. These flexibilities, however, we feel strongly, cannot 

mask the deficiency of a personnel system that is still not well suited to meet the mission critical goals of today’s Federal workforce. 

I will be glad to answer any questions that you have. 

Thank you. 

Senator VOINOVICH. Thank you very much. Ms. Larence, please 

proceed. 

TESTIMONY OF EILEEN LARENCE,1 DIRECTOR, STRATEGIC 

ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. LARENCE. Thank you. Mr. Chairman, and Senator Akaka, I 

am pleased to be here today to discuss GAO’s work on how agencies are using recent human capital flexibilities Congress has provided. 

We agree that the Subcommittee’s investment in this oversight 

is important and timely. We continue to propose that if agencies 

want to take full advantage of new flexibilities to help them hire, 

develop, retain, and reward their talent, they must first have in 

place committed leadership and the necessary supporting infrastructure, including a strategic planning process that links human 

capital policies and programs to achieving organizational results; 

the capabilities to develop and implement these new flexibilities; 

and a modern, effective and credible performance management system with key safeguards built in. 

Our work at various agencies shows that we do not yet have all 

these pieces in place, but we are making progress. I would now like 

to focus on several of these elements. 

First, for reforms to work, senior executives must lead the way 

and cascade successful practices down through their agencies. OPM 

and GAO have recognized this and called on agencies to develop 

rigorous performance management systems for their executives, 

ones that link their day-to-day activities with organizational results and make clear distinctions in their performance. Such systems provide individuals the feedback they need to drive their performance toward agency goals, and provide management with objective information to reward those who have made the greatest 

contributions. 

Agencies must demonstrate they have such a performance management system in place to take advantage of the new higher pay 

caps for SES that became effective January 2004. Our prior work 

for your Subcommittee, Mr. Chairman, indicates that while select 

agencies have begun to incorporate some of the needed elements 

into their systems, such as a link between individual and organizaVerDate 0ct 09 2002 13:21 Nov 03, 2005 Jkt 021432 PO 00000 Frm 00011 Fmt 6633 Sfmt 6633 C:\DOCS\21432.TXT SAFFAIRS PsN: PHOGAN
8

tional results, their appraisal systems were not distinguishing their 

highest performers. 

As you already acknowledged, recently released government-wide 

data on SES ratings for Fiscal Year 2003, the most current available, show similar results government-wide. OPM will have to carefully monitor agencies’ SES performance management systems to 

ensure they are functioning as intended and driving organizational 

change. This is especially important if these systems are to be cascaded down through their agencies. 

One other point on leadership, our ongoing work continues to 

show that agencies want to coordinate on how they are implementing the flexibilities, including problems, innovative solutions, 

and ideas for more efficiency. OPM and the Chief Human Capital 

Officers Council could serve as the catalyst for this coordination. 

Second, turning to the critical infrastructure needed, we have 

found that agencies can make the best use of flexibilities if they are 

implemented in the context of a strategic human capital planning 

process. Recent work shows some agencies still face challenges in 

designing their process. For example, this past March, we reported 

on NASA’s struggles to devise a long-term strategy for its space 

shuttle workforce, given that the shuttle may retire at the end of 

the decade. To help agencies, we offer a planning model that includes basic fundamental steps—identify the workforce competencies you need, your critical gaps, and those flexibilities that 

will best help you close the gaps. Agencies must also evaluate 

whether the flexibilities are achieving the intended results, or in 

other words, are they worth the investment? 

Third, agencies must have the capability to effectively use new 

tools and consequently should practice some fundamentals—they 

have an implementation plan, they educate their managers and 

staff on these flexibilities, and they streamline their processes to 

make it as easy as possible to use those flexibilities. These practices could help in the government’s efforts to improve the Federal 

hiring process. As you have already acknowledged, Mr. Chairman, 

there is considerable frustration that it takes too long and it is too 

hard to bring top talent on board. OPM, its external partners, and 

agencies have been hard at work redesigning parts of the process. 

Congress also provided agencies direct hiring and category rating 

authorities to help agencies more quickly hire the talent they need 

for critical positions. Senator Akaka, as you pointed out, our work 

last showed that few agencies were using the flexibilities, mainly 

because the agencies were not ready. They did not have guidance 

or policies in place or understand how to use the tools. Since then, 

OPM has been taking steps to better educate agencies on these 

flexibilities, but it must continue to monitor and encourage their 

use. 

I just wanted to point out that we currently have work under 

way on two other flexibilities that the Congress has provided, the 

use of the early-out and buy-out authorities, as well as the use of 

the student loan repayment program, and we hope to report the results of that work later this year. 

In closing, Mr. Chairman, it will be important to continue assessing, supporting and making adjustments to the flexibilities provided. In addition, as Congress considers future reforms, it will be 

9

equally important to make sure agencies have built a business case 

for the tools and have the leadership and infrastructure to implement them before the agencies are given these additional flexibilities. 

Finally, GAO, working with a number of external partners, has 

developed a framework, a set of principles, criteria, and processes, 

that could help guide decisions about future reforms. 

Mr. Chairman, that concludes my prepared remarks, and I would 

be happy to answer any questions. 

Thank you. 

Senator VOINOVICH. Thank you very much. 

When Harvard University’s John F. Kennedy School of Government hosted an executive session on the issue of Federal human 

capital management, one idea that everyone seemed to agree on 

was a need for agency Chief Human Capital Officers. 

I would like to ask both of you how effective do you think they 

and the Chief Human Capital Officers’ Council has been? The concept was that they would be sharing ideas, and increase coordination, and elevate the issue of human capital management in the 

Federal Government. Is it working? 

Ms. PE ́ REZ. Thank you, Mr. Chairman. I will say yes to all of the 

above. We meet regularly, on a monthly basis. They bring issues 

to the table and to OPM they think require attention. 

In addition to that, we use the Council as an opportunity to 

share policies as they are being developed, and regulations as they 

are being considered, and to provide an opportunity for sharing lessons learned, and best practices, so that we do not have to reinvent 

the wheel throughout the agencies. 

So I would say yes, the Council is absolutely working, and it has 

elevated the interest of human capital to the highest level of the 

agencies, so they exercise important leadership in the organizations. 

Senator VOINOVICH. Have all the agencies, in your opinion, designated Chief Human Capital Officers as required by legislation? 

Contributing to the problem was the downsizing during the previous decade. Human resources was viewed as important, I believe 

we need to elevate it and recognize its importance. I do not know 

if you read Jack Welch’s book, but he spent more than half of his 

time on recruiting people. He understood that human capital is the 

backbone of any successful organization. 

Are you seeing this recognition in the Federal Government? 

Ms. PE ́ REZ. Absolutely. I have the opportunity to work very specifically with agencies, each one of them. I visit with them regularly. I interact with the Chief Human Capital Officers. I interact 

with their HR directors. I am pleased to say there is absolutely no 

push-back or no sense in any one of the agencies that we deal with 

that human capital is not important or that they should not be taking proactive steps to deal with human capital issues. 

So, absolutely, there is a clear understanding on the part of the 

agencies of the importance of managing people in the organizations. 

Senator VOINOVICH. Have you officially or unofficially evaluated 

the people in these agencies? 

10

Ms. PE ́ REZ. We officially rate the Agency’s programs. I do not officially or unofficially rate the individuals, but I would say, by and 

large, they are all very committed to the programs across the 

board. Everybody is working on implementing programs, and nine 

of the agencies already have programs in place, and by being 

‘‘green’’ that suggests that they can demonstrate results as well. 

Senator VOINOVICH. Perhaps OPM should consider a peer review 

process for these individuals. Well, my suggestion would be that 

you ought to do it. Each agency hires it own human resources professionals, but the fact of the matter is, with such a group of individuals, professionals could offer important professional development opportunities to each other. 

Ms. PE ́ REZ. Thank you. Well, actually, we do provide that kind 

of feedback to the agencies, and to the individual CHCO Council 

members. I thought you meant a formal rating, that it was somehow akin to what agencies use in terms of evaluating their individuals’ performance. That job is left to the leadership of the Agency, 

but we do provide feedback. 

Most importantly, we do raise issues or concerns when we see 

that CHCO is not leading the human capital initiative as they 

should. Just as importantly, we provide a lot of training and developmental opportunities. We hold an academy for the CHCO’s that 

is limited to principals only, where they have an opportunity to 

bring concerns, and where we have an opportunity to raise concerns with them as well. They are scheduled on a monthly basis, 

and they provide good opportunities for saying, ‘‘Hey, this is going 

really well’’ or ‘‘not so well.’’

Senator VOINOVICH. Good. Another opportunity in the CHCO 

Council is for members to offer their personal experiences as lessons for the others. 

Do you want to comment on the CHCO Council, Ms. Larence? 

Ms. LARENCE. I just wanted to make three observations. First, 

GAO continues to encourage the Council to think about developing 

a strategic plan. There are so many human capital flexibilities and 

issues out there we believe the Council should try to set some priorities for where they should focus. 

Second, on our ongoing work we continue to——

Senator VOINOVICH. Pardon me. Would you clasify if you are referring to individual agencies or the Chief Human Capital Officers 

Council. 

Ms. LARENCE. We encourage the Council to set some priorities. 

Or where they are going to focus their attentions and what they 

want to achieve over certain time frames. 

We continue to see that agencies really want to, quite frankly, 

talk to each other about how they are using these flexibilities, but 

it is difficult for them to figure out how to make the necessary logistics happen, and we think that the CHCO Council and OPM can 

serve as a facilitator for that conversation. The sharing of best 

practices has been very helpful, and agencies are doing some of 

that but there is probably a lot more opportunity to do that. 

And finally, when we last reviewed the CHCO Council, we did 

encourage them to also think about some of the strategic issues facing them, including the next set of reforms, more comprehensive 

11

reforms and what is the state of human capital strategic planning 

and performance management systems across the government. 

Senator VOINOVICH. Thank you. Senator Akaka. 

Senator AKAKA. Thank you very much, Mr. Chairman. 

I want to thank both of you for your testimony. 

I also want to thank you, Ms. Pe ́rez, for visiting Hawaii in August 2003 in an official capacity. You are welcome to Hawaii 

whether it is in an official capacity or not. 

Ms. PE ́ REZ. Thank you. 

Senator AKAKA. And I just hope you enjoyed your visit to Hawaii. 

This is to both of you. Congress has authorized a number of 

workforce flexibilities, all of which are designed to retain and recruit the people the Federal Government will need for the future. 

Agencies now can offer a range of incentives such as bonuses, child 

care subsidies, student loan repayment, just to name a few, and yet 

agencies do not have the resources to fund these flexibilities. 

What impact has the lack of resources had on the ability of Federal agencies to take advantage of these flexibilities? Ms. Pe ́rez. 

Ms. PE ́ REZ. Thank you, Senator. What we ask of agencies is that 

they look at the flexibilities strategically, so that while resources 

are limited in terms of what they can afford, we think that if they 

are used wisely and that if they look at the resources across the 

entire organization and prioritize, that they can identify resources. 

It is clear that as we continue to face challenging budgetary 

times, agencies will have some challenges, but that is where strategic planning becomes a real asset. But, if you plan well in advance, if you identify what your needs are going to be, short term 

and long term, it is easier to then allocate resources based on those 

needs. 

So, I think that while it is difficult at times, I think that strategic planning or planning well in advance helps the agencies to 

make not only good people decisions but also to allocate resources, 

financial and otherwise, appropriately. 

Ms. LARENCE. We agree that it is critical that the agencies really 

think about this strategically and what tools are going to work 

most effectively for them, and we think that the fiscal constraints 

help them to do that. What we are beginning to see is they are 

making tradeoff decisions. They are determining whether they have 

a retention problem or a recruitment problem, and if so, what is 

the best tool to use? Is it student loan repayments or maybe it is 

using the retention and relocation bonuses. 

So instead of trying to use all the flexibilities because they are 

there, we are encouraging agencies to really think hard about what 

it is that they have to address and what flexibilities work best, and 

to make those fiscal tradeoffs. 

Senator AKAKA. Ms. Pe ́rez, last year, OPM implemented a 45-day 

hiring model for the Federal Government. OPM also announced 

that it would begin scoring agencies in its use of the 45-day model 

for the strategic human capital management portion of the President’s Management Agenda, beginning in the fourth quarter of fiscal year 2004. 

Has OPM started scoring agencies on meeting this goal? And if 

so, how are the agencies doing and what barriers are there, if any, 

to meeting the 45-day model? 

12

Ms. PE ́ REZ. Yes, sir, we did begin, as promised. We began the 

evaluation or the review of agencies’ hiring processes in terms of 

meeting a 45-day standard that we had laid out. And about 73 percent of the agencies are now meeting the 45-day time-frames. 

Have we fixed the hiring problems in the Federal Government? 

No. Have we made progress in terms of making sure that agencies 

are paying attention to their hiring processes, eliminating unnecessary burdens and administrative layers? I think we made a great 

deal of progress, but much work remains to be done still, sir, so 

that applicants feel like our processes are inviting processes. 

Senator AKAKA. Ms. Pe ́rez, over the past several years Congress 

has made several significant changes in the Federal hiring process 

in order to speed up hiring for Federal positions. Category rating 

gave agencies the ability to consider a broader group of candidates 

for open positions, and a direct hire authority allows agencies to 

make on-the-spot offers for hard-to-fill jobs. 

However, GAO testified that while agencies are improving, they 

are not using all available flexibilities to speed up the hiring process. On a scale of 1 to 10, with 10 being the most effective use of 

the hiring flexibilities, how are agencies doing? 

Ms. PE ́ REZ. I think, sir, it varies. Not to be evasive, but it really 

varies with the flexibility. And as we alluded to in your earlier 

question about fiscal constraints in the Federal Government, agencies are using the flexibilities as they see appropriate or as it meets 

their organizational needs. 

For the most part, for instance, we are seeing a great deal of use 

of the VSIPs and the VERAs, of the early buyouts and early retirement provisions. We are seeing increased use of student loan repayments. 

But we track agencies’ efforts, and we are seeing their use of 

flexibilities throughout the organizations varies depending on their 

needs. There are some areas where we think they still need to use 

them more widely, and for that, OPM is working closely with the 

agencies and providing a great deal of training. We held 27 sessions last year throughout the country, where we provided training 

on the use of flexibilities. We provide a lot of technical assistance 

to individual agencies. We have done hiring makeovers where we 

go in and review their hiring efforts and then make recommendations as to what flexibilities might be appropriate. 

So, I think we have made a great deal of progress. I think OPM 

continues to develop better tools to help the agencies as well. On 

a scale of 1 to 10, I think it varies with the flexibility. Overall, I 

would say that we are probably a 6 or a 7. 

Senator AKAKA. Would you have any comment on that, Ms. 

Larence? 

Ms. LARENCE. I think for some of the flexibilities, we are seeing 

the agencies roll them out a little more slowly than we would have 

expected. For example, in looking at student loan repayment programs, most of the loans have been let by five agencies at this 

point. 

So, we have seen OPM and the CHCO Council really doing a lot 

of outreach and education, and we think that is key to helping 

agencies use flexibilities. 

13

The one thing we also have learned, though, is that you really 

can not tell the story by the numbers, just by looking at how many 

agencies and how frequently they are using these flexibilities, because sometimes it is a strategic decision not to use them. So, you 

really have to go into the agencies and ask them to talk about how 

they have taken a comprehensive approach to using these tools. 

For example, direct hire. Agencies may not have critical occupations that they need to fill at that point. So, we have learned to 

be careful with using just the numbers. 

Senator VOINOVICH. Thank you. 

Senator AKAKA. Mr. Chairman, before I yield, I just want to say 

that you and I understand that agencies’ budgets are stretched. 

While asking agencies to do their best to develop good strategies 

to stretch these budgets, and Ms. Pe ́rez did mention that strategic 

planning does help to do this, you and I can work together to educate our colleagues on this problem. Thank you, Mr. Chairman. 

Senator VOINOVICH. We are very fortunate to have Senator Carper with us this morning. 

And Senator Carper, you did not have an opportunity to make 

an opening statement, and I would welcome you to do that, and ask 

questions. 

Senator CARPER. Thank you, Mr. Chairman. I will not make an 

opening statement. I would like to ask a direct question to Ms. 

Pe ́rez though, if I could. 

I understand that you have been to Hawaii? 

Ms. PE ́ REZ. Yes, sir. [Laughter.] 

Senator CARPER. Did you enjoy the hospitality that was extended 

to you there? 

Ms. PE ́ REZ. I did. 

Senator CARPER. Have you been to Ohio? 

Ms. PE ́ REZ. Yes, sir. 

Senator CARPER. Delaware? 

Ms. PE ́ REZ. Yes, sir. 

Senator CARPER. You have? 

Ms. PE ́ REZ. To Delaware? 

Senator CARPER. Yes. 

Ms. PE ́ REZ. Yes, sir. 

Senator CARPER. Have you been to Delaware, Ohio? 

Ms. PE ́ REZ. No. There I have not been. [Laughter.] 

Senator CARPER. When I was a student at Ohio State University, 

used to think that Delaware was a little town about 30 miles north 

of Columbus, where I went to school. And later on, when I was getting out of the Navy, I found out there was a whole State. [Laughter.] 

And that Ohio probably was not a big enough State for both 

George Voinovich and me to be governor in, so I had to move to 

Delaware to find my fortune. Well, find my fame, but not my fortune. [Laughter.] 

My wife is hoping I will find my fortune, but not yet. 

We thank you for being here today, and we welcome your testimony, and your help. As you know, the President has proposed giving, I think, basically all Federal agencies the same kind of significant new personnel flexibility that has been afforded to the Department of Defense and our new Homeland Security Department. 

14

Do you think we ought to slow down a little bit and wait to see 

how those two big agencies are using this flexibility before we expand them? 

Second part of that question, do you believe that other agencies, 

other than the two that I have mentioned, are fully utilizing the 

flexibilities that are already afforded to them under current law? 

Ms. PE ́ REZ. If I may, sir, with regard to whether we should move 

forward with additional flexibilities of government-wide reforms, I 

am of the opinion, after having worked for 3 years now with our 

agencies, that we absolutely should. What specifically we move forward with in terms of what are the features of the governmentwide effort, I do not know. But I do think that there is absolutely 

no need to wait to see what happens in the Department of Homeland Security and what happens at the Department of Defense. I 

think with regard to the provisions on compensation and some 

other provisions that are at present in those two personnel reforms, 

these are flexibilities that have been in place in government for a 

very long time. The Department of Defense has had a number of 

demonstration projects that have been very successful, and we have 

good data, evaluation data, to look at. 

I think with regard to your other question, ‘‘should agencies be 

ready to assume the additional responsibilities?’’ I agree with you 

completely, that that should be the case. I think that through the 

work over the last 3 years, and the work of OPM and the agencies 

specifically, they are continuing to build their infrastructures to assume the additional responsibilities. We need to be cautious as we 

move forward, but we think we can provide the flexibilities in an 

environment where there is a great deal of accountability, where 

we review the Agency’s efforts. We laid out criteria as to what constitutes the right infrastructure to support the additional flexibilities, and then we support them and monitor their progress. If they 

do not use it correctly, then we can take corrective actions to address that. 

But I do not think, sir, that it is necessary to wait until DHS and 

DOD are implemented. Indeed, the fact that they are implemented 

well in one organization will not determine that they will be implemented well in other parts of the government. 

So, I think we are ready. I think we need to move cautiously and 

make sure they have the right infrastructure, and the right accountability systems in place. I do believe that there has to be flexibility with accountability. 

Senator CARPER. Why do you believe that some agencies take 

better flexibilities that are extended to them than do others? 

Ms. PE ́ REZ. I think that the use of flexibilities—and Senator 

Akaka asked the question of constraints, fiscal constraints and so 

forth—I think that their use needs to be really in the context of the 

operational needs of that organization, and while all the flexibilities make good sense, they may not necessarily make good sense 

for a particular organization. 

I also think that the training that is required to make sure that 

they are implemented well takes time. Our organizations are complex, they are large. Three years in the scheme of things, and in 

the life of an organization, is not a whole lot of time. 

15

So, I think that training is a good thing to do, and I think agencies are training their employees to make sure they are used correctly. 

So, I think that they are making progress, but I think they are 

using them as they see appropriate. So it is not necessarily, as Eileen suggested, it is not how many they are using, it is how are 

they using them that I think ultimately matters most, sir. 

Senator CARPER. Eileen, is she putting words in your mouth? 

Ms. LARENCE. Well, as you all know, the Comptroller General is 

very passionate about transforming the Federal Government’s 

human capital system and making it a more modern and credible 

and effective system. He is also equally cautious about not moving 

forward before agencies are ready and about phasing it in. So, 

maybe we have learned a lesson with the SES regulations in that 

in some cases agencies that received provisional authority still are 

not showing that their systems are where they need to be to use 

those authorities, and they are not making clear distinctions 

among the performance. 

So, the Comptroller General firmly believes that agencies should 

be able to——

Senator CARPER. What do you call him? Do you call him Mr. 

Comptroller General, do you call him Mr. General, or do you call 

him General Walker? 

Ms. LARENCE. We call him Comptroller General Walker. 

Senator CARPER. I call him ‘‘His Excellency.’’ [Laughter.] 

He seems to like that. 

Ms. LARENCE. Yes, I would agree. [Laughter.] 

He would say that we need to make sure that the agencies demonstrate they can use the flexibilities and not promise that they 

can use them. I think that if the Congress decides it wants to wait 

and see how DOD and DHS play out, we could use the time to 

make sure that the agencies have their performance management 

systems and their plans in place to be able to use the flexibilities, 

especially if we are going to implement more performance and market-based compensation systems. 

Senator CARPER. Are there any questions you have in mind that 

we ought to be asking you that we are not? 

Ms. PE ́ REZ. No, personally, I think you are hitting on the right 

questions. 

Senator CARPER. The question about Delaware kind of threw you 

though, didn’t it? 

Ms. PE ́ REZ. Yes, that definitely threw me off there for a while. 

I did not have it in my notes. 

Senator CARPER. I thought you responded well. 

Anything we ought to be asking that we have not? 

Ms. LARENCE. I think the fact that you are asking the questions 

is what is important, quite frankly. 

Senator CARPER. Thanks. Thanks to you for being here. 

Senator VOINOVICH. Thank you, Senator Carper. 

I would like another 3-minute round of questions. We do have 

three other witnesses, but there are a couple of things I and my 

colleagues would like to ask. 

Does the GAO develop metrics to evaluate whether or not agencies are using the flexibilities the way they should? 

16

Ms. LARENCE. What do you mean by metrics? 

Senator VOINOVICH. Congress has aksed GAO to evaluate agency 

use of these flexibilities, and we will be asking you to do more. So, 

before GAO constructs these evaluations, they must develop a system to evaluate whether or not agencies are utilizing the flexibilities. 

Ms. LARENCE. Yes. 

Senator VOINOVICH. Does GAO work with OMB in developing the 

metrics? 

Ms. LARENCE. Yes. 

Senator VOINOVICH. So as GAO works, you know OMB’s perspective so that you would both be on the same page. 

Ms. PE ́ REZ. If I may, actually, I think that is an excellent point. 

In fact, 3 years ago, when we were developing the standards of 

what constitutes good human capital practices in the Federal Government, OPM, OMB, and GAO met and came out with the current 

expectations that, in fact, they reflect the thinking of the three organizations. 

With regard to looking at the agencies and evaluating the agencies’ use of flexibilities, the agencies come to OPM in advance of 

implementing or executing their flexibilities, and we look at their 

request in the context of their human capital practices. So we do 

have metrics or ways to review their requests with regards to a 

more strategic long term-view of human resources management. 

Certainly, we have not worked specifically with the GAO on the 

use of flexibilities, but we can consider that. 

Senator VOINOVICH. I just suggested that it might be beneficial 

to have the two working from the same evaluation criteria. 

Do you look at agency budgets for training? Does GAO have a 

training budget? In other words, right now we have every reason 

to believe that Homeland Security has budgeted to conduct appropriate training for the new performance management system. We 

have real reservations about whether or not the Department of Defense is doing the same thing. 

Have either of your agencies looked at these Department’s budgets for training or discussed this with OMB. 

Ms. PE ́ REZ. In fact, with the Office of Management and Budget, 

we look very closely at the agencies’ overall human capital efforts 

because they are a partner in the evaluation of the agencies’ efforts 

with regard to the President’s Management Agenda. And specifically with training, about a year or so ago we began to do data 

calls and require the agencies to report how much they are actually 

investing in training, and found that agencies are not collecting a 

lot of the information. So, we are paying a lot of attention to training. 

We are evaluating, and incorporating into the score card, Mr. 

Chairman, which is the tool that we use to stay very close to the 

agencies on a quarterly basis, very specific requirements with regard to, not so much the dollar amount, but investing in training, 

and requiring agencies to train their managers in the competencies 

they need to identify gaps that may exist, and then to take corrective actions to close those gaps. So, those requirements are in 

place. 

Senator VOINOVICH. The issue is money? 

17

Ms. PE ́ REZ. Yes. 

Senator VOINOVICH. I would be interested in again surveying 

agencies on training budgets. I did this when I first came to the 

Senate—I want to know what agencies are spending on training 

and how it is reflected in the budget. The last time I did this, of 

the 12 agenceis that responded to my request, 11 said they did not 

know and one said they knew but would not share. 

Ms. LARENCE. Mr. Chairman, we do have an ongoing job right 

now looking at the Department of Homeland Security’s strategic 

plan for training, and we are looking at their max HR human capital project as one of our case studies, and we are looking at to 

what extent they are funding that up front. 

Senator VOINOVICH. Thank you. Senator Akaka 

Senator AKAKA. Thank you, Mr. Chairman. 

Ms. Pe ́rez, as you know, 84 percent of SES members have received their Agency’s highest performance rating over the past few 

years. As agencies strive to make meaningful distinctions in performance when measuring the performance of the SES, I am concerned that some agencies will apply quotas rather than actually 

making meaningful distinctions. 

What efforts will OPM take to ensure that agencies do not apply 

quotas, which limit the number of high performance ratings and 

salary increases above the executive schedule level three? 

Ms. PE ́ REZ. Sir, the regulations that OPM promulgated with regard to the SES new pay-for-performance system are very specific 

in not allowing agencies to set any kind of forced distribution or 

quotas, for the appropriate number of executives rated at the highest level. It is prohibited. 

When we see or have indications that an agency may have, or 

that a manager may have, inappropriately sent any guidance or 

anything else may be taking place, we take corrective action and 

immediately work with the agencies. So, it is not allowed. We monitor it closely, and we work closely with the agencies, so in the 

event that there is any sense out there that this is happening, that 

it is addressed immediately. It is not allowed, period, end of conversation. 

Senator AKAKA. Ms. Larence, GAO reported last year that agencies were not using their management flexibilities because of a lack 

of policy and guidance from OPM. Since that time OPM has held 

several training sessions for agencies. How would you rate the 

training that OPM has provided, and is more needed? 

Ms. LARENCE. We have not participated in that training or really 

done an evaluation of that, but we have seen several things that 

the agency has done. First of all, they did issue fairly clear regulations on direct hiring and category rating authorities. They gave 

some good examples in those regulations of how human capital personnel could use those flexibilities. They gave scenarios. 

Second, they have done a lot to their Website to make it much 

more user-friendly and much more helpful for Human Capital Officers to be able to use these flexibilities. 

So, we did see a number of signs where they are outreaching to 

the agencies. What we have not done, though, is we have not gone 

back in to see to what extent these agencies have used these flexiVerDate 0ct 09 2002 13:21 Nov 03, 2005 Jkt 021432 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 C:\DOCS\21432.TXT SAFFAIRS PsN: PHOGAN
18

bilities, since our last review. So we do not know what effect OPM’s 

action have had yet. 

Senator AKAKA. Thank you for your responses. 

Mr. Chairman, as your Ranking Member, I would like to join you 

in that letter asking about the agencies’ training program budgets. 

Senator VOINOVICH. Thank you. 

Senator AKAKA. Thank you. 

Senator VOINOVICH. Senator Pryor. 

Senator PRYOR. Thank you, Mr. Chairman. 

I know most of the questions I had have been asked, but I just 

thought, Ms. Pe ́rez, I may ask you one about the category rating 

system flexibility. It is intended to maintain veterans preference by 

listing veterans ahead of nonpreference eligible individuals. 

Ms. PE ́ REZ. Yes, sir. 

Senator PRYOR. What effect has category rating had on veterans 

preference? 

Ms. PE ́ REZ. We have done careful analyses of the impact of category rating in the hiring of veterans when we did a governmentwide review of veterans’ issues, an audit probably about 2 years 

ago, sir, and we found absolutely no adverse impact. And, in fact, 

we have a report that we would be happy to share with you that 

suggests that is the case. When we go out and do our training, we 

are very specific in terms of how veterans’ preference applies in all 

of the flexibilities, and have made a commitment in the last 3 

years, a very strong commitment not only to making sure that veterans preference provisions are adhered to, but also that we make 

outreach, that we reach out to the veterans to make sure that we 

make every opportunity available to them to come into government, 

and to educate them about the opportunities that are available in 

government. So we take that very seriously. 

Senator PRYOR. So, it has had no adverse impact? 

Ms. PE ́ REZ. No, sir. 

Senator PRYOR. Thank you, Mr. Chairman. That is all I have. 

Senator VOINOVICH. Thank you. 

I want to say that I really appreciate you being here today. A 

thought came to me, if we had not spent all this time on these legislative reforms, most of the things that you talked about would not 

be happening? So, I know we still have lots of challenges, but I 

must say to you that I have been impressed with what you have 

shared with us today. Ms. Pe ́rez, if this is your first hearing, it was 

a home run. 

Ms. PE ́ REZ. Thank you. Thank you very much, sir. 

Senator VOINOVICH. I am reassured that we have people like you, 

Ms. Larence, in our working agencies, because you really do make 

a difference. I can tell from your testimony that you are fired up 

about this, and you are motivated. Thank you. 

Ms. PE ́ REZ. Thank you. 

Senator VOINOVICH. Testifying on our second panel today is Evelyn White from the Department of Health and Human Services; 

Jeffery Nulf from the Department of Commerce; and Rafael 

DeLeon from the Environmental Protection Agency; and Vicki 

Novak from the National Aeronautics and Space Administration. 

It is interesting. As my colleague, Senator Pryor, said all four of 

these agencies have new leadership. Thank God we have experiVerDate 0ct 09 2002 13:21 Nov 03, 2005 Jkt 021432 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 C:\DOCS\21432.TXT SAFFAIRS PsN: PHOGAN
19

1The prepared statement of Ms. White appears in the Appendix on page 73. 

enced folks working so that they can help the transition from one 

new director or administrator to another. 

Ms. White, we are going to give you an opportunity to testify 

first, and we again thank you for being here. 

TESTIMONY OF EVELYN M. WHITE,1 PRINCIPAL DEPUTY AND 

ACTING ASSISTANT SECRETARY FOR ADMINISTRATION AND 

MANAGEMENT, DEPARTMENT OF HEALTH AND HUMAN 

SERVICES 

Ms. WHITE. Thank you. Good morning, Chairman Voinovich and 

Members. 

My name is Evelyn White, and I am the Acting Assistant Secretary for Administration and Management for the Department of 

Health and Human Services. On behalf of Secretary Michael 

Leavitt, I appreciate the opportunity to appear before you to discuss HHS’s accomplishments in the area of human capital management, and how the legislative flexibilities provided by the Congress 

have been incorporated into our human capital strategy. 

I want to thank Chairman Voinovich and the entire Subcommittee for your leadership and foresight in shepherding the 

various legislative initiatives that have led to increased efficiencies 

and strategic management of the Department’s Human Resources. 

Much has happened since we were here last to discuss human 

capital. As we reported out last year, the Department was aggressively pursuing a strategy to achieve green status in the President’s Management Agenda for Strategic Management of Human 

capital, and I am pleased to announce that HHS is one of the first 

Federal agencies to achieve green status and has remained green 

through the last reporting period. 

Senator VOINOVICH. Congratulations. 

Ms. WHITE. Thank you. 

In 2004 HHS submitted for certification to the Office of Personnel Management and the Office of Management and Budget, a 

new senior executive service performance based management system. HHS was one of the first Federal agencies to submit its SES 

performance system and receive approval. A centerpiece of our new 

SES performance system is the linkage between organizational 

achievement and the individual accomplishments of our SES members. Recently, OPM cited our approach as a best practice, and our 

SES performance management system has been recertified for calendar year 2005. 

Senator VOINOVICH. I want to interrupt you. It just came to me 

that your former director was a former governor. 

Ms. WHITE. That is absolutely right. 

Senator VOINOVICH. Tommy Thompson. I worked with Tommy 

when I was Governor of Ohio. He was my mentor. I followed him 

through the Midwestern Governors Association, Republican Governors Association, and the National Governors Association. This is 

an editorial comment, but I believe the fact that he was a former 

governor gave him a lot more insight into how important human 

capital management is for the success of an agency. 

20

Ms. WHITE. It is wonderful to note that you know the kind of energy that Secretary Thompson had at the Department of Health 

and Human Services. 

Senator VOINOVICH. You are lucky to have Mike Leavitt. 

Ms. WHITE. Absolutely. 

Senator VOINOVICH. Mike Leavitt followed me through the various governors associations. Tommy was my mentor. Then I was 

Mike’s mentor. This is great. [Laughter.] 

Ms. WHITE. It is wonderful. I hope you are adding those seconds 

to my time here. [Laughter.] 

Thank you very much. 

Also, in 2005, we will be implementing a new departmental performance management system for non-SES and nonbargaining employees, moving away from the pass/fail system. This new system 

will add greater granularity in evaluating performance, better align 

performance with organizational achievement, establish cleaner 

linkages with the SES performance management system, and position the Department for future linkages between performance and 

individual pay decisions. 

In 2005, each operating and staff division throughout the Department developed and submitted leadership succession and overall 

workforce plans. Each identified human capital needs as well as 

any gaps between current employment and future needs and mission critical positions. These plans provide a map for the Department’s future human capital needs tied to a strategic mission and 

direction for the Department. 

To meet our human capital needs, we continue to use and expand 

the use of flexible employment authorities. Our highly successfully 

emerging leaders program which brings the best and brightest recent graduates to work for HHS has entered its fourth year. Our 

SES candidate develop program has placed nearly 40 percent of the 

first graduating class in SES positions. 

HHS is reshaping our workforce, using authority approved in the 

Federal Workforce Improvement Act of 2002, authorizing with 

OPM and OMB approval voluntary separation incentive payments 

and early-outs. 

Using the Federal Employee Student Assistance Act and separate authority granted to the National Institutes of Health, the Department has made extensive use of student loan repayment programs with over 1,500 employees having been approved. The Department has crafted additional implementing guidance to expand 

employee coverage and use by the various HHS organizations, and 

implementation of this policy is expected in this fiscal year. 

In addition, the Department has piloted the use of category rating. This method for selecting new employees has provided for—in 

the Chief Human Capital Officers Act of 2002. I can report our 

pilot has been successful in demonstrating its use in expanding the 

pool of candidates for selection, and the Department will issue implementing guidance for use in this approach throughout the Department by the end of this fiscal year. 

The future for HHS’s human capital program is bright, and HHS 

will continue to be a leader in the Federal workforce. 

In 2004, the Department was selected by OMB as one of five candidates to be a Human Resources line of business service provider. 

21

1The prepared statement of Mr. Nulf appears in the Appendix on page 77. 

The Department will offer to other agencies across the government 

end-to-end solutions that take advantage of state-of-the-art information technology applications. HHS will also be the first Federal 

department to implement a fully electronic official personnel folder, 

integrated with our enterprise Human Resources system which will 

allow employees access to their personnel folder anywhere, any 

place, and any time. 

Also, the Department is implementing a learning management 

system that provides a set of electronic tools to manage and support employee training and development activities. 

As for recently enacted human resources flexibilities, HHS continues to adopt these flexibilities as guidance as issued by OPM. 

The Department is thoughtfully and strategically implementing 

these flexibilities and has developed the appropriate internal implementing guidance. We look forward to receiving OPM’s guidance 

on recruitment, relocation and retention bonuses, as well as the 

guidance on the annual leave enhancement provisions of the act. 

In conclusion, we appreciate the flexibilities that Congress has 

provided as they have enabled the Department to improve our effectiveness in managing our human capital initiatives across a 

broad spectrum of these occupations. Nothing is more important 

than to ensure that we have the right people in the right place at 

the right time to meet the human capital service needs of all Americans. 

Thank you, and I will be happy to answer any questions. 

Senator VOINOVICH. Thank you very much. I think you know 

that Dr. McClellan was before this Subcommittee and did a very 

good job. I found it reassuring, as I am sure Senator Akaka and 

the other Members of the Subcommittee did, that they have used 

the hiring flexibilities. To date, they have hired about 400 new employees, and they plan to hire another 100 more. If it was not for 

the flexibilities, CMS would not be able to get the agency ready to 

implement the new prescription drug. So, that is great. 

Ms. WHITE. That is absolutely great. 

Senator VOINOVICH. Thank you. Mr. Nulf. 

TESTIMONY OF JEFFERY K. NULF,1 DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE 

Mr. NULF. Good morning, Mr. Chairman and Members of the 

Subcommittee. My name is Jeffery Nulf, and I have the pleasure 

to serve President Bush as the Deputy Assistant Secretary for Administration at the Department of Commerce. 

Otto Wolfe, our Chief Financial Officer and Assistant Secretary 

of Administration, has asked me to convey his regrets at being unable to attend today due to a scheduling conflict. But on behalf of 

Secretary Gutierrez and——

Senator VOINOVICH. I am glad you are here. 

Mr. NULF. Thank you, sir. I am glad to be here. And Assistant 

Secretary Wolfe would like to thank you and thank this Subcommittee’s leadership for providing seeking solutions to human 

capital issues affecting the entire Federal workforce. 

22

I appreciate the opportunity to discuss one of the most significant 

challenges facing Executive Branch agencies today—how to compete successfully to recruit and retain a skilled and motivated 

workforce through human capital flexibilities. The potential benefits that these flexibilities offer have significant promise, and we 

welcome the chance to share our experience and learn from our colleagues here today. 

The Department of Commerce consists of 13 operating units with 

diverse and often highly technical portfolios, that together foster 

economic opportunity both domestically and abroad for all Americans. Congress faces dynamic challenges in recruiting and retaining individuals with the combination of skills and abilities needed 

to carry out its various missions. This is particularly true of individuals in highly technical fields such as physicists, chemists, statisticians and economists, as well as Senior Executive Service (SES) 

managers. We, like many other Federal agencies, must operate in 

a highly competitive labor market to fill increasingly specialized positions. This situation is exacerbated by the knowledge that over 

the next 5 years roughly one-half of the Commerce workforce will 

be eligible for retirement. 

The potential impact that such a loss of experience and institutional memory would have on program operations is staggering. 

Also during the next 5 years the Department faces the daunting 

challenge of recruiting and training upwards of 500,000 employees 

needed to conduct the 2010 census. 

Senator VOINOVICH. How many did you say? 

Mr. NULF. Half a million, 500,000, sir, Similar numbers to the 

last census, sir. 

Senator VOINOVICH. OK. 

Mr. NULF. Within the context of recently enacted human resources flexibilities and the President’s Management Agenda 

(PMA), Commerce employs a cohesive strategy in meeting these 

many challenges. In 2001, in collaboration with our operating 

units, we conducted a first-ever workforce assessment across the 

Department. Through this effort, we identified the three most significant human capital challenges facing the Department of Commerce: One, high turnover rates in mission critical occupations; 

two, a projected surge in retirement among Senior Executive Service managers; and three, the need to strengthen competencies to 

address mission changes, technological innovations resulting from 

E-government, and workforce changes caused by various factors, 

such as business re-engineering and competitive sourcing. 

To help us respond to these needs, a 5-year workforce restructuring plan was prepared with input from all Commerce operating 

units, and adopted. Regular meetings with our Principal Human 

Resources Managers Council, Chief Financial Officers Council, 

Chief Information Officers Council, as well as working groups at 

the staff level provided opportunities to track progress in implementing the initiatives, sharing experiences, and obtaining feedback on our common interest. 

Within this framework, Commerce employs a wide range of 

human resources flexibilities to meet the challenges that we face. 

For example, we continue to reshape the Department’s workforce 

and correct skill imbalances using the new voluntary early retireVerDate 0ct 09 2002 13:21 Nov 03, 2005 Jkt 021432 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 C:\DOCS\21432.TXT SAFFAIRS PsN: PHOGAN
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ment and separation incentives, authority provisions. To date approximately 250 employees in 7 operating units have taken advantage of these incentives. We are also in the process of identifying 

critical occupations where we will need to request direct hire authority under the Federal Workforce Improvement of Homeland Security Act of 2002. 

Additionally, our bureaus are using the expanded authority to 

pay for academic degrees as an effective tool to retain quality employees and close skill-gaps. We have implemented the Federal Employee Student Loan Repayment Program. Commerce managers 

can use this authority, as appropriate, to compete more effectively 

to recruit and retain high quality employees. 

The Department of Commerce has implemented several provisions of the Federal Workforce Flexibility Act of 2004, which also 

assists managers in recruiting and retaining the best and brightest 

candidates. By allowing the Department to grant 8 hours of annual 

leave, in lieu of 4 hours of annual leave, we believe our efforts to 

attract an elite executive corps will be greatly enhanced. 

In addition to these tools, the Commerce Demonstration Project 

plays a critical role in our efforts to effectively address current 

human resource challenges. Commerce has been managing pay-forperformance systems for 17 years, first under a demonstration 

project at the National Institute of Standards and Technology 

(NIST) beginning in 1988. Following the success of the China Lake 

experiment, this alternative personnel system was made permanent at NIST in 1996 and served as a model for the current Commerce Demonstration (Demo) Project. 

Currently, 4,200 employees from five of our operating units are 

managed through this Demo Project. The Demo Project provides 

pay-for-performance in a broadbanding framework, performancebased salary increases and bonuses, and supervisory pay differentials. 

Additionally, managers have authority to establish pay levels, 

classify positions, and utilize recruitment and retention allowances. 

The success of this initiative depends on accountability, training 

and communication, and ensuring that the fundamental precept of 

this initiative—linking pay to performance—is a reality. Accountability hinges on continual monitoring and evaluation. An oversight 

committee, the Departmental Demonstration Project Board, provides overall program and policy oversight to bureau-specific 

boards and ensures that annual evaluations—conducted by an 

independent contractor—meet OPM requirements. 

Continual training and communication between supervisors and 

employees on all aspects of these initiatives is crucial, particularly 

with respect to performance feedback and the mechanics of the 

pay-for-performance system. Our experience indicates that any 

changes to employee management structures, be they for pay or 

performance, are often met with a degree of apprehension by the 

effected workforce, including minorities. Concerns were expressed 

by some minority employees during the pay-for-performance system 

roll-out, that this would result in disparate treatment. To address 

these concerns, management fully engaged in discussions with the 

employees voicing this concern, as well as the affinity groups that 

represent their interests. 

24

To that end, we have enhanced monitoring mechanisms in place 

to track the actual results of the Demo Project across all affected 

demographics. The conversation with these employees and the affinity groups that represent them will continue as we collectively 

receive more detailed operational results. 

As a result of our most recent annual program evaluations, we 

have found that salary levels and bonuses are directly tied to performance, and that the Demo Project has had an extremely strong 

effect on retaining good performers. 

We are also involved in the government-wide effort to implement 

pay-for-performance for our SES managers. November 17, 2004, 

the Department received provisional certification for its Senior Executive Service Performance Management System from OPM, with 

OMB concurrence for the last calendar year. In March 2005, we received provisional certification for this calendar year. 

As part of our SES pay-for-performance initiative, we have instituted a rigorous performance monitoring process. At the end of fiscal year 2004 the Department adopted a new approach to assessing 

the performance of its SES managers in relation to the performance measures established under our annual performance plan. In 

meetings with the Deputy Secretary, each bureau was called on to 

provide self-assessment of their performance during the year in relation to program objective and performance measures. Bureau 

input was couples with input from the departmental staff offices. 

The results were used to ensure that meaningful distinctions in 

performance were made, and that performance awards and salary 

increases reflected those distinctions. 

In fiscal year 2004, the Department rated 49 percent of its SES 

managers at the outstanding level. This was down from 81 percent 

in 2003; 44 percent at the commendable level, and this was up 

from 15 percent in 2003; and 7 percent at the fully successful level, 

up from 3 percent in 2003. 

During fiscal year 2005 we are broadening the Department’s corporate focus on performance by holding quarterly reviews with senior managers from each of the bureaus. During these sessions—

they are conducted by our Deputy Secretary—each bureau briefs on 

their progress relative to implementing management reforms under 

the PMA, as well as achieving their annual performance targets 

and priorities. The resulting dialogue is helping us to track performance and results on a routine basis, allowing adjustments as 

may be needed throughout the year, assuring that there are no surprises about organizational performance at year’s end. 

Senator VOINOVICH. Mr. Nulf, would you wrap up your testimony? 

Mr. NULF. Yes, sir. I would be happy to. I have some other information, I hope will come out in Q and A. I would be happy to share 

it, sir. 

Senator VOINOVICH. Make sure it does. 

Mr. NULF. Yes, sir. 

In closing, these represent just a few of the management tools we 

are employing to meet human capital challenges. Through these 

and other efforts I am pleased to report that Commerce recently 

achieved a green score card for Strategic Human Capital Management initiative under the PMA. That accomplishment, which is the 

25

1The prepared statement of Mr. DeLeon appears in the Appendix on page 86. 

result of a lot of hard work by the human resources management 

team, as well as the leadership of Commerce, is very rewarding. 

We recognize, however, that this rating is clearly not an end in and 

of itself, and that continued improvement is not only possible but 

essential to ensuring that we are able to carry out our evolving 

missions through a skilled, knowledgeable and dedicated workforce. 

Again, I would like to thank the Chairman and this Subcommittee for their leadership in developing flexible and workable 

solutions for addressing current human capital concerns, and I 

would be happy to answer your questions, sir. 

Senator VOINOVICH. Thank you very much. 

Mr. NULF. Thank you, sir. 

Senator VOINOVICH. Mr. DeLeon. 

TESTIMONY OF RAFAEL DELEON,1 DIRECTOR, OFFICE OF 

HUMAN RESOURCES, ENVIRONMENTAL PROTECTION AGENCY 

Mr. DELEON. Chairman Voinovich and Members of the Subcommittee, I appreciate the opportunity to appear before you today 

to discuss EPA’s efforts in utilizing the recently enacted flexibilities 

to address our human capital challenges. I will be summarizing my 

comments, and thank you for including them in the record. 

Let me preface my specific comments by saying that we at EPA 

are extremely proud of all of our human capital efforts, many of 

which were under way even before the current President’s Management Agenda. At EPA, we consider our employees our greatest resource, and we value their dedication and commitment to the Agency’s work. It is only through our people and the skills and knowledge they possess that EPA is able to achieve its critical mission 

of protecting human health and the environment. 

EPA’s senior leadership has a longstanding commitment to 

human resources and human capital initiatives. We also have a 

strong record of identifying, anticipating, and addressing workforce 

needs and challenges. To that end, EPA employees, managers and 

supervisors have been asked to thoughtfully focus not only on what 

environmental results must be achieved, but on how those results 

will be achieved through the talent that we recruit, retain and develop every day. 

At EPA we devote a lot of time and money to our most critical 

resource: The people who are responsible for the success of the 

Agency’s efforts. For example, in 1999, EPA conducted a workforce 

assessment project which projected anticipated workforce needs out 

to the year 2020. EPA developed our first comprehensive human 

capital strategy in the year 2000, and then we revised it in 2003. 

The Agency’s 2003 through 2008 strategic plan and our ‘‘Strategy 

for Human Capital II,’’ provides the basis for much of our human 

capital planning and decisionmaking. 

The pieces of legislation that you have championed and authored 

have helped EPA address workforce needs and challenges in several years. The Homeland Security Act of 2002, which provided for 

our current early-out and buyout authority, allowed EPA the ability to reshape and restructure our workforce. At EPA in 2003, and 

again in 2004, we made early-out and buyout offers to a number 

26

of GS–14s, GS–15s, SESers, and members of the administrative 

and clerical staff. The resultant early-out and buyout vacancies 

have been utilized to restructure positions at lower grades in different series, or to bring new talent in. 

In 2005, we will base our decisions on whether to offer additional 

early-outs and buyouts on local-level workforce plans, plans developed and tailored to meet specific program and regional needs. The 

early-out/buyout program has been a key tool of the flexibility provided by the 2002 Act, and represents just one of several strategies 

and solutions we are employing to address talent gaps. 

Other strategies have included our environmental intern program and our leadership development programs. Similarly, the 

Senior Executive Reform Act strengthened the relationship between performance and pay of senior employees. In July 2004, 

OPM issued regulations that established the criteria that an agency’s performance appraisal system must meet in order to be certified to use higher pay limits. 

In August 2004, the Agency requested provisional certification of 

our SES appraisal system. I am pleased to report that EPA was 

among the first to submit such a request to OPM, and was one of 

only a handful of Federal agencies to receive approval in October 

2004. 

We have submitted a request to OPM to renew EPA’s provisional 

certification for the SES system in 2005. Meanwhile, with an eye 

towards full certification, we are making revisions to strengthen 

the SES performance system, and we are evaluating the results of 

the fiscal year 2004 appraisal and recognition process in an effort 

to improve it. 

We are also benchmarking the pay plans implemented by other 

Federal agencies to find best practices to incorporate into our pay 

plan as appropriate. 

We view strengthening the linkage between performance and pay 

as an important tool for recognizing and retaining high performing 

senior employees. 

The student loan repayment program allows agencies like EPA 

to repay certain federally insured student loans to recruit or retain 

highly qualified personnel. I am happy to report that EPA has used 

this act to attract and retain top employees. Of course, payments 

for this program come from EPA’s PC and B accounts, so Agency 

supervisors and managers must carefully balance their responsibility to manage basic salary and benefit requirements with the opportunities provided by this program. 

In fiscal year 2004, the Agency repaid $51,000 in student loans 

for seven employees. In 2005, the Agency has 18 student loan repayment agreements in place. 

These flexibilities have also established numerous changes in pay 

and leave administration as well as benefits policies. Members of 

the Senior Executive Service and employees in senior level and scientific or professional positions became eligible to immediately accrue annual leave at the rate of 8 hours for each biweekly pay period. I am also happy to report that EPA has used this authority 

to attract and retain senior level employees. 

Finally, a new section 4121 has also been added to Title 5, requiring agencies like EPA to regularly evaluate their training proVerDate 0ct 09 2002 13:21 Nov 03, 2005 Jkt 021432 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 C:\DOCS\21432.TXT SAFFAIRS PsN: PHOGAN
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1The prepared statement of Ms. Novak appears in the Appendix on page 91. 

grams. EPA has focused attention in this area. Each of our developmental programs is reviewed for effectiveness on an annual basis 

to assure the information shared is current and accurate. Full evaluations have been performed on EPA’s SES candidate development 

program, selection and placement process, the mid-level development program, and the EPA intern program. All programs are 

evaluated at level one for immediate impact on the participants 

and for level two, level three, and four. 

In conclusion, we at EPA are pleased with our record of success 

in the human capital area, and we are continually striving to improve on that record. 

Thank you for allowing me the time to address you today. I am 

happy to take your questions. 

Senator VOINOVICH. Thank you very much. Ms. Novak. 

TESTIMONY OF VICKI A. NOVAK,1 ASSISTANT ADMINISTRATOR 

FOR HUMAN CAPITAL MANAGEMENT AND CHIEF HUMAN 

CAPITAL OFFICER, NATIONAL AERONAUTICS AND SPACE 

ADMINISTRATION 

Ms. NOVAK. Good morning, Mr. Chairman and Members of the 

Subcommittee. I am Vicki Novak, the Assistant Administrator for 

Human Capital Management at NASA and NASA’s Chief Human 

Capital Officer. I am delighted to represent NASA here this morning to discuss our use of new workforce flexibilities, senior executive pay-for-performance implementation, and the use of voluntary 

early retirement and voluntary separation incentive payment authorities. I have submitted a written statement for the record, 

which I will take a few minutes to summarize, if I may. Let me 

begin, however, by expressing our appreciation, as others have 

done here this morning, for your leadership and support in the 

area of Federal human capital management, both government-wide 

and on behalf of NASA. We appreciate all that you have done and 

look forward to continuing to work with you. 

As I and others have testified in the past, NASA has recognized 

for some time the internal demographics and external drivers that 

present a challenge to our human capital management. Some of 

these, such as an aging workforce, a wave of pending retirements, 

and skills imbalances, we share with many other agencies. NASA’s 

situation is exacerbated, however, because scientists and engineers 

(S&Es), make up approximately 60 percent of our workforce, and 

we are competing for S&E talent in a labor market that studies reflect face declining numbers of S&E graduates while the demand 

for such talent in the public and private sector continues to increase. We have been actively engaged in a number of programs 

and initiatives at NASA to help us manage our human capital 

more strategically. 

We continue to enhance the Agency’s competency management 

system as part of our overall workforce planning and analysis capability. The competency management system provides NASA our 

first ever Agency inventory of workforce competencies needed to accomplish our mission using a consistent set of competency definitions. 

28

To ensure that the Agency’s workforce competencies are aligned 

with our mission requirements, we complete an annual assessment 

in connection with our strategic planning and budget process. 

Using the competency management system, we identify the competencies and full-time-equivalent levels needed for current and future program requirements. We identify the competencies available 

in the workforce, project the competencies that will be available in 

the future, and determine the difference or the gap. Using these 

analyses, we develop recruitment, retention, development, and realignment strategies to address actual or projected competency 

gaps and surpluses in specific areas. For example, we may find 

that in some areas we need to strengthen our student programs 

and build the pipeline of talent. In other areas, targeted training 

and development may be needed, and in yet other skill areas we 

may need to redeploy employees to programs in which their skills 

are better utilized. 

As an example, mindful of our need to maintain a pipeline of 

fresh talent, last year NASA’s centers collaborated in 19 recruitment events on college campuses as part of our corporate recruitment efforts. This resulted in 96 diverse hires using the Federal career intern program flexibility. 

The new SES pay-for-performance system has enabled us to recognize the contribution to the Agency’s performance of our top-performing SES members while it provided needed relief from pay 

compression. Our SES system has been provisionally certified for 

2005. In implementing the new pay regulations, we established 

strict ground rules to ensure that pay increases were based on contributions to Agency success and to ensure that increases were only 

given to the best performers. 

In addition, we have strengthened our SES performance appraisal system to be more results-oriented, to assure greater accountability, and to create an even better linkage to the NASA 

strategic plan. 

The workforce flexibilities recently enacted provide us with valuable and versatile tools to address NASA’s workforce management 

needs. This versatility is vitally important since different solutions 

are needed to address the variety of human capital challenges facing our Agency, challenges that are shaped by each center’s demographics, local labor market, and program project needs. As mentioned in my written testimony, under the NASA Flexibility Act of 

2004, the use of enhanced recruitment and relocation bonuses, 

more substantial travel benefits, and enhanced annual leave flexibilities have been very useful incentives in attracting new talent. 

The distinguished scholar hiring authority, more flexible term appointments, and more flexible SES term authority provide for more 

streamlined and flexible hiring. Enhanced relocation and retention 

bonuses, qualifications pay, and the ability to convert term to permanent appointments have been valuable tools in retaining and 

leveraging existing talent. 

The Federal Workforce Flexibility Act offers many of the same or 

very similar tools as those provided in the NASA Flexibility Act. 

Many of these flexibilities are and will continue to be important to 

NASA in reshaping and realigning the workforce to support the 

new Vision for Space Exploration. For example, we are currently 

29

using the buyout and early-out authorities provided in the workforce improvement of the Homeland Security Act of 2002 to encourage voluntary attrition in areas in which the need for certain competencies has diminished. We are using these tools to address 

workforce rebalancing both within individual centers as well as 

across the Agency in a managed, strategic way, and we have developed our buyout/early-out plans very carefully and deliberately to 

ensure that we do not buy out competencies that we still need or 

will need. We will continue to use hiring authorities and other 

incentives strategically to attract high-quality employees, as I alluded in my written testimony, and relocation and retention 

bonuses will be increasingly important in addressing workforce reshaping objectives, including space shuttle transition and retirement in 2010. 

In conclusion, with the new Vision for Space Exploration comes 

an increased challenge to continue to be strategic and innovative 

in human capital management. NASA must implement a number 

of fundamental changes in how the Agency approaches space exploration and better align the workforce to achieve the new vision. 

The workforce flexibility tools being addressed today are essential 

to ensuring that we reshape and maintain a high-caliber workforce 

with the skills and competencies we need. 

Let me close by saying again we greatly appreciate the excellent 

support you have provided in Federal human capital management 

in the past, Senator Voinovich, and we welcome your leadership in 

the future. I am happy to answer any questions. 

Senator VOINOVICH. Thank you very much. It has been very educational to see what all of have you tried to do with the new flexibilities. 

All four of you have achieved a level of certification for your performance management system, the Senior Executive Service. What 

steps has your agency taken to include employees in development 

of the system? What has been done to educate employees on the 

new system? This is a real issue for the Members of this Subcommittee. We support pay for performance, but we want to make 

sure that it is done right. I think there are a lot of people who like 

to talk about this, but anyone who has had to complete performance evaluation, as I have over my career, know this is tough. It 

was one of the toughest things I had to do, and I would be interested in knowing how you went about implementing these new systems in your respective agencies and receptivity so far. 

Mr. NULF. Mr. Chairman, I would be happy to speak to that. I 

think it gets back to what you were speaking with the first panel 

on and your commitment to training and your commitment to 

throwing the resources behind it that are necessary to make it effective. I think pay-for-performance—if I may say, I am a private 

sector guy that is down here learning in many different ways, but 

I come from a world of pay-for-performance, and what it has done 

is put us on a level playing field with the private sector and the 

recruitment and retention of valuable human capital. And what we 

have done is to make sure that the employees are involved in all 

aspects of pay for performance. If it is transparent, sir, and all parties are involved—that being the employee, management, and leadVerDate 0ct 09 2002 13:21 Nov 03, 2005 Jkt 021432 PO 00000 Frm 00033 Fmt 6633 Sfmt 6633 C:\DOCS\21432.TXT SAFFAIRS PsN: PHOGAN
30

ership—everyone is well served, including the taxpayer. Our commitment to that on the training side is, I believe, second to none. 

Senator VOINOVICH. Ms. White. 

Ms. WHITE. I will be happy to answer as well. When we started 

in about 2001 looking at performance-based approaches to how we 

would have some accountability for our senior leadership at the Department, starting from the top all the way through SES, we 

brought a contractor in to help us to develop performance-based 

contracts for our SES members, and from that the employees were 

able to participate to talk about and describe what their work responsibilities were as related to their mission, so we wanted to 

make sure that mission criticality was of the utmost importance in 

the way that their performance plans were being developed. 

In addition to that, we have a structure at HHS that is called 

the Management Forum. It consists of the executive officers across 

all the agencies at HHS, and at that monthly meeting, the group 

has an opportunity to help weigh in, to help shape the policies in 

the direction with respect to as well as the education of rolling out 

our SES performance-based system. We meet annually also to develop the elements of what will go into the outcome-based measures that we will hold our SESers accountable for. 

In this year, we will be cascading this performance-based system 

to the non-SES employees and non-bargaining unit employees. We 

intend to use a similar approach for employee involvement, and 

management, and pushing the information out in a training environment to get people hands-on opportunity to learn what the new 

requirements will be. 

Senator VOINOVICH. Mr. DeLeon. 

Mr. DELEON. Yes. I think the one thing I would like to add, 

along with my colleagues, is at EPA, when we talk about performance, we have always had a strong SES performance management 

system, and along with OPM’s help this past year in reaching certification, we discussed the standards very closely with our senior 

managers, with boards like the Executive Resource Board or our 

Human Resource Council——

Senator VOINOVICH. Let me understand this. Have you had a 

pay-for-performance system in the EPA for a long time? 

Mr. DELEON. No. I believe we have had a strong system already. 

Senator VOINOVICH. You have a robust performance management 

system for a long time? 

Mr. DELEON. Yes, and along with the——

Senator VOINOVICH. But not linking pay with performance? 

Mr. DELEON. No. And in this past year, along with OPM and receiving provisional certification, we ensured that our standards met 

the performance that we wanted our senior executives to meet, so 

we have had some strong internal discussions what those standards should look like, what are SESers’ performance standards and 

the expected level of performance that they should meet. We have 

used boards internally, like the Executive Resource Board and others, to help develop those standards. I think if you look at results 

of our most recent performance cycle, you will notice that we have 

had some differentiation not only in the bonuses, but also in the 

performance and the pay raises that we were able to institute this 

past year. 

31

Senator VOINOVICH. Ms. Novak. 

Ms. NOVAK. Yes. I can say that we have done many of the same 

things at NASA, but we took kind of a top-down approach, making 

sure that the senior leadership of the Agency understood the new 

SES pay-for-performance system and what the expectations were 

and the accountability requirements. Then we basically rolled that 

out at our field centers, using senior management as well as a lot 

of involvement of the human capital officers at our field centers. 

Senator VOINOVICH. Have you conducted demonstration projects 

at NASA? 

Ms. NOVAK. No, not really. We pilot things and test things but 

not actually demonstration projects in the official sense of the 

word. 

Senator VOINOVICH. Did you have a performance management 

system for your engineers? 

Ms. NOVAK. Well, we have always had performance evaluation of 

our engineers, both at the senior executive levels, as well as at the 

non-senior executive levels. We have changed our performance appraisal approach from time to time, engaging the unions and engaging the employees. In fact, last year we changed from a passfail type of a system to a three-level performance appraisal system. 

But we engage the unions and get their help and support, and that 

helps us with all of these different new initiatives that we roll out. 

Senator VOINOVICH. This is my last comment. It came to me, 

Senator Akaka, and Senator Pryor, that right now DOD is developing the regulations for a new personal system. It might be interesting to have a summary of what these agencies have done to prepare effective performance management systems, to see how their 

experience might assist to the discussion between the unions and 

DOD. In other words, these agencies have actually done it. It 

seems to me that it would be in DOD’s best interest to fully understand how these systems operate, so their regulations are responsive to the real world. I think it would help them right now. I know 

the unions are concerned and maybe sharing the experiences at 

these agencies would be beneficial. 

As a matter of fact, if you would identify in your testimony, the 

steps you have taken to allay the fears of individuals. Thank you. 

Senator Akaka. 

Senator AKAKA. Thank you very much, Mr. Chairman. The brief 

discussion here leads me to ask this question first. Ms. Novak, I 

am glad to hear that you have been engaging the unions in this. 

I have heard from employees at NASA that individuals hired under 

NASA’s flexibilities have not been allowed to join a union even 

though they are clearly part of a bargaining unit where they work. 

Let me be clear. It was not the intent of Congress in granting 

NASA personnel flexibilities to bar NASA employees from joining 

unions or to erode employees’ collective bargaining rights. Are employees hired under the NASA Flexibility Act barred from joining 

unions? And if so, why? 

Ms. NOVAK. Sir, I am shocked to hear that, to be very honest, 

and I am clearly going to look into that. 

No, absolutely not. Of course, we have bargaining unit positions 

and some that aren’t, and depending on the nature of the position, 

and, of course, we have several different unions that we have union 

32

members representing. We are using some of the flexibilities to 

bring people on board, to hire people, and there should be no bar 

whatsoever to those individuals. If they are otherwise available to 

join a union, that should be no impact. So I will clearly check into 

that, and maybe we could talk or I could talk with your staff and 

get some more details. 

Senator AKAKA. Thank you for your response. 

Ms. White, you testified that HHS has a pilot program using the 

category rating method for selecting new employees. I want to follow up on Senator Pryor’s question to Ms. Pe ́rez as to how veterans 

have fared under the category rating at HHS. As ranking member 

of the Veterans’ Committee, ensuring the rights of our veterans is 

very important to me. Category rating was used in demonstration 

projects for several years at USDA, and the impact on veterans 

was positive. 

How have veterans fared under category rating at HHS? 

Ms. WHITE. I can tell you that the pilot that we ran was with 

National Institutes of Health and with the Centers for Medicare & 

Medicaid Services, and we thought if we could have a successful 

pilot in those two organizations, it will work anywhere. And I am 

proud to convey that the pilot was very successful. NIH ran its 

pilot from June 2004 to March 2005. They included eight different 

kinds of vacancies, and they are the one of the high scientific organizations at HHS. And CMS started its pilot in January 2005 to 

present. And while they have only offered up one vacancy up to 

this point, they yielded 10 different hires from that process. The 

veterans float to the top of each qualifying category and, as such, 

would be selected in the category that they fall into. And we make 

sure that it is not only important to protect the rights of veterans 

but to make sure that the processes we have provide that same assurance. 

And so we are looking forward now to implementing the category 

rating process across the department. 

Senator AKAKA. Thank you. 

Ms. Novak, among the flexibilities granted to NASA through the 

NASA Flexibility Act was the authority to implement a scholarship-for-service program. This program is similar to one I championed for national security positions that was included in the Intelligence Reform Act which became law in December. What is the 

status of NASA’s scholarship-for-service program? 

Ms. NOVAK. Senator Akaka, thank you for asking that. We have 

an assistant administrator for education. Her folks are doing the 

staff work associated with that, but I can tell you what the status 

is. They are in the process of very shortly briefing our new administrator, Dr. Michael Griffin, on that and publishing some regulations. Hopefully the plan is to have an estimated 20 students on 

board in the program in the fall time frame. We are going to increase the numbers with each year, that is my understanding, but 

hopefully in the fall that will actually be kicked off. 

Senator AKAKA. Thank you. Mr. Chairman, my time is almost 

up. I have a question for the rest of the witnesses, but I will be 

glad to ask it in a second round. 

Senator VOINOVICH. Why don’t you go ahead and ask now. 

33

Senator AKAKA. All right. Ms. White, Mr. Nulf, and Mr. DeLeon, 

I just discussed the scholarship-for-service program with Ms. 

Novak. Do you believe that a similar program would be helpful to 

recruit employees for your respective agencies provided there is 

adequate funding? Mr. Nulf. 

Mr. NULF. Not knowing all the details of the program itself, sir, 

but I will speak at a level that I am comfortable with to say that 

first hearing of it and getting a better understanding of it, I might 

speak more to the details, but I would say this. We are such a diverse organization, Commerce, and our needs cross more spectrums 

and vocations than one can shake a stick at. And that being said, 

the more tools and the more flexibilities and the more capabilities 

we have to bring in via scholarship or grants or what have you the 

youth of America into the walls of Commerce, the better off certainly we will be served in the long run. 

So my short answer would be, yes, sir, it is something that we 

would be very open to and would be interested in discussing further. 

Senator AKAKA. Thank you. Ms. White. 

Ms. WHITE. I would be interested in knowing more about NASA’s 

program, but we think at Health and Human Services we have a 

number of programs that fit that kind of model. Whether they are 

called service fellows or scholarship for service or things of the like, 

our health organizations and our National Institutes of Health use 

those kind of authorities very extensively. 

As you might well know, the importance of getting in people who 

have the top-level research that we need for National Institutes of 

Health and doctors that will help us carry out our mission requires 

us to be innovative in how we outreach to individuals who have the 

skill sets where we would have to offer some monetary incentive 

for them to not only come but to stay in our organizations. And 

sometimes being a part of premier scientific organization by itself 

isn’t enough, and, therefore, I think one of the reasons that NIH 

is able to yield so many of their employees that were approved for 

the student loan repayment which represents the bulk of that 

1,500 that I mentioned earlier. Their payment is roughly $49,000 

per employee. I think this is similar to the model that NASA may 

have, but I would be happy to look into that to see if we could add 

another to the group of programs that we have currently. 

Senator AKAKA. Thank you. Mr. DeLeon. 

Mr. DELEON. Yes, similar to my colleague’s comments, I am not 

familiar with the specific program for NASA, but we have talked 

about a similar program, an environmental fellows program, where 

people would come in for service, that type of program. 

And I would say that if we had the authority and certainly the 

resources to implement such a program, we would be very interested in pursuing something that was applicable to EPA. So, yes, 

thank you. 

Senator AKAKA. Well, thank you for your responses. I know the 

Chairman and I look forward to the time—and maybe it is happening now—where different agencies will be able to talk to each 

other about some of these programs and share best practices instead of starting from zero so that we can all benefit from each 

agency’s experiences. 

34

Thank you very much, Mr. Chairman. 

Senator VOINOVICH. Thank you, Senator Akaka. Senator Pryor. 

Senator PRYOR. Thank you, Mr. Chairman. 

Senator VOINOVICH. Senator Pryor, I want to say thank you very 

much for coming. Senator Akaka and I usually hold down the fort. 

You are very nice to us to show up. 

So that people know, there are many Members of this Subcommittee concerned about this issue. The problem in the Senate 

today—and the public should know it—is we could all be at three 

different places at the same time and all of them justified. We are 

constantly prioritizing what we have to do. In my particular case, 

I am the Chairman of the Subcommittee. I have to be here. 

Senator Akaka, God bless you. He is here, and some of our other 

Members try to come in and help us out. And I don’t want you to 

get the impression that people are not concerned about this, but 

that is the way it works here in the Senate. 

Senator Pryor. 

OPEN STATEMENT OF SENATOR PRYOR 

Senator PRYOR. Thank you, Mr. Chairman, and once again I 

thank both of you for your leadership on these very important 

issues, and these are not issues that always make the headlines, 

but this is the nuts and bolts of government. And you are both very 

committed to try to improve government, make it run more efficiently and more effectively, and I join you in that, and thank you 

for having me today. 

Let me just jump right in, if I may, Ms. Novak, and ask you 

about NASA. Has NASA found the OPM 45-day hiring model to be 

realistic for all administrative positions? 

Ms. NOVAK. We have found the 45-day model to be realistic for 

a good number of our positions. We are fortunate we have an automated staffing and resume recruitment system, which allows us to 

run vacancy announcements and get through that whole process 

pretty quickly, most often meeting the 45-day requirement. 

Senator PRYOR. When you say a good number, what type of positions does the 45-day model not work for? 

Ms. NOVAK. In some cases for those that are very technical and 

that require a wide search, looking for very specific technical qualifications, of which we have a good number. 

Senator PRYOR. That is why I ask you the question. And I see 

a couple of heads nodding here on the panel. That is also your experience as well? 

Mr. DELEON. Yes. 

Ms. WHITE. Yes. 

Mr. NULF. Yes. 

Senator PRYOR. Sometimes, in some cases, the more technical or 

the more precise the requirements are, the 45-day requirement 

may not always work. 

Ms. NOVAK. One size doesn’t always fit all. 

Senator PRYOR. But, nonetheless, do you like the 45-day model? 

Ms. NOVAK. I think it works fairly well. I will go beyond that. 

I think it is a good model, and I think that is one of the complaints 

we get from individuals interested in the government, as well as 

from people within the government, that it takes too long to hire. 

35

I think we need to have some guidelines to strive for. If we can go 

through that process in 45 days, for most cases we are doing very 

well. 

Senator PRYOR. Good. And let me ask you this: I know NASA 

and others have had funding cuts. Have the funding cuts adversely 

impacted your ability to hire and train? 

Ms. NOVAK. Actually, at NASA, we have not had funding cuts 

per se in terms of our overall budget. We are doing some rebalancing and restructuring internally, which has created some challenges for us in the workforce where we have got some positions 

in certain areas where they are not attached to programs that are 

funded right now. We are working some rebalancing issues. We are 

working buyouts and early-outs, looking at the possibility of employees moving across field center geographic lines, if it is appropriate, if they want to go, to try to take care of our situation. 

Senator PRYOR. Is that true with the rest of the panel? 

Mr. DELEON. If I may, I would say in certain of our regions funding has been—or budget cuts have provided some challenges for the 

regional folks to meet their headquarters folks, but for the most 

part our training dollars have been OK. It has been more in the 

hiring with some budget cuts. 

Senator PRYOR. OK. 

Mr. Nulf, over at Commerce, you talked about the Department’s 

use of academic degree training. To what extent are these educational opportunities contributing to your strategic plan? 

Mr. NULF. It is a bureau-by-bureau impact, sir, but for those that 

do require it and need the specific targeted recruitment and it is 

specialized towards particular academic background, the flexibilities that this Subcommittee has seen to and provided to Commerce 

has enhanced our capabilities. 

Senator PRYOR. Let me ask the panel generally about the fear of 

lawsuits, the fear of litigation, especially when it comes to the direct hire piece of this, and I guess to some extent category rating 

flexibilities. 

What have your respective agencies done to overcome the fear of 

being sued in the direct hire context, and is that a legitimate concern? Have you seen lawsuits or the threat of litigation in your 

agencies? Why don’t we start with you, Mr. Nulf. 

Mr. NULF. Well, I think any good organization, which I believe 

Commerce to be, has an effective risk management program, and 

leadership, it should be one of the first things they think about 

from the standpoint of protecting the organization and making sure 

we are able to accomplish our mission. 

Having said that, I don’t think that there is a hesitancy necessarily to do or to approach or evaluate any programs, whatever 

they are, category rating or direct hire authority. I think as Marta 

spoke to earlier, it is choosing those flexibilities, those tools that 

are in the toolbox that best position you to do your job. So I 

wouldn’t say it is necessarily due to risk management perspective 

of avoiding lawsuits. It certainly is reality in today’s environment 

that you have those considerations, yes, sir. 

Senator PRYOR. Does the rest of the panel have anything to say 

on that? 

36

Ms. WHITE. I would just like to say that I don’t have any information that would point to any litigation or lawsuits with respect 

to direct hire category rating, but I think one of the fundamental 

things we have to bear in mind is that even though these flexibilities allow us to hire quickly, it does not relieve us of our responsibility of making sure that people are qualified who are coming 

through that review process, whether it is expedited or not, and 

that is the way we provide the assurances in both direct hire and 

any category rating. 

Senator PRYOR. Thank you. 

Mr. DELEON. And we haven’t seen any increase in the litigation 

risk in either of those two areas, direct hire or category rating. 

Ms. NOVAK. Just to end that conversation, in terms of the use 

of the legislative provisions that we received in the NASA Flexibility Act, we have put in place safeguards to make sure that, in 

spite of the flexibilities, merit principles are being addressed and 

we are not violating prohibited personnel practices essentially. So 

I don’t think we have a problem in that area at all. 

Senator PRYOR. Thank you, Mr. Chairman. 

Senator VOINOVICH. Thank you. I would be remiss, Ms. Novak, 

not to ask you about NASA. I have written to the acting administrator, and I have talked to the new administrator. I am concerned 

with NASA attempting to reshape their workforce while moving 

away from aeronautics to fulfill the President’s mission to Mars 

and the moon. I am concerned that at NASA’s Glenn Research Center and Ames Research Center, notices have been sent to employees indicating they can take early retirement or a separation payment. 

It looks like NASA is projecting this will happen. I know many 

of us are going to work very hard to make sure that aeronatutics 

research is minimized at NASA. What bothers me is that NASA is 

anticipating Congress will agree with the new mission proposed by 

the President. However, if Congress funds aeronautics research 

these people will be needed. 

Ms. NOVAK. Right. Yes, sir, I expected that you might ask me 

this question, and it is a very important one. I saw just as I was 

coming up here today a newspaper article that came out this morning. Our Deputy Administrator, Fred Gregory, testified yesterday, 

and in the testimony I see that there has been a discussion about 

relooking at some of the aeronautics issues. I know our new Administrator has talked about we need a national aeronautics policy, 

much as we have a space exploration policy. 

So there may be some additional conversations about this, but I 

think what you are referring to, Senator, is we have used buyout 

and early-outs at the Ames Research Center and at Glenn Research Center and, in fact, throughout the Agency recently. It may 

appear as though that has been capricious and arbitrary and 

maybe we are stepping up prematurely, but there actually has 

been—and maybe it hasn’t been communicated to the employees as 

effectively as it needs to be, but there has been a lot of analysis 

behind that and discussion between the centers and the mission director organizations in Washington, and there have been some programmatic changes. As a result of those programmatic changes, 

there have been identified some competencies, some areas or comVerDate 0ct 09 2002 13:21 Nov 03, 2005 Jkt 021432 PO 00000 Frm 00040 Fmt 6633 Sfmt 6633 C:\DOCS\21432.TXT SAFFAIRS PsN: PHOGAN
37

petencies where we believe we either need to diminish those or we 

won’t need them in the future, and in some areas there are some 

we need to beef up. 

So what we are trying to do using the early-outs and buyouts is 

to do some rebalancing and restructuring in a smart, deliberate 

way as opposed to arbitrary and capriciously, and it is not supposed to be a signal at all that this means we are going out of business. 

Senator VOINOVICH. The only comfort I have is that I have seen 

projections on the number of people you expect to take advantage 

of the buyouts. And as a matter fact, less people have taken advantage than you anticipated. 

Ms. NOVAK. Yes, that is true. 

Senator VOINOVICH. So that part of it gives me some comfort, 

and we are going to be staying on top of this. 

Ms. NOVAK. Yes, sir, and I know NASA is going to be looking 

hard at that. 

Senator VOINOVICH. The other thing I would like to mention is 

that there are some Members of Congress who feel agencies need 

more workforce flexibilities. Do you believe at the present time you 

have the flexibilities that you need in order to retain and to attract 

the best and brightest people to the Federal Government? 

By the way, one of the enacted reforms that really interests me, 

Senator Akaka, is changes to annual leave. I looked at the statistics about why mid-career professionals from the private sector 

wouldn’t work for the Federal Government. One of them is they 

have got to work 13 years before you get a month’s vacation. 

Mr. NULF. Yes, sir, that is correct. 

Senator VOINOVICH. Reforming this has made a difference, hasn’t 

it? It is just amazing. It is just a simple thing, but it deals with 

the human aspects of a job. I think maybe it was you, Senator 

Akaka, who talked about the human things are the most important. Things like annual leave, family leave, and flexible time. 

Mr. NULF. I guess I could start us off. We have the tools to do 

our job, sir. You have positioned us well. I think that there are certain flexibilities that are currently there that are not being fully 

utilized, that as the agencies—I will speak for mine—as the Agency 

and as the managers become better trained and more effective 

when to pull the trigger on certain things, the more you will see 

the numbers. I would agree with—one of my colleagues earlier 

talked about the fact that the numbers are not necessarily the 

whole story. But the fact you have a number of things that you can 

go to to try to bring in that right person for that right job to fill 

it is absolutely invaluable, and I would go one step further. When 

you talk about the family things—and, again, I am one of these 

folks that came in and was wrestling with those things, of being 

away from family and things of that sort. And what you have done, 

again, there is you have put us on a level playing field, gentlemen. 

You have put us on a level playing field to compete with the private sector so that it is more than just being able to, which is extremely important, to serve the government and serve the taxpayer, but actually you are not having to have just one or the 

other. You can still have a family life and you can still carry on 

with things that are priorities in your life. 

38

Senator VOINOVICH. Thank you. Ms. White. 

Ms. WHITE. We appreciate the flexibilities that you have championed under your leadership, and we are aggressively pursuing 

those. We also are going to pay a whole lot more attention to some 

of the processes that come with the flexibilities to ensure that they 

do not stand in the way of yielding the desired result that the flexibilities were intended to give. We are going to see if we can’t match 

up the GS–5 and GS–7 hiring processes so they can be matched 

with those that we use for the career intern program for emerging 

leaders at GS–9 and GS–12. 

Mr. DELEON. I think the short answer is yes from EPA’s perspective. We appreciate all of the authorities that have been instituted 

lately. As my testimony shows, we have used quite a number of 

them to affect our workforce and to bring in new talent. So we appreciate all your effort and leadership and look forward to your 

continued——

Senator VOINOVICH. Yes, but the issue is, is there something else 

that would make a big difference? 

Mr. DELEON. Well, I think the one program that I would like to 

explore with my colleague from NASA is the program that she 

mentioned as an added flexibility that we can utilize at EPA. 

Senator VOINOVICH. By the way, I like the competencies assessment that you do. I would encourage all agencies not only to do 

this but incorporate it as part of their GPRA report. 

Senator Akaka. 

Senator AKAKA. Thank you very much, Mr. Chairman. Just to 

comment on what I said in terms of keeping workers happy, I was 

mentioning travel and how we provided compensatory time for employees traveling outside their normal work hours. So I think we 

need to continue to review all these policies and see where we can 

be more flexible on some of these that have been around for years. 

I look forward to doing that. 

Ms. White, you testified that HHS has over 1,500 employees approved for the student loan repayment program and will expand 

employee coverage for fiscal year 2005. In this regard, this is what 

we have been talking about. We are concerned about what is going 

to happen in a few years when the baby boomers retire. There will 

be a demand for workers. And, of course, we hope the demand is 

satisfied by the right people for the right jobs, but some of these 

people will require additional training or education. 

The student loan repayment program, I feel, will play a major 

role. I strongly support student loan repayment programs and believe them to be one of the most attractive recruitment incentive 

tools for the Federal Government. 

Also, as an aside, I believe that a student loan repayment program can help employees learn a foreign language for their work. 

So I am asking you, Ms. White, would you discuss the student 

loan repayment program at HHS, including the average award, the 

criteria for selection, and how HHS jumped from 38 participants in 

fiscal year 2003 to 1,500 in fiscal year 2005? 

Ms. WHITE. Well, we have the National Institutes of Health to 

thank for that. They have a separate authority, separate from the 

one that your numbers were derived, and I did not mean to imply 

39

that the 1,500 was across the entire department. It was my reason 

for indicating that NIH had a separate authority. 

Approximately 1,450 of the 1,500 do come from the NIH’s special 

authority for student loan repayment, and they pay anywhere up 

to about $49,000 per employee under their special authority. They 

hire more doctors and research fellows and those in job categories 

with the higher student loan repayment balances than most other 

individuals who may come through, so they have separate authority. 

With respect to other organizations at HHS, they do have the authority to use their own repayment program, but we want to provide them additional guidance about how they might look at it from 

a strategic perspective, so they can expand their use beyond the 

small number that currently exists, but make it relevant to their 

organization. 

We have not had tremendous difficulty recruiting our talent. It 

is evident in our success with the emerging leaders program. The 

first year we ran that program we had 8,000 applications. And 

every year beyond that we have had at least 2,000 or 3,000 applications for the emerging leaders program. However, the incentive 

with respect to the student loan program would not have 

necessorily provided the incentive to generate applications at a 

similar magnitude. 

Once hired, what we look at is a way of trying to retain the individuals that have come through the emerging leader program, and 

paying a student loan is one of the most attractive ways that we 

can leverage to provide an incentive for them to stay and for us to 

have that high talent in our organization for time to come. 

Our employees sign a service agreement to stay employed with 

our Agency for every year of student loan repayment that we authorize. 

Senator AKAKA. Thank you. Mr. Nulf, would you care to comment 

on that? 

Mr. NULF. I will be very candid, sir. We do not have the numbers, as my colleagues do here at this table, in regard to student 

loan repayment. I would say this: That is something that we have 

turned our attention to and are focus and committed to having 

numbers that this Subcommittee would be proud of. We have a 

number of folks we are talking to in the recruitment, in the pipeline that I think will bear fruit shortly, but we have not effectively 

used it as the retention tool that it needs to be. We are going to 

do so and believe it is one of the stronger weapons you have given 

us to do our job. We need to focus more intently on it, sir. 

Senator AKAKA. Ms. Novak, given the fact that NASA has and 

needs a highly trained workforce, I am curious why NASA only 

awarded student loan repayments to about 40 employees. Is that 

number correct? 

Ms. NOVAK. Yes, sir, that is the number I have also. Actually 

that is a good question. I guess I looked at it a little bit differently. 

We use our flexibilities, judiciously, when we really need them. We 

don’t necessarily offer them across the board, but with the 40 we 

have identified a number of those—more than half of those are for 

contract acquisition and contract management type individuals, 

which have been identified as one of our critical competency areas. 

40

That is an area that we want to make sure that we recruit and develop and retain individuals in that particular area. So a good portion of those 40 have been in that particular competency area. 

I believe that we have used them, again, judiciously, when we 

have needed to use them. 

Senator VOINOVICH. Let me ask a question to follow up on this. 

Maybe there is process or something here we don’t know. When 

using direct hire, you get permission to hire on college campuses? 

Ms. NOVAK. Well, I know that you can direct hire individuals in 

certain specified occupations. That is, if you have made a case that 

it is very difficult——

Senator VOINOVICH. You have to ask OPM formally. 

Ms. NOVAK. Right. We don’t have any of those per se at this 

point in time, but what we do is, in discussing people, we will go 

through another process as opposed to direct hire, but we will be 

talking with them early on about what are some of the things that 

we can offer you through the Flexibility Act or otherwise that 

would make coming to NASA a positive experience so that we can 

nab them and bring them in. The student loan repayment program 

clearly is one of those. 

Senator AKAKA. Mr. DeLeon, you testified that in fiscal year 

2005 EPA had 18 student loan repayment agreements in place. 

What is the criteria for selecting these individuals, and how much 

money will the 18 individuals receive? 

Mr. DELEON. Let me start with the 18. We have a modest program in place, and as my colleagues have indicated, we will look 

at critical needs, look at is there a particular talent gap that we 

are trying to fill and offer it as an incentive. But as you alluded 

to, I think, in your opening statement and I have alluded to in my 

testimony, our managers have to balance some critical programmatic needs and some dollars challenges since it comes from 

the PC&B accounts. So we have used it judiciously. It is modest. 

Perhaps with some further assistance and guidance and resources 

we could expand that program, because I agree with you, Senator, 

that this is a great incentive to bring some young talent into the 

workforce, compete with our private sector competitors, and try to 

at least alleviate some of the disparity in pay that some of the college graduates face when faced with a salary from the Federal Government. 

But we are looking for every opportunity to expand our use of the 

student loan repayment program and have provided our managers 

guidance on using it judiciously, as we have so far. 

Senator AKAKA. Well, thank you very much, Mr. Chairman, for 

giving me this additional time. 

Senator VOINOVICH. Certainly. One bill that Senator Akaka and 

I have introduced in previous sessions of Congress would not tax 

as income student loan repayment. It has not been able to pass 

through the Finance Committee. How much would that help this 

program? 

Ms. WHITE. I believe it would be a tremendous help to the student who has to pay back the loan because then more of the money 

goes toward the loan rather than the portion that remains after 

taxes. It would do a lot to significantly begin to reduce a lot quicker 

41

the outstanding loan balance that the employee would have when 

they were a student. 

Senator VOINOVICH. It would give us the same benefit as universities. 

Ms. WHITE. The same benefit, the same money comes out of 

the——

Senator VOINOVICH. If a student goes to work for a nonprofit, 

universities can repay the loan and the students don’t have to pay 

taxes on it. Do you think that would help? 

Mr. NULF. Absolutely, sir. I think anytime you can stamp something tax free as a benefit, it packs a bigger punch, yes, sir. I would 

share with you that my wife and I recently were looking at one of 

the business publications, looking at the—our children are only 2 

years old at this point, and in 16 years we will be wrestling with 

those college costs. And I think these types of flexibilities and these 

types of benefits speak to not just here and today. What we can do 

to have John Smith or Sally Smith fill a particular chair providing 

a certain function or value to an organization, but they speak to 

the generations to come that we are so worried about with the retirement and the institutional knowledge that is walking out of the 

door of the agencies. 

Senator VOINOVICH. Well, thank you very much. This has been 

great. We have good people on the front lines, and we are real impressed with what you are all doing in your respective agencies. 

Your work makes us feel good, and we will be seeing you again. 

Thank you. 

The hearing is adjourned. 

[Whereupon, at 12:53 p.m., the Subcommittee adjourned.] 

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