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24–712 PDF 2005

NSPS: THE NEW DEPARTMENT OF DEFENSE

CIVILIAN PERSONNEL SYSTEM—REACHING

READINESS

HEARING

BEFORE THE

SUBCOMMITTEE ON THE FEDERAL WORKFORCE

AND AGENCY ORGANIZATION

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

APRIL 12, 2005

Serial No. 109–88

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

GINNY BROWN-WAITE, Florida

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(Independent)

MELISSA WOJCIAK, Staff Director

DAVID MARIN, Deputy Staff Director/Communications Director

ROB BORDEN, Parliamentarian

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

SUBCOMMITTEE ON THE FEDERAL WORKFORCE AND AGENCY ORGANIZATION

JON C. PORTER, Nevada, Chairman

JOHN L. MICA, Florida

TOM DAVIS, Virginia

DARRELL E. ISSA, California

KENNY MARCHANT, Texas

PATRICK T. MCHENRY, North Carolina

——— ———

DANNY K. DAVIS, Illinois

MAJOR R. OWENS, New York

ELEANOR HOLMES NORTON, District of

Columbia

ELIJAH E. CUMMINGS, Maryland

CHRIS VAN HOLLEN, Maryland

EX OFFICIO

HENRY A. WAXMAN, CALIFORNIA

RON MARTINSON, Staff Director

CHRIS BARKLEY, Professional Staff Member

REID VOSS, Clerk/Legislative Assistant

MARK STEPHENSON, Minority Professional Staff Member

(III)

C O N T E N T S

Page

Hearing held on April 12, 2005 .............................................................................. 1

Statement of:

Abell, Charles S., Principal Deputy Under Secretary, Personnel and

Readiness, Department of Defense; George Nesterczuk, Senior Policy

Advisor on the Department of Defense, U.S. Office of Personnel Management; and Neil A.G. McPhie, chairman, U.S. Merit Systems Protection Board ...................................................................................................... 51

Abell, Charles S. ........................................................................................ 51

McPhie, Neil A.G. ...................................................................................... 80

Nesterczuk, George ................................................................................... 70

Heiser, Karen, organizational development program manager, Federal

Managers Association; John Gage, national president, American Federation of Government Employees; and Ron Ault, president, Metal

Trades Department ....................................................................................... 94

Ault, Ron .................................................................................................... 153

Gage, John ................................................................................................. 117

Heiser, Karen ............................................................................................. 94

Walker, David M., Comptroller General of the United States, U.S. Government Accountability Office ..................................................................... 6

Letters, statements, etc., submitted for the record by:

Abell, Charles S., Principal Deputy Under Secretary, Personnel and

Readiness, Department of Defense, prepared statement of ...................... 53

Ault, Ron, president, Metal Trades Department, prepared statement of .... 156

Davis, Hon. Danny K., a Representative in Congress from the State

of Illinois, prepared statement of ................................................................ 4

Gage, John, national president, American Federation of Government Employees, prepared statement of .................................................................... 120

Heiser, Karen, organizational development program manager, Federal

Managers Association ................................................................................... 97

McPhie, Neil A.G., chairman, U.S. Merit Systems Protection Board, prepared statement of ........................................................................................ 82

Nesterczuk, George, Senior Policy Advisor on the Department of Defense,

U.S. Office of Personnel Management, prepared statement of ................. 72

Walker, David M., Comptroller General of the United States, U.S. Government Accountability Office, prepared statement of .............................. 9

(1)

NSPS: THE NEW DEPARTMENT OF DEFENSE

CIVILIAN PERSONNEL SYSTEM—REACHING

READINESS

TUESDAY, APRIL 12, 2005

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON FEDERAL WORKFORCE AND AGENCY

ORGANIZATION,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 2:03 p.m., in room

2154, Rayburn House Office Building, Hon. Jon C. Porter (chairman of the subcommittee) presiding.

Present: Representatives Porter, Davis of Illinois, Norton, and

Van Hollen.

Staff present: Ron Martinson, staff director; B. Chad Bungard,

deputy staff director/chief counsel; Chris Barkley and Shannon

Meade, professional staff members; Reid Voss, legislative assistant/

clerk; Patrick Jennnings, detail from OPM serving as senior counsel; Mark Stephenson and Tania Shand, minority professional staff

members; and Teresa Coufal, minority assistant clerk.

Mr. PORTER. Welcome, everyone. Thank you for joining me today.

The hearing will come to order. The Subcommittee on the Federal

Workforce and Agency Organization is having a hearing entitled,

‘‘NSPS: The New Department of Defense Civilian Personnel System—Reaching Readiness.’’

But I thought that for the benefit of those who have traveled for

some distance to be here that I would start the meeting. As I said

in my opening a moment ago, welcome. Thank you for being here.

Today’s testimony focuses on another significant milestone in the

transformation of the Federal work force. On February 14, 2005,

the Department of Defense and the Office of Personnel Management issued proposed regulations for the new National Security

Personnel System at the Department of Defense. The NSPS will be

the second major new personnel system for Federal employees; the

other being the DHS personnel system.

According to the Department of Defense, when the NSPS is fully

implemented, approximately 700,000 civilian DOD employees will

be eligible for coverage under the new system. When the new

NSPS and the new DHS human resources system are fully implemented, over half of the Federal Government will be under the pay

for performance and other aspects of the new systems.

As I pointed out in our previous hearing on the DHS system, the

new human resource systems at DOD and DHS are the first major

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reforms to our Civil Service process in 50 years. It is critical that

we get this right. And it took many months of hard work by the

DOD, the OPM and the DOD labor organizations to create the proposed regulations for the NSPS, and there are still a lot of details

to be worked out, which is why we are here today.

We are charged with implementing a large-scale change and having to deal with a number of personnel and cultural issues. DOD

faces nothing short of a major task. This is our chance to use the

oversight power of the subcommittee to highlight the aspects of the

regulation efforts that represent steps in the right direction and aspects that raise concern or need additional work.

As I have said before, change can be difficult, and I know that

this is a nerve-wracking experience for the Department’s work

force. However, I can assure everyone here that this subcommittee

will closely monitor the progress of DOD and OPM toward a publication of final reglations and implementation of this new system

over the next several years. I am confident that if the NSPS is implemented in a fair, credible, and transparent manner, DOD employees will thrive. Under this new system—again, DOD employees

will thrive under the new system.

I would like to express my thanks to the witnesses who have

agreed to join us today. We have brought together a broad and

knowledgeable array of voices as we continue our oversight of the

new system and look forward to hearing all of your perspectives,

if not today, then in the future.

I would now like to recognize the ranking member of the subcommittee, Mr. Danny Davis. Welcome, and we now have a

quorum.

Mr. DAVIS. Thank you very much, Mr. Chairman, and I want to

thank you for calling this hearing. I also want to thank the witnesses for agreeing to appear and for coming.

At the Deparment of Homeland Security’s hearing our subcommittee held last month, I said that DHS’s personnel regulations

and implemented directives were not fair, credible, or transparent.

Today the Defense Department offers us the same kind of

changes to its personnel system. The difference between DHS and

the Defense Department is that DOD already has shown us that

they have no intention of being fair, credible, or transparent. There

is a saying that actions speak louder than words. And of course,

my mother used to tell us that ‘‘What you do speaks so loudly until

I can’t hear what you are saying.’’

DOD’s actions have given us a good idea of what to expect when

NSPS is implemented. I will give you two examples of actions that

demonstrate what we can expect from DOD. First, early last year,

DOD released a proposal for its new labor relations systems to congressional staff. House and Senate Democrats expressed concerns

about the proposal in the February 25, 2004 letter to Secretary

Rumsfeld. The letter stated that the National Defense Authorization Act of 2003 specifically stated three things. One, that DOD

could not waive Chapter 71 of Title 5 of the U.S. Code which sets

forth the right of employees to join unions; that the new personnel

system must be prescribed jointly with the Director of the Office

of Personnel Management; and that DOD must provide for an independent third-party review of agency decisions.

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House and Senate Democrats were not the only congressional

members who expressed concern. So did many Republicans. Their

concern was so great that DOD was compelled to go back to the

drawing board and to start the proposal process all over again. Yet

DOD presents us with more of the same kind of draft regulations

and implementation directives that were the source of initial concerns. Chapter 71 of Title 5 continues to be replaced with provisions that essentially gut collective bargaining on most matters

that are important to Federal employees. Instead of jointly prescribing and implementing the proposed regulations, OPM has

been reduced to reviewing and commenting on DOD regulations

that may have governmentwide implications.

Finally, instead of an independent third-party review of agency

decisions, DOD continues to propose a new Defense Labor Relations Board that would be located within the DOD and whose

members would be selected solely by the Secretary.

The second example of DOD’s it’s-our-way-or-the-highway attitude has to do with the administration’s much-touted and well-publicized call for performance-based pay. If we have heard nothing

else from the administration, we have heard that Federal employees should be compensated based on their individual performance

and that managers should have the flexibility to award their best

performances with bonuses and higher salaries. Concerns about patriotism and politicization of the process were dismissed.

Earlier this year the pay-for-performance debate raged on. It

came to light that DOD gave political and noncareer employees

higher pay raises than career employees. These were across-theboard pay raises for political appointees, and they were not based

on merit or on individual performance. The irony of DOD’s actions

is that these political appointees are responsible for our national

security, but they are not held to the same standards to which

rank-and-file Federal employees are held.

The second example demonstrates the kind of unfairness that

makes me concerned that the regulations do not state that employee performance expectations must be in writing. These expectations will determine whether or not an employee receives a pay

raise, but not one word of these expectations must be put in writing. DOD has shown us that they have no intention of being fair

or credible. DOD’s intentions, however, are transparent to anyone

paying attention.

It is no surprise to me that the Comptroller General will testify

that he has three primary concerns about the proposed regulations.

These concerns have to do with the fact that the proposed regulations lack adequate safeguards to ensure fairness and to guard

against abuse. Do not specify that employee expectations should be

communicated to employees in writing and do not specify a process

to involve employees in the planning and development of the new

system.

Mr. Chairman, I share these concerns, and based on DOD’s actions, the members of this subcommittee and Congress should

share them as well. I look forward to the testimony of our witnesses, and, again, thank you very much for calling the hearing.

[The prepared statement of Hon. Danny K. Davis follows:]

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Mr. PORTER. Thank you. I would like to ask unanimous consent

that all Members have 5 legislative days to submit written statements and questions for the hearing record. Any answers to written questions provided by the witnesses will also be included in the

record. Without objection, so ordered.

Also ask unanimous consent that all exhibits, documents, and

other materials referred to by the Members and their witnesses

may be included in the hearing record and that all Members be

permitted to revise and extend their remarks. Without objection, so

ordered.

It is also the practice of this committee to administer the oath

to all witnesses. If you could all please stand, those that will be testifying, and I will administer the oath.

[Witnesses sworn.]

Mr. PORTER. Let the record reflect that all witnesses have answered in the affirmative. Please be seated. Thank you.

On our first panel today, we will hear from Mr. David Walker,

the U.S. Comptroller General for the Government Accountability

Office. Mr. Walker, it is a pleasure. I know that you have a number

of other testimonies you have to make in the next few days, so we

appreciate you being a part of our hearing once again. So if you

would please—you have 5 minutes.

STATEMENT OF DAVID M. WALKER, COMPTROLLER GENERAL

OF THE UNITED STATES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

Mr. WALKER. Thank you, Mr. Chairman and Ranking Member

Davis. It is a pleasure to be back before you. I would ask your consent that my entire statement be included in the record so I can

move to summarize it now, if you can, Mr. Chairman.

Mr. PORTER. Yes.

Mr. WALKER. Thank you very much.

Mr. WALKER. It feels like deja vu all over again, because it

wasn’t that long ago that I was here before this subcommittee testifying about the Department of Homeland Security’s proposed regulations; and obviously they are both matters of significant importance, not only with regard to the departments and agencies involved, and their employees, but also with regard to our overall effort to try to modernize our human capital policies and practices

in the Federal Government.

As I did at that hearing, I would respectfully request that—just

provide you a few examples of positives, areas of concerns and the

issues going forward. My testimony has many more that has now

been provided as a part of the record.

As you both know, the National Security Personnel System did

not get off to a good start on Capitol Hill and, frankly, didn’t get

off to a good start initially within the Department of Defense.

As you probably recall, the Defense Department came up to Congress 1 day before a recess. I had a very thick bill, with no business

case and very little justification. The Congress held a number of

hearings, including this full committee, and made a number of improvements to that bill that I think represented the progress.

The Defense Department, after that legislation was enacted, initially stated its intention to move quickly to maximize this new

7

flexibility as quickly as possible. I am pleased to say that since

Gordon England has been involved as Secretary Rumsfeld’s point

person on this project, I have noticed a significant change; namely,

the commitment to so-called ‘‘spiral development,’’ to a more

phased approach, and the commitment toward more consultation

and communication with regard to this important initiative. And I

think that’s important. But as Mr. Davis said, you know, it’s important that continue, and actions do speak louder than words.

I would give one positive comment, one area of concern and one

important point as we move forward.

First, the overall conceptual framework with regard to regulations has considerable merit because it proposes to move to a more

modern, flexible, and market-based and performance-oriented classification compensation system. So the conceptual framework clearly has merit.

However, with regard to the areas of concern, the details do matter very greatly, and there are very many important details that

have yet to be defined.

For example, how will performance expectations be set and how

will that be documented? How will the new pay for performancebased compensation system actually be designed and implemented?

Furthermore, how will the appeals processes actually work, and

what will be the rights and the limitations to those rights, and will

they have adequate independence not only to be effective but also

credible in the eyes of the affected parties?

These details very much do matter, and I think it makes it critically important that the meet-and-confer period which is about to

be undertaken be engaged in by both parties on a—in a constructive manner and using a good-faith approach, because it’s pretty

clear that these new authorities are going to be implemented. But

it’s very important that both parties come to the table in a good

faith manner and with a constructive approach to try to make the

best out of these regulations and to fill in some of these details, because I am a strong believer, Mr. Chairman and Mr. Davis, that

there clearly is a need for additional flexibility in this area. But

there must be adequate safeguards to provide reasonable assurance

and consistency and to prevent abuse when that flexibility is granted.

The last point that I would make on going forward is it’s critically important that there be adequate systems and safeguards in

place before any additional pay-for-performance or other major

flexibilities are implemented. It’s very, very important that they be

in place; and that means, among other things, a modern, effective,

credible, and hopefully validated performance appraisal system

that results in meaningful distinctions of performance and, furthermore, that there be adequate internal safeguards as well as external safeguards, and that there be an appropriate degree of transparency with regard to the degree of results of any related decisions. Transparency is a powerful force, and I think that it can play

an important role here.

I think it’s important that we get this right, rather than getting

it fast. On the other hand, I think we need to move as soon as prudently possible to make these reforms, because it’s going to take a

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number of years to effectively do what all needs to be done to roll

this out departmentwide.

We at GAO will continue to do our best to lead by example and

to share our considerable experience and expertise in this area. As

you know, we went to broad-banding in 1989. We went to pay for

performance in 1989, and we have continued to try to improve to

modernize that over the years, and we think that some of our both

process and policy approaches may have conceptual merit for consideration by both the Department of Defense as well as Department of Homeland Security.

And last, but certainly not least, as both of you know, the Department of Defense has 14 of 25 high-risk areas on GAO’s latest

high-risk list. It is critically important that DOD place additional

time, attention, and focus on the much-needed business transformation effort. And this National Security Personnel System is a

critical element of that overall transformation effort.

And we believe and continue to believe, as I will testify over the

next couple of days before the Armed Services Committee, that the

Department of Defense needs a chief management official, a Chief

Operating Officer, if you will, the person at the right level within

the Department, a level 2, reporting to the Secretary, who is dedicated full time to addressing the many business transformation

challenges, including NSPS; because, in the past, the track record

is not very good and, quite frankly, the stakes are way too high,

both from the standpoint of money and people, not to do this right.

Thank you.

[The prepared statement of Mr. Walker follows:]

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Mr. PORTER. Thank you, Mr. Walker. I appreciate you mentioning those three key areas that I know that my friend and colleague

from Illinois pointed out in his opening statement. And I expect

you will probably have some more questions with regard to those,

and I will wait for some of those questions.

But I have had an opportunity, since we last had a hearing and

since we chatted, to look at some of the information that you provided regarding the Deputy Secretary of Defense for Management,

and I know you touched upon it in your closing comments. Even

beyond today’s hearing, I look forward to looking closer at that. I

think it’s critical in some shape or form that a person of this capacity become a part of the process. My concern is that at what point

does that happen, and what would be optimum as we are looking

at, you know, the pay-for-performance change; first change, as I

said, in 50 years.

At what point should we be spending more time on that Deputy

Secretary of Defense? Should that be parallel to what we are doing

today?

Mr. WALKER. Well, I have mixed emotions about this, Mr. Chairman, because on the one hand the President, as you know, has announced his intention to nominate Gordon England, who is the individual I referred to before, as Deputy Secretary of Defense. And

let me say for the record that in my own actions with Secretary

England, I believe he is a first-rate professional, and I believe

that’s an excellent nomination.

At the same point in time, I also believe that the existing Deputy

Secretary job is a full-time job, and that there is—continues to be

a need for a Deputy Secretary for Management, this chief management official if you will, to focus on the business transformation.

I doubt that there’s a human being on the planet that can basically

deal with both of those jobs. Each of them are full-time jobs. The

stakes are too high for us not to get NSPS right. The stakes are

too high for us not to make, you know, progress with regard to the

other major business transformation challenges within the Department of Defense, such as financial management, information technology, supply chain management, etc. And I think it’s going to

take somebody like this chief management official at the right level

for—enough time with a proven track record of success in order to

be successful.

Mr. PORTER. Yes.

Mr. WALKER. So now is what I would say, Mr. Chairman.

Mr. PORTER. Now is the time.

How would you envision this position being different from the

newly created Chief Human Capital Officer?

Mr. WALKER. My view is that the new Chief Human Capital Officer would report to this position, that a number of key players who

are involved in the business side of the Department of Defense

which should inherently not be political. I mean, there might be political appointees, but you need to make sure that you have the

right type of business infrastructure in place no matter who the

President is, no matter who the Secretary of Defense is, and no

matter which party controls the White House or Capitol Hill.

And so my view is that the Chief Human Capital Officer would

report to this person and would work in partnership with this perVerDate 11-MAY-2000 13:53 Dec 06, 2005 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 D:\DOCS\24712.TXT HGOVREF1 PsN: HGOVREF1
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son as well as other key players, not just the under secretaries, but

also the service secretaries and other key players in the Department in order to take a more strategic, a more integrated, and a

more, you know, departmentwide approach to this and other key

initiatives within the Pentagon.

Mr. PORTER. Do you think that CHCO, or the Chief Human Capital Officer, is going to have the tools and the ability to manage the

change to NSPS?

Mr. WALKER. I think first we have to recognize that, you know,

that modernizing your human capital policies and practices is absolutely key to the overall transformation effort within the Department, and that while the Chief Human Capital Officer will play a

critically important role, this is so important to the mission of the

Department of Defense that even the Secretary of Defense needs to

allocate some time to this effort.

And the communications strategy, while it might end up, you

know, involving the Deputy Secretary or Deputy Secretary of Management as playing a key role along with the CHCO, you have to

involve a number of different line and functional heads, as well as

the Secretary, in this effort.

I mean, you know, the stakes here are key, not just for the Department of Defense, but also for our overall Civil Service reform

effort. I mean, we are dealing with a huge part of the Federal work

force, and it’s really critically important that we get this right.

Mr. PORTER. I had an opportunity to meet with some of the managers yesterday and had kind of a question-and-answer session. I

think I touched upon it at our last hearing. I know there are a lot

of folks that are concerned. And now we are talking close to

600,000, 700,000 people in DOD and certainly those in Homeland

Security.

But I want to reiterate what you mention in your summary, that

we have to have these safeguards in place to prevent abuse. We

have to. It’s our responsibility, and it’s critical that it be highlighted in your report.

Also the process for continuing involvement by the employees, I

think that, again as you pointed out in your report, it’s an area of

weakness.

And as my colleague said from Illinois, we have to make sure

that some of these things are done in writing so that people understand.

I know this isn’t a question, it’s more of a comment. In my short

tenure as chairman, I am learning that in many departments,

agencies, I question who is in charge. And I think the system has

allowed itself to evolve into a lot of this, a lot of finger-pointing.

And at least I believe in the watch of this subcommittee, we don’t

want to create more finger-pointing; we want to have somebody in

charge so they are held accountable, so that they can respond to

these employees that need help, to those managers that want to

train and make sure there is ample training material.

Again not a question, more a comment. I appreciate what you

have had to say today.

Mr. WALKER. If I can followup real quickly on that. With regard

to the overall business transformation effort within the Department of Defense, of which NSPS is a subset, a very important subVerDate 11-MAY-2000 13:53 Dec 06, 2005 Jkt 000000 PO 00000 Frm 00049 Fmt 6633 Sfmt 6633 D:\DOCS\24712.TXT HGOVREF1 PsN: HGOVREF1
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set but only in a piece, the answer is nobody is in charge. That’s

the honest answer right now at the Department. I am talking

about the overall business transformation process.

And you talk about concerns. It is very understandable that

there would be broad-based and serious concerns about the type of

changes that are being proposed here. Quite frankly, there were

broad-based and serious concerns when these same type of changes

were proposed at the GAO. I mean, these are fundamental philosophical changes. But just because they are complex, just because

they are controversial, just because they are a concern, doesn’t

mean that we shouldn’t proceed. We must proceed. But how do we

proceed? You know, what basis we proceed, and to make sure that

it is based upon a constructive and interactive approach that we

have these actual—these principles and safeguards in place, and

that we have reasonable transparency; that’s critically important.

But we must proceed. But how we do it matters.

Mr. PORTER. Thank you. Mr. Davis.

Mr. DAVIS OF ILLINOIS. Thank you, Mr. Chairman.

Mr. Walker, let me thank you. As always, I look forward to your

insight into your testimony, and I agree with you totally that the

conceptual framework, I think, is excellent. I also agree with your

assessment of Mr. England.

But I think that some of these things have to be codified in such

a way that it doesn’t matter, to some degree, who the individuals

might be relative to the implementation, but that the codification

is there. You have consistently testified that human resource systems must be transparent and credible. I mean—and I have certainly appreciated that position.

And you have also indicated that you believe that employees

must have confidence in the system if you are going to have the

kind of work force, the kind of morale, and the kind of productivity

that you are expecting.

Would you say that verbal communications could be good enough

to create that kind of environment and those kinds of confidences

in the employees?

Mr. WALKER. Well, verbal communications need to occur, and

they should occur on a frequent basis throughout the year, but I

believe that you have to have some written expectations.

And part of that has to do with seriously considering a competency-based approach as a means to move forward with regard

to any new performance appraisal system.

I know that we at GAO adopted that, and I know others have

followed a similar approach, including most recently the Defense

Intelligence Agency, which ended up adopting a number of our

competencies. And what we found is a competency-based approach

is a way that can help to set expectations and help to assure a reasonable degree of consistency, you know, not only within units but

also across units in a given department.

So I think you need to have written expectations, but that should

be supplemented with frequent oral communications.

Mr. DAVIS OF ILLINOIS. And you indicated, so—to answer another

question that I sort of had in mind—and so that you would suggest

that DOD look seriously at some of the policies and practices that

your agency has established and been making use of and encourage

47

them to follow suit or to certainly look at what you have done more

as a model than what they have perhaps recommended?

Mr. WALKER. Well, Mr. Davis, we are not perfect, and we never

will be. Nobody is. I think that, you know, we have had a considerable amount of experience here, both as it relates to the policy

framework as well as it relates to the process that should be employed to try to get to a positive outcome.

And in fairness, the DOD and DHS are talking with our people,

and they are trying to be informed by that. And I hope that when

they end up engaging in the meet-and-confer process, and I hope

that when they end up filling in a number of the important details,

some of which I mentioned, some of which you mentioned, some of

which the chairman mentioned, I hope that in doing that, it will

be informed in part by what they learn from us and others, because

there are a number of important details that have to be filled out.

And if I can come back to your comment about institutional versus individual, that’s a critically important point. The fact of the

matter is we are talking about doing something here that will span

beyond any individual and beyond any administration.

And just as I think it’s important that we keep that concept in

mind for the National Security Personnel System, I also think it’s

important that we keep that concept in mind with regard to the

chief management official, because we need to institutionalize that

as well, because we don’t know who the next set of players might

be.

Mr. DAVIS OF ILLINOIS. Can you think of anything that agencies

would have to fear by doing that? I am saying sometimes, you

know, people see demons and things if they open them up a bit.

Can you think of anything that they would have to fear from employees?

Mr. WALKER. Well, obviously anytime you provide more discretion, people are concerned about how that discretion is going to be

used, and want to make sure that discretion is not going to be

abused.

There is little doubt in my mind that the DOD and that—you

know, in this particular case, are wanting to get reasonable flexibility, but they are not wanting to abuse employees. It would be totally counterproductive to do that. But in order to be able to

heighten the degree of confidence that that won’t be done, it just

reinforces the needs for the safeguards. It reinforces the needs for

more specificity. It reinforces the need for, you know, more written

documentation and adequate checks and balances; that that not be

based upon a promise but it actually be written and codified, if you

will.

Look, no matter what the final rules are, there will be a significant percentage of the work force that will remain concerned. And

part of that is because we are moving from a system whereby,

under current law, 85 percent-plus of all pay increases have nothing to do with skills, knowledge, and performance. It’s on autopilot.

And we are moving from a system where, even if you perform at

an unacceptable level—where we don’t have that many people who

do—but even if they perform at an unacceptable level, they are entitled by law to that 85 percent of the annual increase. And so that

by itself is going to cause a great degree of concern.

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But as I said, that doesn’t mean we shouldn’t move forward.

Mr. DAVIS OF ILLINOIS. Thank you very much. And I think I have

some of that 85 percent who work for me who—and we want to

change it.

Mr. PORTER. I don’t think I will comment on that, Mr. Davis. We

will leave that for you.

Mr. Walker, on page 20—and you don’t need to turn to page 20,

but it has to do with resources for implementing the new system

and training and helping change this culture—you said 85 percent

has nothing to do with performance.

Could you spend a little more time this afternoon talking about

the training aspect and where you see the strengths and weaknesses are of the plan regarding the training, making sure the

managers are trained and employees are trained so they can understand how they can achieve these higher levels of performance?

Mr. WALKER. Well, first, we haven’t done an in-depth study of

their training plan. Frankly, I don’t know that they have an indepth training plan for us to study yet. I will say this: that based

upon our own experience, which I know best, it takes a considerable amount of time and it takes a considerable amount of resources to be able to not only help explain what you are doing and

why you are doing it, but how to do it.

Again, they have to come up with a modern, effective, credible,

and hopefully validated performance appraisal system; that, after

you do that, you have to train not just the managers who will rate

employees, but also the reviewers who will review the ratings, and

also the employees who will be rated based upon these standards,

and also the other key players who will have some role to play with

regard to the checks and balances.

We spent a considerable amount of time and money after we

ended up designing the system and training all those different key

players in what their role was and what we were trying to accomplish out of this system and what type of, you know, safeguards

and means that we had in place to try to achieve all of our objectives.

My understanding is, just through a note that’s been passed to

me by one of our very capable staff, is that the plan hasn’t been

developed yet, which doesn’t surprise me, because it’s hard to develop the plan when you don’t have the system yet, you know. But

no doubt it’s—you know, the Department contemplates that there

will be extensive, you know, training efforts.

Mr. PORTER. And with your assistance as this unfolds, I would

like to put a microscope under that so we watch as that unfolds,

so that there is proper training and the funding of that training.

But I would appreciate your assistance in that area.

Mr. PORTER. Another question. You know, when I go back to the

district, I am asked frequently about homeland security, international security, because its still in the hearts and minds of individuals as they are going to work every day; they go to the airport,

and there’s extra security.

How do you see the NSPS fulfilling the mission of DOD; and

that’s, of course, the security of the Nation and of the world? Is,

in fact, this system being put in place going to make our Nation

a safer place to live and to work and to raise our families?

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Mr. WALKER. I think it can if it is designed and implemented

properly. Let me tell you why I say that. Because any agency, company, or not-for-profit entity is only as good as the people who comprise it. And I think it’s important to recognize that we do need to

move to more modern or flexible, more market-based and performance-oriented human capital systems. That’s critically important.

We need to do a better job of linking the strategic plan and the desired outcomes of the Department of Defense with the measures of

success for the different units that make up the Department of Defense and the individuals who contribute to the mission of the Department of Defense.

And I think that to the extent that we can link those and integrate those and move to a more modern set of human capital policies and practices where we are making more decisions based upon

skills, knowledge, and performance, then there’s no doubt in my

mind that we will end up resulting in more positive outcomes that

will enhance value and will mitigate risk. That has clearly been the

case at GAO, and I think it can be the case in many departments

and agencies. But it’s, as has been said, not just what you do but

how you do it that matters.

Mr. PORTER. Thank you. Mr. Davis.

Mr. DAVIS OF ILLINOIS. Just actually one question, though. I was

thinking, when I was a kid growing up, my mother and I used to

have a lot of serious conversations about her assessment of my performance. And I remember her telling me one time that I hadn’t

done much. And I asked her, how much is much?

And that leads me to the question of how much detail. How detailed do we need to have things in order to create this transparent

environment that we are talking about? And I know it’s difficult to

assess and measure what sometimes you can’t see before you see

it, but how much detail is necessary?

Mr. WALKER. What I would say, Mr. Davis, is I have found that

a competency-based approach, where you end up working in partnership with employees to define the competencies that are necessary for them to be successful and maximize their potential in

various roles and responsibilities; so you work in partnership with

the employees to define those competencies, and then you have the

employees validate what has been come up with such that A, you

get better buy-in with regard to that and, frankly, you mitigate litigation risk as well by doing it that way.

If you do that, and then you couple that with fairly clearly defined, you know, performance standards—in other words, here is

what we want you to do and here is what we define as meets expectations, and here is how we define as ‘‘outstanding,’’ ‘‘role

model,’’ call it what you want. That if you do that, you have a very,

very solid framework for moving forward. And then some of those

competencies might end up involving competencies like achieving

results.

Then, as a supplement to doing this, you must then define what

do you mean by that? What do the results mean from the standpoint of the unit involved, the individual involved? You know, we

do that at GAO, and the definition of results will vary, based upon

the department, based upon the unit, based upon the individual, as

to how can they contribute to overall organizational results.

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But the competencies and the performance standards provide the

foundation that can be supplemented with additional information

where there would be a degree of transparency associated as well.

But the level of detail, obviously, would vary based upon the individual facts and circumstances.

Mr. DAVIS OF ILLINOIS. Thank you very much.

Mr. WALKER. Thank you.

Mr. DAVIS OF ILLINOIS. I really appreciate your testimony.

Mr. PORTER. I just have one additional question, and it’s come up

a couple of times. It has to do with the Labor Relations Board. The

question is whether or not having three members appointed by the

Secretary of Defense really provides an independent review. Do you

feel that the Department can establish an independent committee

to review the employee problems?

Mr. WALKER. I think if they are all going to be appointed by the

Secretary of Defense, there has to be a process for determining who

the candidates are from which the Secretary will select. There has

to be a participatory process there where you are providing reasonable assurance that there’s going to be some degree of balance on

that Board, where employees and/or their representatives have

input to that process. I also think it’s important to have term appointments and very stringent standards for removal once the person is appointed.

We have at the GAO something called the Personnel Appeals

Board. That is something that was established late in the 1980’s

to provide credible, reliable, independent and external review body

for our employees. In the interest of full and fair disclosure since

day one, the Comptroller General has appointed the members of

that board.

However, how we go about it is very important. We do have a

consultative process. We do try to achieve balance. There are fixed

terms, and people cannot be removed, you know, once they have

been appointed. In fact, I can’t remove them. They can only remove

themselves, their colleagues can remove them, if they are—if there

is a dereliction of duty or some other aspect.

So I think, you know, it’s possible for it to work if you address

the issues that I talked about. But I don’t think they have been

adequately addressed yet.

Mr. PORTER. Thank you. Again, we appreciate you being here

and providing your insights, we look forward to continued communications on these topics. We appreciate it.

Mr. WALKER. Thanks. I will stay for a little while, but I won’t

be able to stay for the whole time.

Mr. PORTER. I understand. Thank you. Thank you.

I would now like to invite our second panel of witnesses to please

come forward to the table.

I will first have opening statements by the Honorable Charles S.

Abell, Principal Under Secretary of Defense, Personnel and Readiness. Following Mr. Abell will be Mr. George Nesterczuk, the Senior Policy Advisor on the Department of Defense, U.S. Office of Personnel Management. And finally we will hear from the Honorable

Neil McPhie, the chairman of the U.S. Merit Systems Protection

Board.

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I would like to begin today by recognizing Mr. Abell. Mr. Abell,

thank you very much, and you will have 5 minutes.

STATEMENTS OF CHARLES S. ABELL, PRINCIPAL DEPUTY

UNDER SECRETARY, PERSONNEL AND READINESS, DEPARTMENT OF DEFENSE; GEORGE NESTERCZUK, SENIOR POLICY

ADVISOR ON THE DEPARTMENT OF DEFENSE, U.S. OFFICE

OF PERSONNEL MANAGEMENT; AND NEIL A.G. McPHIE,

CHAIRMAN, U.S. MERIT SYSTEMS PROTECTION BOARD

STATEMENT OF CHARLES S. ABELL

Mr. ABELL. I thank you, Mr. Chairman and Mr. Davis.

The National Personnel System is a key part of DOD transformation. We will create a total force, uniformed military and civilian employees who share a common vision, who recognize common strategic and organizational objectives, and who operate as

one cohesive unit. DOD civilians are unique in government in that

they are an integral part of an organization that has a military

mission, a national security mission.

DOD civilians are at work side by side with our uniformed military personnel around the world in every time zone, every day.

NSPS will bring 21st century human resource management to

these dedicated public servants.

NSPS has been designed to meet a number of essential requirements. Our guiding principles as we designed them were mission

first, respect the individual, protect rights guaranteed by law,

value talent, performance and leadership, and commitment to public service. Be flexible, understandable, credible, responsive, and

executable, and to balance the HR system interoperability unique

with the mission requirements and to be competitive and cost-effective. We have key performance parameters and implement these

guiding principles with measurable metrics.

NSPS was enacted on November 24, 2003. Since January 2004,

we have been engaged in a process to design the HR appeals and

labor relations system in an open, collaborative environment in

consultation with our employees, the unions and other interest

groups.

Since January 2004, we have met face to face with employees,

unions, and interest groups in many settings, as well as maintained two-way communications via written correspondence, cover

stations, and exchanges of documents. Based on feedback from the

unions and congressional committees, in March 2004 the Department adjusted the process, established different governance and

enhanced our partnership with OPM.

The proposed regulations published in the Federal Register on

February 14 reflect the result of this adjusted process. The Federal

Register notice is the formal notice required by the statute, followed by the 30-day comment period, after which we reviewed the

comments, and beginning on April 18th, will meet in a meet-andconfer process for a minimum of 30 days.

Mr. Chairman, I stress the word ‘‘minimum.’’ We will devote the

time necessary to adequately discuss and confer on every issue

raised during the comment period, and this is where the details

that so many long for will begin to emerge. We have asked the FedVerDate 11-MAY-2000 13:53 Dec 06, 2005 Jkt 000000 PO 00000 Frm 00055 Fmt 6633 Sfmt 6633 D:\DOCS\24712.TXT HGOVREF1 PsN: HGOVREF1
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eral Mediation and Conciliation Service to assist us in this meetand-confer process. And at the conclusion of the meet-and-confer

period we will report the results to our congressional oversight

committees.

I suspect that we will spend some time today talking about what

NSPS does. But let me take a minute to talk about what NSPS

does not do. It does not change the merit system principles that are

the foundation of the Civil Service system. It does not change prohibited personnel practice rules. It does not change whistle-blower

protections nor antidiscrimination laws. It does not modify nor diminish veterans preference. It does not change employee benefits,

such as health care, life insurance, retirement, and so forth. It does

reserve due process for employees, and it does not reduce opportunities for training and professional development.

On the other hand, Mr. Chairman, the National Security Personnel System will provide a streamlined, more responsive hiring process, simplified pay-banding structure, and will allow us flexibility

in assigning work, performance-based management, that is linked

to strategic and organizational goals, and includes accountability at

all levels. It will give us—allow us pay increase based on performance rather than on longevity; efficient, faster features for adjusting performance and disciplinary issues while protecting due process rights, and a labor relations system that recognizes our national security mission while preserving collective bargaining rights

of the employees.

Although we plan to implement the labor relations system DODwide, we intend to phase in the HR system beginning in late summer of this year, as we expect full implementation by late 2007 or

perhaps early into 2008. We recognize that the National Security

Personnel System is a significant change, but these are necessary

changes.

We will meet the challenge of change and change management

willingly. We are committed to training employees, managers, and

supervisors. We are committed to the collaborative approach that

we have used to get to this point. We understand the concern and

the anxiety of our employees. It would be unnatural if they were

not concerned or anxious, and we will address their concerns.

NSPS is the right system, based on the right philosophy, at the

right time in our history. The Department, in partnership with the

Office of Personnel Management, the unions, interest groups, and

our employees, will implement it with efficiency, effectiveness,

transparency, and sensitivity.

Mr. Chairman, before I close, I would like to recognize the great

contributions of my partner, Mr. George Nesterczuk, Dr. Ron Sanders of OPM, and Ms. Mary Lacy of our personnel—of our program

executive office. They have been invaluable to getting us to where

they are, and they are going to be part of the team that takes us

all the way home.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Abell follows:]

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Mr. PORTER. Thank you very much.

George, that was quite an opening right there from Mr. Abell.

Maybe I don’t need to say much more. He said great things about

you.

STATEMENT OF GEORGE NESTERCZUK

Mr. NESTERCZUK. I will see if I can reciprocate toward the end

of my testimony as well. He has been a great partner.

Thank you, Mr. Chairman, for holding this hearing and for giving us the opportunity to clarify a number of issues surrounding

the NSPS. I have provided a longer statement for the record. I

would just like to, orally, briefly summarize some of the key points.

It’s my privilege to represent the Office of Personnel Management today to discuss the proposed implementation of the NSPS.

The proposed regulations will establish a new human resources

management system that we believe is as flexible, contemporary,

and responsive as the President and the Congress originally envisioned. The regulations are still in a proposed stage. We still have

much left to do. Right now we are assessing the thousands of comments that came in during the public comment period, and we are

about to enter into the meet-and-confer process with DOD’s unions,

during which we expect to get into a great deal of detail concerning

the regulations.

Subsequently, we expect a great deal of additional work in the

continued collaboration with the unions over implementing

issuances within the Department. We have stipulated a continuing

collaboration process in the regulations and expect to refine it during the meet-and-confer period beginning next week.

As to the content of the regulations, I think we will probably get

into details during the question-and-answer period, but I would

like to summarize a few key points. On pay and performance, we

took a very employee-oriented approach. We are proposing a simplified classification system that will actually enhance career

growth for employees. We are simplifying the pay structure using

broad pay bands that will allow greater employee growth within

each band, and we are making clearer distinctions on entry into supervisory and managerial tracts.

On staffing flexibilities, we believe that the regulations will better support the Department in matching its work force to its mission requirements. There are provisions for expedited hiring and

targeted recruitment. Performance-based retention is built into the

system with less organizational disruption whenever they need to

be enforced. We have also guaranteed full veterans preference as

veterans enjoy today in the work force.

On due process of accountability, we have assured due process

safeguards for employees, while balancing the greater deference to

DOD’s mission requirements that the current system—where the

current system has been lacking.

Finally, in the labor relations arena, we are proposing a system

that provides the Department with more predictability and greater

uniformity in the issuance of internal management directives.

Let me conclude with the following, Mr. Chairman. If DOD is to

be held accountable for national security, it must have the authority and flexibility essential to that mission. That’s why Congress

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gave the Department and OPM the authority to waive and modify

the laws governing staffing, classification, pay, performance management, labor relations, adverse actions and appeals, a broad

array of flexibilities.

In developing the proposed regulations, we believe that we have

succeeded in striking a better balance between union and employee

interests, on the one hand, and the Department’s mission imperatives on the other. At the same time, we made sure the core principles of the Civil Service were preserved.

Mr. Chairman, that concludes my statement. Thanks for the opportunity to appear before the subcommittee, and I will be pleased

to respond to any questions you might have.

Mr. PORTER. Thank you, anything nice you might want to say

about Charles while you are here?

Mr. NESTERCZUK. He has been terrific, a very understanding fellow. Thank you.

[The prepared statement of Mr. Nesterczuk follows:]

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Mr. PORTER. Mr. McPhie.

STATEMENT OF NEIL A.G. McPHIE

Mr. MCPHIE. I was hoping he would say something nice about

me, but——

Mr. PORTER. There is still time.

Mr. MCPHIE. Chairman Porter and Ranking Member Davis and

Member Van Hollen, My name is Neil McPhie, and I have the

honor of serving as chairman of the U.S. Merit Systems Protection

Board.

Thank you for the opportunity to appear before you and participate in this hearing on the proposed Department of Defense National Security Personnel System [NSPS]. First, I want to congratulate DOD and OPM, the designers of the NSPS, for proposing

an appeals process that guarantees due process to public employees.

MSPB’s formal statutory role in design process is to consult DOD

and OPM to assist those agencies in ensuring that all employees

are afforded the protections of due process. The Board consulted

with DOD and OPM to develop the regulations to implement the

NSPS.

Members of my staff participated in working groups and attended numerous meetings throughout this process. Some of that

staff is present here today. The proposed regulations reflect some

of the suggestions generated from the collaborative process. For example, I appreciate DOD’s and OPM’s recognition of the need for

carefully defined mandatory removal offenses.

As an independent adjudicatory agency, MSPB is not in a position to judge among the various personnel systems that policymakers may devise. Rather, MSPB’s role is to adjudicate employee

appeals pursuant to the system applicable to a particular department or agency.

MSPB is pleased that the DOD has chosen to retain MSPB’s adjudicatory services. I believe that MSPB’s participation is critical to

establishing the credibility of the process. The DOD appeals system

envisions MSPB’s involvement at two stages. An employee has a

right to appeal an adverse action to an MSPB administrative judge.

After DOD finalizes the administrative judge’s decision, either taking no action or by modifying it within the prescribed period, the

employee has the statutory right to petition the full board for review.

MSPB has a distinguished history of providing fair proceedings

and sensible decisions. The full Board at MSPB and administrative

judges will bring integrity and objectivity to the NSPS employee

appeals process and will continue MSPB’s tradition of providing

fair proceedings and objective decisions. I am confident that the

Board will provide the same high quality of services for which it

has become known.

The compressed timeframes in the proposed system will create a

more efficient appeals system, but may pose a challenge to current

Board resources as it strives to reduce its processing time for all

board cases.

However, several provisions of the proposed regulations may

prove especially helpful in reducing the amount of time it takes to

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adjudicate DOD cases. For example, the provision grants the Board

to issue a summary judgment when there are no material facts in

dispute, will facilitate the expedited adjudication of DOD appeals.

The Board understands the challenges it faces and has already

begun to examine ways to reduce case processing times. That study

is not complete, but indications are that case processing times can

be significantly reduced by streamlining processes, instituting technological innovations, implementing more efficient management

practices and securing additional resources.

My goal as head as the MSPB is to treat all cases equally. That

is why the Board has requested additional funds as part of its

budget request for fiscal year 2006, to enable the Board to hire

more staff and provide appropriate training and enhance technology. These additional resources will facilitate the Board’s efforts

to adjudicate DOD and DHS employee appeals within the required

timeframes, while continuing to provide efficient and timely adjudicatory services to other client agencies.

In conclusion, I’m optimistic of the future of the Federal Civil

Service. The service is poised to undergo a significant transformation that may culminate in far-reaching changes in how the

government operates. I believe that in the end, the Federal Civil

Service will be a more attractive place to work. The Board recognizes that its role in safeguarding Civil Service protections is an

important component in the current transformation of human resource management practices governmentwide. The implementation of the NSPS will be a significant early step in this process.

We look forward to continued opportunities for consultation with

our colleagues at DOD and OPM as they move toward final regulations and ultimately to implement the NSPS.

That ends my oral statement. And I will be happy to take any

questions you may have.

Mr. PORTER. Thank you very much.

[The prepared statement of Mr. McPhie follows:]

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Mr. PORTER. I would now like to open up our Q and A period.

I would like to ask my friends at DOD and OPM, Mr. Walker has

discussed for a number of years, but specifically today, about the

creation of a Deputy Secretary of Defense for Management. What

do you think about that idea?

Mr. ABELL. Mr. Chairman, I think that over the history of the

Department, the role that the Secretary of Defense has laid out for

the Deputy Secretary of Defense has varied. Many times, the Deputy Secretary of Defense is the Chief Operating Officer. Other

times, he’s been—another role has been defined for him. I think the

organization and management of the Department of Defense should

be one that fits the style and the talents of the Secretary of Defense.

So I would urge that you and your colleagues engage the Secretary of Defense on this question and see how he would do that

or what he would suggest to you. I would note that a bifurcation

of the chain of command is almost always a bad thing. So if the

Department of Defense was split and some things going to one

Deputy Secretary and some things going to another, I would suspect that we would end up with gaps and seams, but that is just

my personal view on that one.

Mr. PORTER. I think there are gaps and seams the way it is. And

I appreciate your comments and I understand in your capacity, as

you should be, of being selective in your comments, but it’s something I want to spend some time on and look forward to continued

discussions on that subject.

Mr. Nesterczuk.

Mr. NESTERCZUK. We don’t really have an institutional position

on that, and so I would rather not speak for OPM. That really is

an issue for the Executive Office of the President together with the

Secretary of Defense to sort out.

I can comment personally on it, having been an observer on these

matters for loath 25, 30 years, that I tend to share Charlie’s view

on that; that bifurcation really doesn’t serve the Department or any

department well. We tend to integrate both policy and resource responsibilities in the second, third, and fourth-level chains of command. All managers are responsible for integrating their resource

requirements with their policy consideration and evaluate it as

such. That kind of dynamic decisionmaking, as it works its way up

the chain, I think serves the organization as a whole the best.

Mr. PORTER. Back to, I guess, a question I had earlier, and that

is regarding some of the concerns from employees and management

and funding of that training and making sure they understand the

new culture and the direction. What assurances can we give to

your employees that, in fact, the managers will be trained to manage, and employees will then understand the processes, and whether it’s in writing or verbal? What assurances do we have that you

are going to be able to take this work force and modify it into a

pay for performance?

Mr. ABELL. First of all, Mr. Chairman, it’s not in our ethos or not

in our interest to fail, so we want to succeed, and training is the

key to success. It’s also one of the things that the Department does

well every day. For NSPS in particular, we have developed several

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ministered in a decentralized way by the services and defense

agencies. Managers and supervisors will get a minimum of 18

hours of training; employees, a minimum of 13 hours of training;

HR practitioners, up to 40 hours of training; and senior leaders,

senior supervisors, a minimum of 6.

We have a lot of experience with our alternative personnel systems and various demonstration projects. We are developing now

an evaluation system to ensure that the training took, so it will be

standards-based as opposed to hours-based. Merely completing the

program doesn’t necessarily get you a go. Before anyone has their

pay subject to a performance Board, we will have mock payouts,

where the employees and the managers and the supervisors will

get to practice this all at once in a transparent way so we can see

where the competencies are and get that credibility, if you will, but

also tell us where we need additional training resources. We are

going to track the training in our automated system so we know

who has been trained and who has not. And we plan to have a

readiness checklist. Before NSPS is deployed to an organization,

the organization must have met the standards on a checklist. We

think we have a good program. We won’t put an organization into

NSPS until they are ready.

Mr. PORTER. Mr. Davis.

Mr. DAVIS OF ILLINOIS. Thank you very much, Mr. Chairman.

Mr. Secretary, let me ask you, DHS has contracted with Northrop Grumman to write the details to implement its new personnel system. Will the details of DOD’s system be crafted by agency,

human resources management staff, or do you see that being contracted or outsourced out?

Mr. ABELL. Sir, we don’t plan to contract the creation of those

regulations out. Again, we have extensive experience. We are using

working groups which are not just HR practitioners but also employees and supervisors to assist us as we do that.

Mr. DAVIS OF ILLINOIS. Chairman McPhie, you heard the discussion with Mr. Walker relative to more detailed expectations. Would

that help you and your colleagues when it’s time for you to do a

review on appeal? Would that help you to be in a better position,

you think, to make the best decisions?

Mr. MCPHIE. Well, let me answer it this way, Mr. Davis. I have

practiced law myself, and it seems to me I have always gotten better outcomes when I had objective pieces of evidence in the record.

I can’t speak for every MSPB judge, but I assume a judge wants

to have a fully explicated record.

The thing I would urge, though, this is a brand-new system. You

know, lots of things have to be worked out, even at the level of

MSPB in hearing a specific case. I believe MSPB judges are going

to try to get into the record or urge the parties to provide the

record with all the documentation so that the judge may render a

fair and good decision.

Mr. DAVIS OF ILLINOIS. Sounds to me—and I’m not a lawyer—

that you’re saying that the clearer the evidence or the expectations,

the more comfortable one can be that the decisions they arrive at

are rendered based upon evidence that two people looking at would

see the same way, as opposed to one person looking at the glass

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and perhaps saying, that glass is half empty and another person

saying it’s half filled?

Mr. MCPHIE. Documentary evidence is documentary evidence.

Oral evidence is different, and there you go to credibility of people

and so on. Additional documents won’t help you. But it seems to

me as I sit here and think of it, if you’re going to have de novo review, that is, review based on the record developed below, I believe

it’s very important to have a fully developed record below, so that

the Board, when it reviews it, ultimately the Federal circuit court

when it reviews it, would have a full record before it so it can

render, I believe, an objective, usable decision.

Mr. DAVIS OF ILLINOIS. Thank you very much. And I think people

who kind of follow the way I think about some of these situations

know that I kind of feel that OPM plays a junior partner role in

some of these deliberations as opposed to being an equal partner.

And I’m looking at the general provisions section 9901–105 in coordination with OPM, and it says that the OPM Director will be

provided an opportunity as part of DOD’s normal coordination process to review and comment on recommendations and officially concur or not concur with all or part of them. The Secretary of Defense

will take the Director’s comments and concurrence or nonconcurrence into account and advise the Director of his determination

with reasonable advanced notice of its effective date. Thereafter,

the Secretary and the Director may take such action or actions as

they deem appropriate consistent with their respective statutory

authorities and responsibilities.

This section does not read as though the Secretary and Director

are equal partners. Is there any recourse, Mr. Secretary, Mr.

Nesterczuk, for OPM—I mean when there’s disagreement—let’s say

you can’t arrive at an agreement, what happens? Who prevails in

this kind of situation?

Mr. ABELL. The process you described—and they are in the proposed regulations—is not different than the processes that are in

place today, in that two officers who are appointed by and report

to the President have their conversations through their staffs,

make their points. And should they ultimately not agree, the disagreement is adjudicated in the Executive Office of the President.

That’s what that says.

The practical effect of all that is that very few disagreements

would ever reach the Secretary and Director level of adjudication.

Folks like George and I, or Dr. Sanders and Mary Lacy, will work

those out. But if there is something so fundamental to the core responsibilities of either and it does reach that level, it will be adjudicated in the Executive Office of the President, not unlike a disagreement between Treasury and Commerce.

Mr. NESTERCZUK. Let me comment on that, Mr. Davis, if I may.

The language you specifically cited addresses an issue that goes

way beyond the enabling regs, way beyond implementing issuances

into practical day-to-day decisions where we have reserved basically some role for OPM. In issuing enabling regulations, we are

full partners. There’s no question of that in the enabling regulations that we’re discussing, which require both signatures of the

Director of OPM and the Secretary of Defense. And following that

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with more detail in implementing issuances, we will be working

with the Department in implementing those issuances.

Once they are in effect, we have reserved for OPM an additional

consultative role, and how that consultative role plays out is the

language you specifically read.

We don’t anticipate collisions in those areas very often. These

will be practical issues of setting pay levels based on surveys, pay

surveys, market conditions, and things of that sort or when it

comes time to implementing hiring authorities, specific details on

that, we would be consulting with DOD before they issue those.

But we listed the specific instances where those provisions would

kick in, and those are in the regulations as well.

Mr. DAVIS OF ILLINOIS. The National Defense Authorization Act

specifically states ‘‘jointly prescribe,’’ but I certainly appreciate the

practicality of the Executive Office sort of adjudicating any disputes.

Thank you very much.

Mr. PORTER. Mr. Van Hollen.

Mr. VAN HOLLEN. Thank you, Mr. Chairman. And thank you,

gentlemen, for your testimony.

I just wanted to followup on a couple of issues that have been

raised, especially the testimony by Mr. Walker. I was not able to

be present when he delivered the testimony, but I have been reviewing the testimony. And much of the concerns he raised there

have been raised in earlier hearings with respect to regulations

and Department of Homeland Security as they relate to pay for

performance. And pay for performance is something I think everyone agrees with in concept. We want to reward employees who perform better. And certainly employees who are not up to par should

not be rewarded. The key is coming up with a system that does

that in a fair, predictable manner, one that the employees have

faith and confidence in, one that is not going to be used for political

purposes or one that is not going to be there to reward the pet of

the manager.

And the devil is in the details and the details are absolutely critical in this area. This committee reviewed the pay-for-performance

plans that were put in place by GAO some time ago and decided

that based on the way they phased it in in a predictable manner

in the oversight and the ability for employees to have input into

that process and know the standards which they were being asked

to perform, that is something we can move forward with.

In reviewing the regulations with respect to the Department of

Defense, there are a couple of issues that have been raised here.

First was the issue of defining the details of implementation of the

system. Now, as I understand your testimony, Mr. Secretary, you

agree that needs to be spelled out and you are going to be sure that

before this is actually fully implemented in any particular agency,

that you’re going to flush out the details; is that correct?

Mr. ABELL. Yes, sir. We will flush out details during the meetand-confer process which begins on April 18. At the end of that

process, I think the detail that many have asked for will be apparent. But we will also make sure that we have moved from regulation to execution by—through training, and we will have a mock

payout.

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I agree with you, it is essential to the system that good performance be rewarded, that bad performance be incentivized to turn to

good performance, that the system is credible and has the trust of

the employees. I agree with you on all those points.

Mr. VAN HOLLEN. With respect to predictability and the expectations we are going to measure against, one of the other issues

raised in Mr. Walker’s testimony is that while the regulations

allow the core competencies to be spelled out in writing, it doesn’t

require it. And I ask you, would you object to them requiring they

be spelled out?

Mr. ABELL. Sir, it’s my expectation, we will flush this out during

meet and confer, but my expectation is that written performance

standards will be part of the final regulations, but it is something

that we are anxious to talk to our union counterparts in the meetand-confer process.

Mr. VAN HOLLEN. Finally, the issue of making sure there is a formal or an established process for continuous input from employees,

that is going to be I hope part of your proposal going forward; is

that right?

Mr. ABELL. I would go beyond that. The continuing and informal

process will go both ways. We need supervisors to counsel and

mentor their employees. We need employees to be able to express

their views to their supervisors and perhaps make suggestions as

to how their performance should be judged. It goes both ways; and

that is continuous, I agree.

Mr. VAN HOLLEN. I know this committee will continue to work

with you in this area. If things get off on the wrong track, it becomes very difficult to regain the confidence and faith of employees.

Mr. McPhie, if I could ask you, because we had an earlier hearing on the Department of Homeland Security’s regulations; and, as

I recall, your testimony at that time was more critical of their proposals going forward than your testimony seemed today of the Department of Defense’s provisions regarding employee ability to appeal. What are the differences here? Are there some differences

here that you are concerned of? Could you elaborate on the differences?

Mr. MCPHIE. I don’t think they were more critical or less critical.

I think what got buried was the statements that good things will

happen in the DHS system.

The criticism that I made and continue to make here, if you want

to call it that, I think it’s more of a reality check. The MSPB is

going to have to overcome some challenges to maintain its part of

the bargain. Now, clearly, that brings into question some of the

things I testified at the DHS hearing and now. Resources is an

issue I stressed then and I made the point here again. The compressed timeframes are going to have—they require great efficiencies in the system. And the point I tried to make there, perhaps

I will make a little bit more clearer here, is that MSPB is critical

in ensuring credibility. That’s what I think a lot of people are alluding to at this hearing.

You know, most DHS and DOD require a more efficient system.

There’s no question about that. And to get those efficiencies will require MSPB to change the way it does business. That’s a challenge.

And we are trying to solve that challenge as we speak. We are

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looking at different ways to do business differently so that we not

only do DHS or DOD cases promptly, but we do everybody else’s

case promptly. The last time I was a little bit more detailed about

two tracks and so on. That’s not the goal. The goal is one case-processing system.

Mr. VAN HOLLEN. Thank you, Mr. Chairman. I don’t have other

testimony, but this is a much shorter set of testimony than before.

And my sense is that there are not that many differences between

the two proposals. And you in your previous testimony were critical

of the standard of review and some other things as well. There is

one thing in the DOD regulations that actually is less protective of

employee appeal rights as I read this than in the Department of

Homeland Security, and this is raised not in your testimony but in

the GAO testimony. And I was just surprised that I didn’t hear you

mention it, which I understand is in contrast to DHS’s final regulations. These proposed regulations permit an internal DOD review

of the initial decisions issued by MSPB adjudicating officials. And

under this internal review, DOD can modify or reverse an initial

decision or remand the matter back to the adjudicating official for

further consideration.

Doesn’t that significantly undercut the existing power and independence of the Merit Systems Protection Board? And there are no

regulations at all that offer additional details on the Department’s

initial review process; how they are going to handle that. What is

your response to that?

Mr. MCPHIE. That point is covered in my written testimony and

my oral comments here today. I noted that. But this review body,

somebody who is not satisfied—either party who is not satisfied

with what the review body does, as I note, has the right to appeal

that decision to the full Board. And why is that important? Because

any review beyond that to the circuit court has to be from a final

Board decision. That’s how the NSPS is drafted.

Mr. VAN HOLLEN. I look forward to continuing to discuss this

issue. It’s not clear in the regulations as to how that process would

unfold.

Mr. PORTER. Congresswoman Norton.

Ms. NORTON. Thank you, Mr. Chairman. I apologize. I have been

detained in an important meeting, but I wanted to come by. And

I have listened to the questioning thus far and asked staff about

the clarification—I heard some clarification on pay for performance.

And I want to issue a warning that I think any lawyer in the

room will agree with me will be the case. Pay for performance is

something that I certainly prefer. In my office, some people get bonuses at the end of the year and some people get higher bonuses

than other people. We can do that in the Congress. So, you might

wonder, why didn’t the Congress go to this sooner? And let me tell

you why, so everybody understands what you’re walking straight

into. Why are they stuck with this system which seems so uniform?

My friends, it’s because of State action and due process. Unlike

other employers, a State employer is bound by the Constitution to

offer due process. That’s very different from if you work for a private employer.

What does that mean here? You are radically moving to a different system where the Federal Government has not protected

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itself as the present system does against State action lawsuits. If

you get dismissed from the Federal Government, how you get promoted, very different from how you do it at GM. And my friends,

in case you think it’s because Uncle Sam is the fairest employer,

you know, or in case you think it’s because the unions made him

do it, let’s understand that we’re talking about an employer that

is bound by the 14th amendment and all that implies about due

process.

OK. Then let us move to a pay-for-performance system where, at

least so far, the employer must convey somehow or other—we have

to assume because we have seen nothing in writing or orally—what

the expectations are. The first time that this system goes into place

large scale, and there are differences in how people are paid and

evaluated without written expectations beforehand, you will not be

able to count the lawsuits. And there will not be any distinction between so-called conservative judges and liberal judges. It will be a

straight-out whether there has been due process to deprive somebody of pay he might otherwise have received because that person

has not met expectations which have not been communicated to

him in writing.

So I don’t care what you think about it. Understand you are moving to a system that is the way it is because the Federal Government recognizes the great difference between it and any private

employer, that State action is involved every time it handles an

employment matter with an employee.

Now, if you want to move radically from that, fine. But don’t

think you are going to be able to move off of due process 14th

amendment requirements. And my friend, you are not going to be

able to differentiate who gets what pay when you are hauled into

court without pulling out a piece of paper saying, ‘‘I told them what

the expectations were.’’ And you will be called into court. You are

still the United States of America. You are still subject to the due

process clause of the 14th amendment. You will be hauled into

court. You have to be able to say, she didn’t do this, that, or the

other, and she did. And that’s why she got more pay than she got.

And if you say, look, I told her so, you’re out of court right there.

So whatever you think of our view here about the fairness of telling somebody in advance in writing what you expect before you

evaluate them and either give them a certain amount of pay or

don’t, regardless of whether you are for that or not, understand

that it is not for you to decide. That has been decided for you by

the Constitution of the United States. We can argue about how

much you have to do, but this much is clear. Oral communication—

unless you got a tape recorder there so that the employer can take

it down and have a copy—on its face does not meet due process requirements if pay is to be based on what you have, ‘‘told the employee.’’

I want to leave that with you, Mr. Chairman, quite apart from

what we ought to do. I think there is a serious problem of possible

litigation unless we get some greater clarity on written evaluations.

I speak not only from a matter of fairness, but constitutional fairness. Thank you very much.

Mr. PORTER. I would like to have the witnesses respond to a few

of your thoughts. I think it is a good opportunity.

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Ms. NORTON. Anybody with a bar card want to disagree with

what I just said?

Mr. MCPHIE. Maybe it’s only fair—I touched on it early on, not

in as much detail, but due process, the fundamentals of due process

is notice of what you are being accused of and an opportunity to

defend yourself in a meaningful fashion. I believe, as I said early

on, this process guarantees that, and therefore it guarantees the

due process that’s expected in the Constitution, which is minimum

due process. Beyond that, I can’t comment.

Ms. NORTON. Can you clarify what the notice is here?

Mr. MCPHIE. Right now, employees are told what they are being

accused of.

Ms. NORTON. You think any court—first of all, you are not accused of anything. You didn’t get the same pay as anybody else.

Mr. MCPHIE. Accused of or being disciplined for, somebody crafts

an order and hands it to the employee consistent with prevailing

judicial precedent that’s required. There’s no question that it is required; it is. And there is no question that the Federal Government

follows it; it does. And at some point in time, the employee is entitled to a hearing and whatnot in this process.

The hearing is initially going to be in front of an MSPB judge

with appeal, with an in-between step to an internal review body,

and then an appeal upstream to the full MSPB Board. And if you

follow the life of a case beyond the Board, there is always review

by the Federal circuit court. So you know, except for some details,

there’s not much difference, say, between this process and some

other due process—some other due process processes.

Ms. NORTON. I understand the notice. You have the notice that

you aren’t going to get your pay. I’m talking about the notice as

to what the expectations were that resulted in your not getting

your pay. And I say if you cannot point to that notice, you have

violated due process and it’s a slam-dunk loss to the government.

Mr. NESTERCZUK. Let me address some of the comments that you

made, Ms. Norton. I can’t imagine Federal work force not having

written performance standards. The question is, how many, how

much, how frequently are they updated? If you’re dealing with a

problem employee, you would be insane as a supervisor or manager

not to document every instance of poor performance; otherwise you

won’t meet the standards that Mr. McPhie has just been speaking

about.

However, you cannot impose that kind of evidentiary standard on

every employee in the work force. Thank goodness, the overwhelming majority perform very well. We even have outstanding performers. They don’t need a great deal of documentation. So the notion

is to find the right amount of documentation for the right circumstances.

And I believe there’s no question that under NSPS as we have

been practicing today, the standard for poor performers or difficult

performers or problem employees is going to be a great deal of paperwork to document the problems. But in the case of outstanding

performers, that requirement will tail off rapidly. When you are

dealing with good employees, quite frequently, they know better

than you do the details and the day-to-day requirements of their

job. So it’s a matter of communicating back and forth on a regular

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basis. And as you assign tasks to be completed, that there is a feedback mechanism provided so the employees know where they

stand.

But in the case of difficult employees, there’s no question, Mrs.

Norton, that the requirement to document and document thoroughly will still be there.

Ms. NORTON. You know, I’m inclined to say that I know that it

isn’t true; that you all just don’t get it, because you keep answering

another question. I never raised the question about poor performers. I know what to do. I ran a Federal agency. I had to clean out

a whole lot of poor performers. I know how to keep records. I’m

talking about the following—and I agree with you it has to be at

a level so that we’re not completely drowned in paperwork. But I’m

saying that if you come to work for me as a legislative assistant

in my office, you get in my office a written notion of what it is that

a legislative assistant does. Now, that has to be broken down, obviously, to individual jobs, but those jobs cover a whole lot of folks.

So I really don’t think this is onerous. You are not going to pay for

performance for poor employees. You’re not going to pay for performance for outstanding employees. You are going to pay for performance for everybody. You have never done it before.

I am telling you what I believe as a lawyer who continues to be

a lawyer, if I may, so I continue to teach at Georgetown and teach

a course over there every year. I believe that there is a terrible

problem if you don’t defend yourself by making sure that these employees have a written expectation, not down to you, Mary, what

I would like you to do is this; John, what I would like you to do

is that; but what are the expectations for this job, so when that

person comes up for the pay period, you can say you have met the

expectations less than somebody else and that is why you are getting less pay than somebody else.

All I’m saying is the best defense is an offense. The offense here

is to have written expectations for job categories so that everybody

understands up front what is expected of her and cannot be on

your back when she gets less than she would like.

Mr. NESTERCZUK. I agree with you.

Mr. PORTER. Mr. Abell.

Mr. ABELL. I agree with my colleague from OPM. As we go

through the meet-and-confer process, we will flush out the details

in this area. And it is my expectation that there will be written

performance standards for all employees and then the degree of the

detail, as you’ve said and Mr. Nesterczuk has said, is something

that we’ll have to work out.

I will take exception to one thing you said. In fact, the Department of Defense does do pay for performance today in our demonstration projects and in our alternative personnel systems, quite

successfully, we believe. We have not faced the lawsuits and the recriminations you have described. So we intend to use those lessons

as we move forward in the rest of the Department.

Ms. NORTON. I won’t bother to ask him what those circumstances

are, but I do want to warn you, how many employees do you have

at the Department of Defense?

Mr. ABELL. About 600,000 or so.

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Ms. NORTON. And I could find out a great deal more, if we had

more time, about what that involves, the level that involves, how

that particular section was chosen to be the demonstration. But my

problem is this: We are talking about the Department of Defense

and 600,000 Federal employees, and you better not forget it. And

I don’t see why anybody—your best lawyers would say to you, certainly if you were in the private sector, protect yourself against litigation. This is a fairly easy way to do it.

Mr. PORTER. Thank you, gentlemen. We appreciate your testimony.

I would like to invite our third panel of witnesses to come forward today. First we will hear from Karen Heiser, organizational

development program manager at the Federal Managers Association; Mr. John Gage, national president at the American Federation of Government Employees; and, finally, we will hear from Mr.

Ron Ault, President of the Metal Trades Department.

Like the previous panels, I would like to recognize each of you

for your opening statements and please summarize your statements in approximately 5 minutes.

I would like to recognize Ms. Heiser. You are recognized for 5

minutes.

STATEMENTS OF KAREN HEISER, ORGANIZATIONAL DEVELOPMENT PROGRAM MANAGER, FEDERAL MANAGERS ASSOCIATION; JOHN GAGE, NATIONAL PRESIDENT, AMERICAN

FEDERATION OF GOVERNMENT EMPLOYEES; AND RON

AULT, PRESIDENT, METAL TRADES DEPARTMENT

STATEMENT OF KAREN HEISER

Ms. HEISER. Chairman Porter and Congressman Davis, thank

you all. As a member of the Federal Managers Association, thank

you for allowing me this opportunity to express our views on the

proposed regulations for the new DOD National Security Personnel

System.

Our mission at FMA is simple. We promote excellence in public

service by creating an efficient and effective Federal Government.

We are grateful to be here and look forward to continuing this important dialog.

I currently manage organizational development programs at

Watervliet Arsenal, just outside Albany, NY. I have an MBA in

human resources and several years of private sector experience as

an HR manager in manufacturing and health care. However, the

bulk of my experience has been with the Federal Government in

labor relations and quality programs.

As you are aware, managers and supervisors are in a unique position under these proposed regulations. They will be responsible

for implementation of the Department’s new personnel system and

also subjected to its requirements. As such, managers and supervisors are pivotal to ensuring the success of the new system.

We at FMA recognize that change does not happen overnight and

we remain cautiously optimistic that the new system may help

bring together the mission and the goals of the Department with

on-the-ground functions of the defense work force. Two of the most

important components to successfully implementing the new sysVerDate 11-MAY-2000 13:53 Dec 06, 2005 Jkt 000000 PO 00000 Frm 00098 Fmt 6633 Sfmt 6633 D:\DOCS\24712.TXT HGOVREF1 PsN: HGOVREF1
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tem are training and funding. Managers and employees need to see

leadership from the Secretary on down that supports a collaborative training program and budget proposals that make room to

do so. We also need consistent oversight and appropriation of proper funding levels from Congress to ensure that both employees and

managers receive sufficient training in order to do their jobs most

effectively.

There are two primary areas in which we see the need for performance management training. Operations training is required in

order for managers to understand the nuts and bolts of the new

system, their responsibilities and authorities, and the rights and

responsibilities of their employees and their supervisors.

Of equal or more importance is the training required to enable

managers at all levels to understand how to translate organizational goals into performance standards. The process begins with

an organization understanding its goals and objectives and making

them clear to members of their organization. Goals and objectives

are transmitted down through the organization, translated into

executable plans and then to performance elements and standards

of employees on the ground floor.

Theoretically, since organizational goals are the result of a desire

to meet customer requirements, this is how performance management directly links employee’s success to organizational success.

Our consistent message is this: As managers and supervisors, we

cannot do this alone. Collaboration between manager and employee

must be encouraged to debunk myths and create the performance

and results-oriented culture that is so desired by the proposed regulations.

As any Federal employee knows, the first item cut when budgets

are cut is training. It is crucial this not happen in the implementation of these regulations. Not to be underestimated is the effect of

more than 10 years of Federal work force downsizing. During this

time, missions have continued to be accomplished because of dedicated skilled managers and employees. However, performance management during this time has taken the form of a survival mode:

Do what it takes, do more with less. It has not been as formal or

as consistent as what is required or envisioned by the NSPS.

Making a change to pay for performance without first addressing

the need to refine these organizational and management skills in

this area will have serious detrimental consequences. DOD is the

largest employer in the Federal Government. For Civil Service reform to be implemented throughout government, it must be successful in DOD.

FMA further supports a fair and open labor relations process

that protects the rights of employees and creates a work environment that allows employees and managers to do their jobs without

fear of retaliation or abuse. The past 10 years have seen improvements in labor/management partnership across DOD. At my site,

for example, much organizational progress has been possible because of a strong cooperative relationship of labor and management

with a shared goal of organizational success.

Let us not lose sight of this type of growth in the pending implementation. The new system has relegated the authority for determining collective bargaining rights to the Secretary. In this regard,

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the recognition of management organization such as FMA is a fundamental part of maintaining a collaborative and congenial work

environment.

Title 5 CFR 251, 252 allows FMA, as an example, to come to the

table with DOD leadership and discuss issues that affect managers

and supervisors. While this process is not binding arbitration, the

ability of managers and supervisors to have a voice in a policy development better enables them to support accomplishment of

DOD’s mission and goals and is crucial to the Department’s longterm vitality.

We are cautiously hopeful that the new DOD system will be dynamic, flexible, and responsive to modern threats and as positive

as its vision. The proposed regulations, however, remain vague and

academic. Current guidance provides the bones of what we believe

to be a workable plan. And while we remain concerned with some

areas at the dawn of the system’s rollout, the willingness of OPM

and DOD to reach out to employee organizations such as FMA is

a positive indicator of collaboration and transparency. We look forward to continuing to work closely with Department and agency officials.

Thank you for this opportunity to allow our views to be heard.

And I will be happy to answer any questions you may have.

[The prepared statement of Ms. Heiser follows:]

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Mr. PORTER. Next we will have John Gage, national president of

the American Federation of Government Employees.

STATEMENT OF JOHN GAGE

Mr. GAGE. Good afternoon. I’m appearing today on behalf of my

union, AFGE, as well as the United DOD Workers’ Coalition which

represents 36 unions covering DOD workers all across the Department.

We have numerous concerns with the draft regulations, but I

want to talk about what I consider the most serious problems.

First, DOD has proposed radically reducing the scope of collective

bargaining. The proposal effectively eliminates collective bargaining by expanding the manager’s rights clause as compared to current law and rendering most previously negotiable issues to be off

the table. Such issues include procedures and arrangements for

overtime, shift rotation, flexible and compressed work schedules,

safety and health programs, deployment away from the work site,

and on and on. In addition, DOD will be able to unilaterally override provisions of collective bargaining agreements simply by sending out issuances. The scope of bargaining must be restored so that

meaningful participation can continue to exist in DOD.

Proposed regulations do not follow the authorizing legal mandate

to safeguard collective bargaining rights for DOD employees. When

the legislation authorizing NSPS was under consideration in 2003,

Secretary Rumsfeld assured the Congress that his only intent with

regard to collective bargaining was to establish national level bargaining over most issues. We can live with that and we can make

that work, but we can’t live with the NSPS draft because it reduces

the scope of bargaining to virtually nothing, far beyond any real or

imagined national security concern.

Second, the Board that hears labor management disputes arising

from NSPS must be independent of DOD management. In the proposed regulations, DOD would establish an internal Board made up

entirely of individuals appointed by the Secretary. This Board will

be paid by and beholden to DOD management. It would have no

independence or credibility with the work force.

Secretary Rumsfeld promised the Congress, prior to the enactment of the law authorizing the establishment of NSPS, that any

Board established to hear labor/management disputes would be

independent. There is no reason for DOD to have an internal labor

board which duplicates the functions and costs of the Federal labor

relations authority, but if it must exist as a safeguard, it is absolutely critical that it be entirely separate and distinct from DOD

management.

Third, the standard for mitigation and discipline in adverse action cases under NSPS in the proposed regulations is virtually impossible to meet and effectively removes the possibility of mitigation. DOD must change the standard from ‘‘wholly without justification’’ to ‘‘unreasonable,’’ which is the court-imposed standard

established over 25 years ago in order for employees to have meaningful due process and safeguard against arbitrary and capricious

actions. DOD must stop the game-playing with long-established legally recognized standards.

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Further, and in contrast to current law, the proposed NSPS adds

additional bureaucratic delay by declaring that adverse action in

arbitrations will no longer be final and binding. Instead, they will

have to be reviewed by the MSPB, thereby reducing the authority

of arbitrators. This is entirely insupportable and contrary to congressional intent and weakens an important safeguard for employees.

Fourth, under the NSPS, employees’ performance appraisals will

be the crucial determinant of salary, salary adjustment, and job security. Yet under the proposed regulations, there is no requirement

for management to propose written standards against which performance will be measured. And in addition, employees are denied

the right which is now available to all current Federal employees,

including those under the new homeland security personnel system

to use and negotiate a grievance and arbitration system, to present

evidence to an impartial body as a critical safeguard for fairness

and transparency.

Fifth, the proposed pay regulations open the door for a general

reduction in salaries for all DOD personnel compared to the rates

they would have been paid under current statutory systems. An

ability to reduce entry-level salaries in addition to an ability to

refuse annual adjustment of salaries for those who perform satisfactorily as permitted in the regulations will, by definition, conspire

to reduce overall DOD salaries. Strong and unambiguous safeguards must be in place to prevent overall lowering of pay for the

DOD civilian work force. There must be constraints on the ability

of DOD to lower salaries or withhold salary adjustments across the

Board. These safeguards must be established not only to protect

the living standards of the civilian DOD work force relative to the

rest of the Federal work force, but also to guarantee the ongoing

economic vitality of communities with DOD installations.

Finally, procedures for deciding who would be affected by a reduction in force must be based on more than a worker’s most recent performance appraisal. Incredibly, the proposed NSPS regulation would allow an employee with 1 year of service and an outstanding rating to have superior retention rights to an employee

with 10 years of outstanding appraisals and 1 year of having been

rated nearly above average. Such rules are patently unfair and

must not be allowed to stand.

In conclusion, it cannot be emphasized strongly enough that the

approach DOD has taken thus far, exhibited by the above examples, has been profoundly demoralizing for its civilian work force.

These dedicated and patriotic Americans are extremely unsettled

by the harsh prospects set forth in the proposed regulations because they are not fooled by words like ‘‘modern,’’ ‘‘flexibility,’’

‘‘market-based.’’ They see fundamental rights stripped away and a

pay system rigged to lower overall DOD pay.

We strongly urge the committee to take action either legislatively

or through oversight to require DOD to correct the many problems

with the regulations and provide the safeguards I have mentioned.

Unless substantial changes are made to the regulations, the NSPS

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will become a recruitment and retention problem rather than a solution that will deflect the agency from its important mission in

years to come.

Thank you, Mr. Chairman.

[The prepared statement of Mr. Gage follows:]

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Mr. PORTER. I would like to recognize Mr. Ron Ault, who is president of the Metal Trades Department.

STATEMENT OF RON AULT

Mr. AULT. Thank you, Mr. Chairman and members of the committee. My name is Ron Ault. I’m the president of the Metal Trades

Department at the AFL–CIO. On behalf of the more than 40,000

civilian employees at the Department of Defense represented by

the Metal Trades Department, I thank you for the opportunity to

testify today. I’m also pleased to appear on behalf of some 700,000

represented by the 36 unions in the united DOD Workers’ Coalition. And I want to say we are here speaking for the DOD workers.

I’ve got prepared testimony I would like to enter into the record,

but I want to deviate from it for a couple of seconds, because I

want to put a human face on all this. This is the public comments

CD that was provided to us by the NSPS office, and I would strongly recommend that every member of the committee get a copy of

this and just look at the comments from the people in your district.

And I won’t tell anybody here that I have looked at all, some

50,000 that’s reported on here, but I’ve looked at a lot of them; and

I would suggest that if you just go through here and randomly select on any basis that you would like to select and read these comments, you would understand the upheaval that’s going on and the

morale of the Federal work force that we represent and speak for

today.

Particularly, I would say that I’ve discovered seven so far in

favor of NSPS, and there may be more, but I’ve only discovered

seven. So that is indicative of the people’s opinion of what’s going

on with NSPS.

The recent wave of adulation for the late Pope John Paul II, especially his role in collaboration with his countryman Lech Walesa

in igniting the spark that destroyed the Soviet communism, is a

sharp reminder to all of us, especially those of us involved in shipyard labor, of the importance of free trade unions to the fabric of

freedom in our Nation. Some may recall that Mr. Walesa was a

mere shipyard electrician before he became head of the first free

Polish state since before World War II.

I mentioned the Pope and the Polish labor movement as a reminder to all that anything that comprises right of free trade

unions to represent the aspirations of working families is an anathema to America. And I strongly suggest that NSPS represents an

eminent threat to that freedom. The workers we represent are patriotic. Many like myself are veterans of military service, and we

are proud of the work we perform and the reason we perform it.

One of our affiliated organizations, the International Brotherhood of Electrical Workers, recently had one of their members seriously wounded while performing work as a Federal employee in

Iraq. Gary York, the vice president of local union 1688, is a power

plant controller working at the Gavins Point Power Plant in

Yankton, SD. He volunteered for Operation Restore Iraqi Power in

October 2003. On Christmas Eve, his convoy was attacked and he

was wounded. Actually was shot in the head. Lucky for him, the

bullet passed through the doorpost before striking him. He also received a shrapnel wound in the shoulder, which was a minor injury

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compared to the head wound. He spent several weeks in hospitals

in Germany and here at Walter Reed in D.C. He returned to his

job around May 2004. Gary received the Medal of Freedom from

the Corps of Engineers for his service. He was also featured in one

of the issues of the IBEW Journal and one of the Corps publications. Gary just returned to Iraq for his second tour of duty on

April 20, 2005.

Since NSPS was first proposed, I have met with rank-and-file

workers in almost every DOD work location where we hold recognitions and collective bargaining agreements. On their behalf, I want

to register my most strenuous objection to the inference and implication that underlies the National Security Personnel System, that

is that we oppose this plan because we are obstructionists and because it represents a departure from the status quo.

Ladies and gentlemen, we do not like status quo. We believe that

constructive change in the work site is long overdue. One of the

primary reasons that working people select union representation is

because they want to see change and they expect us to help them

implement it; change that brings about a more open, objective, atmosphere in the workplace; that enables working people to perform

their jobs effectively without interference and impediment; change

that removes subjective elements of personality, prejudice, and ambiguity from the workplace and supplements those elements with

clear rules and standards of evaluation.

In other words, we support high-performing workplaces, clearly

defined performance standards, assignments which are understandable and achievable. We support individual and organizational growth, equal opportunity and fair treatment on the job. We

welcome change when it enhances our ability to have a voice on the

job, where it enables us to attain improved training, improve our

safety and health on the job, where it is accompanied by respect

and dignity that our contributions warrant. We are skeptical of

change that is initiated for the purpose of undermining our freedom of association. We are dubious about change that is unilaterally initiated for the purpose of curtailing our potential for wage

growth and personal achievement.

Now, I wanted to stop there and say one of the key points that

I want to emphasize today: that I personally attended every single

meeting of the Department of Defense from the get-go on NSPS.

I want to stop there and say one of the key points that I want

to emphasize today that I personally attended every single meeting

of the Department of Defense on NSPS. And I will say this, we

have yet to be involved in this process.

The information has been provided to the public and the other

information that has been provided to you and Members of Congress is not accurate. We have not had any part of forming any portion of this. It’s been a secret, it’s like a Stealth airplane that’s

been designed by someone working in secret.

You heard the MSPB person testify today about the working

groups. We have asked to be part of the working group’s deliberations, and to be involved in this and we have been denied this. We

have been denied every opportunity to help implement and form

and share this program that is now out here on the street that has

caused all these problems.

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So I want you to understand that we are skeptical of what’s

going to happen from here forward. Is OPM and DOD just going

to run the clock out on us for 30 days and then implement what

they have written in secret for months and months, or are we going

to have real dialog?

I keep hearing the words from the folks that come up and testify,

but they are not reassuring words to us. And we represent the people that are the experts in this field. They are not experts. We do

this every day for a living.

Our folks are the people that make it work. I agree with Comptroller Walker, only the workers can make this thing work. We

have a crew today working on the USS San Francisco. No one had

to make those folks go out there and work together as a team. If

we implement the pay-for-performance element as it is currently

designed, I fear that you are going to destroy all the teamwork and

all the expertise of those folks.

And let me just say this: We are coming up on the anniversary

of the USS Thresher disaster. Our folks make, repair and operate

on those nuclear submarines and all kinds of weapons systems that

we can’t really talk about today.

You know, the very first atomic bomb was hoisted out in the

desert in White Sands by a crane operator that was one of our chief

shop stewards during the Manhattan project. We do nothing but

national security. Everything is national security to us.

So it’s an insult for our folks to hear the words that they cannot

have the freedom that we are espousing in Iraq because they are

Federal employees, and they are somehow less than patriotic for

having a union in their workplace or for using that.

All we are asking for is a fair shake. We are asking that Congress would take control and mandate that the intent of Congress,

as well as the letter of the law, is followed in NSPS.

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

[The prepared statement of Mr. Ault follows:]

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Mr. PORTER. Thank you, Mr. Ault, we appreciate your comments

today and to all of you for your additional backup testimony.

I would like to ask the first question, having to do with the Managers Association. We have heard consistently that Federal managers are categorized as having the lack of necessary skills based

on this new system that is being proposed. What kind of training

will managers need to be most successful in his system?

Ms. HEISER. For pay? For performance? For performance management in general?

Mr. PORTER. Yes.

Ms. HEISER. I think that the whole idea of translating organizational goals to performance standards of an employee is the general

framework of the training that would be required. What the gentleman was just talking about is right on point, really that the Federal workers do their jobs.

And I think in the workplace, a lot of times supervisors come

from a technical pool, or rather come to a supervisory position from

a technical level rather than a managerial level, and work well

with employees to manage and get the work done. But as far as

actually leading them and coordinating the individual work of

those people toward a higher goal, I don’t think that’s—that’s not

common to the Federal sector.

And I think that type of a bigger focus is what’s primarily required. And the whole idea of communicating, the whole concept of

written standards versus verbal standards, I hope that’s going to

go away. I never understood the idea of having verbal opposed to

rather than written, but they are both moot, because the point is

to communicate standards effectively in whatever way it takes and

it may be a combination.

I think that OPM originally thought that managers were somehow bound by a performance appraisal that listed a set of duties

and that was the only discussion that took place until performance

appraisal time, and I fear that has really become the way things

are in government. And that’s what has to go away, the idea of

having continuous communication with employees about how they

are doing in terms of their performance.

And it’s got to be a bi-way, it has to be a two-way communication. It has to be—have the supervisor to the employee in terms of

here is what I perceive. It sounds like basic communication, but I

think that’s what is missing.

Mr. PORTER. Do you think there would be adequate funding.

Ms. HEISER. We took a little survey there this norning, you

weren’t there today—we took a little survey to see what level of

confidence our folks had that the money would be there. It wasn’t

very high. You know, I don’t know.

Mr. PORTER. Thank you. Mr. Ault, I know that your information

regarding Mr. York is very germane. And please let him know he

is an American hero, and we appreciate what he is doing. And having been to Yankton many times, I know exactly where he works

or was working, but give him our best.

And I know that you are quite bashful and your comments are

reserved and subdued, and I say that with a smile, because I appreciate your candor.

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But let’s talk for a moment about the labor relations board that’s

being proposed. Tell me what you think.

Mr. AULT. As proposed, it leaves a lot to be desired, when you

have an in-house program, we sometimes call these in-house

unions or company unions, where, you know, you are subservient.

There’s no equality here. There’s no—first of all, it wouldn’t be

transparent, it wouldn’t be objective, if the Secretary can appoint

and make those kinds of things happen.

Currently, there is some objectivity and there is the systems of

checks and balances of impartial grievance arbitration out there,

where both parties have to, by preponderance of the proof, are a

just cause standard of proof, have to prove their case that this person is actually guilty or has done something that would warrant

the action.

I don’t see any of that going on with the system that is as proposed.

Now, I have listened to management side of the House saying we

are going to work that out in collaboration. Well, I sure hope so because we haven’t worked anything out up till now. We have just

been meeting for the sake of meeting so that they could come up

to them on the Hill and say, hey, we met with the unions today.

Mr. PORTER. Thank you.

Mr. Davis.

Mr. DAVIS. Thank you, Mr. Chairman. Ms. Heiser.

Ms. HEISER. Sir.

Mr. DAVIS. I have been told often that the devil is in the details,

when you look at proposals and movements and changes. And I

heard Mr. Gage and Mr. Ault both delineate, I guess, what I would

call a lot of devils in this proposal. Are there any that you see that

are apparent devils in the proposal?

Ms. HEISER. I think the largest apparent devil is truly the funding. We did take part of our vote this morning with—we are having

the FMA national convention, so we have all folks in one place—

and asked how confident they and their managers would be that

this money would be there to see the programs, through, let’s say,

in the 3 to 7 years that it would take for full program implementation. And there was not a lot of confidence.

I think that detail is truly the most significant, because managers cannot sell the potential value of this program to their employees, nor believe it themselves, unless they have confidence that

the reward, I guess, would be there.

Mr. DAVIS. Mr. Ault, I was moved by your description of patriotism as you talked about the gentleman who obviously is patriotic.

And yet we knew that much of this action supposedly has been

driven with an emphasis on national security. And early on, when

the conversations got started, people were saying, well, we need to

look at this especially in DOD because of national security.

We need to look at it in homeland security because of national

security, and, I mean, there are people like myself who suggest

that it was essentially an opportunity to try and turn back the

clock in many ways, and that is turn back the clock on the employee rights, turn back the clock on collaboration, turn back the

clock on democracy in the workplace. I mean, we talk about democVerDate 11-MAY-2000 13:53 Dec 06, 2005 Jkt 000000 PO 00000 Frm 00169 Fmt 6633 Sfmt 6633 D:\DOCS\24712.TXT HGOVREF1 PsN: HGOVREF1
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racy. And yet it appears as though, in many instances, we are not

willing to practice what we preach.

How important do you think a sense of democracy is in the work

environment?

Mr. AULT. I think it’s critical. The folks we represent are more

than arms and legs. They are the real experts. Whenever you are

going into a nuclear reactor compartment hot, you have to be able

to know that the people that have worked with you are dependable,

I mean, it’s the democracy of workplace is just critical.

We have a unique perspective. We also represent the private sector that build these ships. So, I mean, we come from a unique perspective. And when we talk about a contemporary system and a

flexible system, when we set out and negotiate, for example, with

Northrop Grumman ship systems, the first thing they want in their

labor relations is the involvement of the employees.

They want what DOD is throwing away. They want the employees to be part of the team. A contemporary labor relations system

today is more about employee involvement and less about supervision. They want to see more self-directed work force. They want

to see fewer supervisors. They want to see more people directly involved in production. They want to see cost savings from employees, ideas being implemented on the floor without going through a

long and tedious process. So, Mr. Davis, to speak directly to it, it’s

the answer.

Unfortunately, no one from DOD is asking the question.

Mr. DAVIS. I would concur with you.

Mr. Gage, it seemed to me that you indicated that collaboration

has been less than democratic, or I guess you get the impression

that you don’t feel that there has been partnership in the evolution

and development of the proposed changes relative to your union

and other unions interaction with DOD. Is that an accurate characterization?

Mr. GAGE. That’s exactly accurate. We are disappointed about it.

The way we read the authorizing legislation, we were supposed to

be part of the design of this thing. And we have been shut out completely. We are still, you know, I am looking at it, you know, we

are going to go into this meeting and confer. And we know what

we think we need as safeguards, and I would really like to hear

that word being used so often today.

Because if this system is so good, it should be able to stand up

to scrutiny and have safeguards for employees for that transparency. So we are going into the meeting and confer, and we think

we have our very good arguments, and we are hoping that DOD

will look at them.

But so far they seem to have their mind made up. It’s a very theoretical approach they are taking rather than the practical one that

Ron is talking about and that our workers are looking for. So we

are trying to get this out of the sky and out of ideology, maybe, and

down to the practical, practical things that work on the worksite.

Mr. DAVIS. Well, I have no further questions, Mr. Chairman, I

want to thank all of the witnesses for appearing and for their participation. And, again, I thank you for holding this hearing.

Mr. PORTER. Thank you, Mr. Davis. That would conclude my

questions also. We appreciate your comments and know that many

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Members will be submitting questions later. They have time to do

so, and actually, I do have some questions that we will be submitting.

But let me say for the record that this committee is going to be

very thoughtful in its deliberation, as we follow the process of implementation. And I know a number of points were brought up this

morning that have to be addressed and haven’t been, and know

that many of the stages of implementation can take 8 or 9 years,

if my understanding is correct. But we want to make sure that it

is done right and that the employees and managers, those that are

directly impacted have a say in this process.

So we appreciate all of your testimony today and look forward to

following this in the future, and we will adjourn the meeting.

Thank you.

[Whereupon, at 4:15 p.m., the subcommittee was adjourned.]

[Additional information submitted for the hearing record follows:]

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