GAO

United States General Accounting Office

A

Testimony

Before the Subcommittee on Civil Service

and Agency Organization, Committee

on Government Reform, House of Representatives

For Release on Delivery 

Expected at 2:00 p.m. EDT

Wednesday, July 16, 2003

GAO’S PROPOSED

HUMAN CAPITAL 

LEGISLATION

View of the Employee 

Advisory Council

Statement of Christopher A. Keisling,

Employee Advisory Council Member

GAO-03-1020T
Page 1 GAO-GAO-03-1020T 

Good afternoon, Madam Chairwoman and members of the Subcommittee. 

My name is Chris Keisling. I am one of three liaisons to the Comptroller 

General and the Congress selected by GAO’s 23-member Employee 

Advisory Council (also known as the EAC). I am an Assistant Director in 

GAO’s Atlanta Field Office and while my role on the Council is to 

represent Band III employees in all field offices, I am here today, at the 

Subcommittee’s invitation, to provide the views of the Council and a wide 

cross-section of GAO on the Comptroller General’s Human Capital II 

proposal. 

The Comptroller General formed the EAC about 4 years ago to be fully 

representative of the GAO population and advise him on issues pertaining 

to both management and employees. The members of the EAC represent a 

variety of employee groups and almost all employees outside of the senior 

executive service (more than 3,000 of GAO’s 3,200 employees or 94 

percent). The EAC operates as an umbrella organization that incorporates 

representatives of GAO’s long-standing employee organizations including 

groups representing the disabled, Hispanics, Asian-Americans, 

African-Americans, gays and lesbians, veterans, and women,1

 as well as 

employees in various pay bands, attorneys, and administrative and 

professional staff.2

As established in our charter, the Employee Advisory Council serves as an 

advisory body to the Comptroller General and other senior executives by: 

• seeking and conveying the views and concerns of the individual employee 

groups it represents while being sensitive to the mutual interests of all 

employees, regardless of their grade, band, or classification group; 

• proposing solutions to concerns raised by employees, as appropriate; 

• providing input by assessing and commenting on GAO policies, 

procedures, plans, and practices; and, 

• communicating issues and concerns of the Comptroller General and other 

senior managers to employees. 

In preparing for our testimony today, the EAC considered the results of 

discussions with constituents, and input from Council representatives, 

 1

While these organizations historically operated under separate charters by the Comptroller 

General, they now are included in the charter of the EAC and appoint representatives to 

serve on the Council. 

2

These members are elected by their constituency to 2-year terms and may seek reelection 

once. 
Page 2 GAO-GAO-03-1020T 

including information gathered from employees during the initial 

introduction of the proposal and comments provided on the Comptroller 

General’s revised proposal. Although we have limited quantitative data in 

this regard and recognize that not all employees have the same opinions 

regarding all provisions of the proposed legislation, we believe our 

testimony is representative of a substantial cross-section of GAO 

employees. 

In summary, GAO employees generally support many of the provisions in 

the proposed legislation. For example, most employees expressed support 

for 

• the provision to make GAO’s authority to offer voluntary early retirement 

permanent, 

• provisions to enhance vacation time for upper-level hires and relocation 

expenses deemed necessary by the Comptroller General to recruit and 

retain top employees, and 

• the provision to establish an exchange program with the private sector. 

However, many employees have expressed concerns about the proposals 

that affect pay. Specifically, many staff are concerned about the potential 

negative impact of the change in the basis for annual salary increases, 

although some staff recognize the potential benefits for additional reward 

and management flexibility. To a lesser extent, staff are concerned about 

changes to pay protections provided under traditional federal employment 

rules. Staff have differing opinions on the provision to change GAO’s name 

to the Government Accountability Office. 

The EAC recognizes and appreciates the efforts the Comptroller General 

has made to address employees’ concerns regarding provisions affecting 

pay by (1) providing assurances that the new system will sustain 

employees’ purchasing power and provide parity with prevailing locality 

pay, (2) proposing short- and longer-term modifications to GAO’s 

performance management system, and (3) incorporating a 2-year 

transition period for implementation of the new system. We hope that if 

the legislation is enacted, the Comptroller General will continue to be 

responsive to the concerns of employees as the agency moves forward in 

implementing these changes. 
Page 3 GAO-GAO-03-1020T 

Outreach efforts by EAC representatives indicate that most employees 

support many portions of the legislative proposal under consideration by 

the Subcommittee but have concerns about provisions in the proposal 

related to pay. Specifically, employees generally support provisions that 

make the authorities provided to GAO for voluntary early retirement pay 

incentives permanent, to provide enhancements in vacation time and 

relocation expenses deemed necessary by the Comptroller General to 

recruit and retain top employees, and to establish a private sector 

exchange program. However, many employees are concerned about the 

provisions that change the way that annual pay decisions are made and, to 

a lesser extent, the proposed change to traditional protections for pay 

retention. Employees had differing opinions about the proposed change to 

GAO’s name. 

Most employees support the Comptroller General’s proposed provisions to 

make permanent GAO’s 3-year authority to offer voluntary early 

retirement and voluntary separation payments to provide flexibility to 

realign GAO’s workforce. In addition, GAO employees recognize that 

attracting and retaining high-quality employees and managers throughout 

the organization is vitally important for the future of GAO. Employees thus 

generally support the provisions to offer flexible relocation 

reimbursements, provide upper-level hires with 6-hour leave accrual, and 

establish an executive exchange program with private sector 

organizations. Most employees commented positively on these authorities 

so long as there are internal controls to monitor and report on their use, as 

are present to provide accountability for other authorities throughout 

GAO.3

Many employees expressed concern about the provisions that affect the 

determination of annual pay increases and pay retention. The opinions 

expressed by employees generally fall into three categories: (1) general 

concerns and some supporting views regarding changes in traditional civil 

service employment rules that could reduce the amount of annual pay 

increases provided for economic adjustments but provide greater 

opportunity for rewarding performance, (2) concerns about making a 

 3

For example, the Comptroller General detailed GAO’s use of the flexibilities provided in 

the first round of authorities granted in the GAO Personnel Flexibilities Act of October 

2000 in U.S. General Accounting Office, Assessment of Public Law 106-303, GAO-03-954

SP (Washington, D.C., June 27, 2003). 

GAO Employees 

Support Most Aspects 

of the Proposed 

Legislation But Have 

Concerns About Pay 

Provisions and 

Differing Opinions 

About the Proposed 

Name Change 

Most Employees Support 

Proposals to Improve 

GAO’s Ability to Realign 

the Workforce and Attract 

and Retain High-Quality 

Employees 

Many Employees Are 

Concerned About The 

Provisions That Affect Pay 
Page 4 GAO-GAO-03-1020T 

portion of annual economic adjustments variable based on performance 

assessment, and to a lesser extent (3) concerns about the loss of 

traditional pay retention protections. 

The first area of employee concern is proposed changes to traditional 

federal civil service employment rules that have historically provided a 

fixed annual increase for all federal employees determined by the 

President and the Congress. Government employees in general, and GAO 

employees in particular, often conduct work that can have far reaching 

implications and impacts. Such work can positively or negatively affect 

segments of the population and thereby the general public’s perceptions 

of, and reactions to, the federal government, including Members of 

Congress. Over the years, the Congress has developed a bulwark of 

protections to shield federal workers from reprisals that might result from 

their service as employees. Included among these has been the process by 

which federal employees’ salaries are annually adjusted as a result of the 

passage of, and signing into law, of the annual budget. 

The historical process relies on passage of legislation which includes an 

annual increase in pay to reflect increases in inflation and overall 

employment costs, followed by determinations by the President (and the 

Office of Personnel Management) to calculate the distribution of the 

legislative economic adjustments between an overall cost-of-living 

adjustment and locality-based increases to reflect differences in cities 

across the nation. The current mechanism for annual federal pay 

adjustments is found in Public Law 101-509, the Federal Employees Pay 

Comparability Act.4

The Comptroller General has expressed his concern about trends in the 

executive branch that make it highly likely that the current civil service 

pay system will be the subject of comprehensive reform within the next 

few years. Citing federal agencies that already have many of these 

flexibilities, such as the Federal Aviation Administration5

 and the new 

 4

While the goal of the act is to achieve full comparability, namely pay parity, between 

federal employees and their nonfederal counterparts on a locality-by-locality basis, the law 

has never been implemented as originally enacted as a result of a provision in the law that 

authorizes the President to offer an alternative pay plan in times of war or “serious 

economic conditions affecting the general welfare.” 

5

While the Federal Aviation Administration is not required to grant cost-of-living 

allowances or locality-pay increases, agency management has elected to continue providing 

these pay adjustments as they are generally applied to the federal pay system. 

Concerns and supporting views 

on proposed changes that 

could reduce annual pay 

provided for economic 

adjustments but provide 

greater rewards 
Page 5 GAO-GAO-03-1020T 

Department of Homeland Security, as well as agencies currently seeking 

reform, such as the Department of Defense, he has stated his belief that 

GAO needs to be “ahead of the curve.” 

Under the proposal, rather than relying on the administration’s 

determination and the Congress’ mandate for an annual salary adjustment, 

GAO can develop and apply its own methodology for the annual cost-ofliving adjustments and compensation differences by locality that the 

Comptroller General believes would be more representative of the nature, 

skills, and composition of GAO’s workforce. Some employees have 

expressed the following concerns. 

• Removing GAO from the traditional process significantly alters a key 

element of federal pay protection that led some employees to seek 

employment in the federal sector. Changing this protection could diminish 

the attractiveness of federal service and result in the need for higher 

salaries to attract top candidates. 

• A portion of appropriations historically intended to provide all federal 

employees with increases to keep pace with inflation and the cost of living 

in particular localities should not be tied to individual performance. 

• GAO-based annual economic adjustments are more likely to be less than, 

rather than more than, amounts annually provided by the Congress; thus 

employees performing at lower (but satisfactory) levels who may not 

receive an equal or greater amount in the form of a bonus or dividend may 

experience an effective pay cut from amounts traditionally provided. 

• The flexibility for the Comptroller General to use funds appropriated for 

cost-of-living adjustments for pay-for-performance purposes could imperil 

future GAO budgets by making that portion of the annual budget 

discretionary where it was once mandatory. 

• The wide latitude provided in the proposal gives the Comptroller General 

broad discretion and limited accountability for determining whether 

employees receive annual across-the-board economic adjustments, the 

amount of such adjustments, and the timing of adjustments. This could 

result in unfair financial harm for some employees if the broad authorities 

were improperly exercised.6

• The Comptroller General has not made a compelling case regarding the 

need for these pay-related and other legislative changes, for example by 

showing that existing cost-of-living adjustment mechanisms are inaccurate 

 6

While management’s salary increase decisions for employees are not subject to appeal 

under the current system, some employees feel that the application of any methodology 

that GAO establishes to determine the amount of annual economic increases under the 

proposed approach should be subject to appeal. 
Page 6 GAO-GAO-03-1020T 

or that the agency has had difficulty in attracting and retaining high-quality 

employees. 

On the other hand, some employees also recognize that the proposed pay 

provisions may offer some distinct advantages for some employees. Some 

employees commented in support of the provision indicating that 

• the existing system for calculating inflation and local cost adjustments 

may not accurately reflect reality; 

• most employees would not likely be harmed by a system that allocates a 

greater share of pay to performance-based compensation; 

• the authorities would allow GAO managers to provide greater financial 

rewards to the agency’s top performers, as compared to the present payfor-performance system; 

• making a stronger link between pay and performance could facilitate 

GAO’s recruitment of top talent. 

In addition, the provision may, to a limited extent, address a concern of 

some field employees by providing alternatives to reductions in force in 

times when mandated pay increases are not fully funded or in other 

extraordinary circumstances. For example, from 1992 to 1997, GAO 

underwent budgetary cuts totaling 33 percent (in constant fiscal year 1992 

dollars.) To achieve these budgetary reductions, GAO staff was reduced by 

39 percent, primarily through field office closures and the associated 

elimination of field-based employees. While we hope the agency will never 

again have to manage budget reductions of this magnitude, this provides a 

painful example of the vulnerability of staffing levels, particularly in the 

field, to budgetary fluctuations. The proposed pay provisions would 

provide the Comptroller General with greater flexibility to manage any 

future budget crises by adjusting the annual pay increases of all employees 

without adversely and disproportionately impacting the careers and lives 

of field-based employees. 

In addition to the revised basis for calculating annual economic 

adjustments, employees are concerned about the provision that 

transforms a portion of the annual pay increases that have historically 

been granted to federal employees for cost-of-living and locality-pay 

adjustments into variable, performance-based pay increases and bonuses. 

Because the GAO workforce is comprised of a wide range of highly 

qualified and talented people performing a similarly wide range of tasks, 

employees recognize that it is likely that some employees at times have 

more productive years with greater contributions than others. Therefore, 

most agree with the underlying principle of the provision to provide larger 

Concerns about making a 

portion of annual pay increases 

variable based on performance 

assessment 
Page 7 GAO-GAO-03-1020T 

financial rewards for employees determined to be performing at the 

highest level. However, in commenting on the proposal, some employees 

said that GAO management already has multiple options to reward high 

performers through bonuses, placement in top pay-for-performance 

categories, and promotions. Others expressed concern that increased 

emphasis on individual performance could result in diminished teamwork, 

collaboration, and morale because GAO work typically is conducted in 

teams, often comprised of employees who are peers. 

These concerns are compounded by long-standing widespread employee 

concerns regarding the accuracy and validity of GAO’s performance 

appraisal system, which is used for the current system of performancebased pay adjustments. Any effort to increase the link between pay and 

performance implicitly relies upon the existence of a reliable method for 

gauging individual performance. We received comments that the varying 

levels of complexity, time frames, resource availability, and sensitivity of 

GAO work make it difficult to objectively assess individual performance 

and to fairly and accurately compare employees’ performance with 

sufficient precision. In other words, some employees believe that the 

subjectivity inherent in the system does not provide a valid basis for 

distinguishing between subtle differences in performance that may be 

measured in tenths of a percentage point between performance categories. 

Employee concerns about performance assessment have not significantly 

changed as a result of the new competency-based system GAO 

implemented last year. The comments we have heard are consistent with 

the concerns expressed to the Congress by GAO employees in 1993: 

“The PFP (pay-for-performance) process involves managers making very fine distinctions 

in staff’s performance in order to place them in discrete performance management 

categories. These categories set artificial limits on the number of staff being recognized for 

their contributions with merit pay and bonuses.” 

Related to concerns about subjectivity in the performance assessment 

system, Council representatives and employees expressed concern about 

data indicating that as a group, minorities, veterans, and field-based 

employees have historically received lower ratings than the employee 

population as a whole. While the data indicate that the disparity is 

considerably improved or eliminated for employees who have been with 

the agency fewer than 5 years, some employees have serious reservations 

about providing even greater discretion in allocating pay based on the 

current performance management system. 
Page 8 GAO-GAO-03-1020T 

To a lesser extent, some employees expressed concerns about the 

elimination of traditional federal employment rules related to grade and 

pay retention for employees who are demoted due to such conditions as a 

workforce restructuring or reclassification. The proposed legislation will 

allow the Comptroller General to set the pay of employees downgraded as 

a result of workforce restructuring or reclassification at their current rates 

(i.e., no drop in current pay), but with no automatic annual increase to 

basic pay until their salaries are less than the maximum rates of their new 

grades or bands. 

Employee concern, particularly among some Band II analysts and mission 

support staff, focuses on the extent to which this provision may result in a 

substantial erosion in future pay, since there is a strong possibility that 

these two groups may be restructured in the near future. For example, one 

observation is that the salary range within pay bands is such that senior 

analysts who are demoted would likely wait several years for their next 

increase in pay or bonus. In this circumstance, employees would need to 

reconcile themselves to no permanent pay increases regardless of their 

performance. Some employees cited this potential negative impact on staff 

motivation and productivity and emphasized that to continue providing 

service at the level of excellence that the Congress and the American 

people expect from GAO, this agency needs the best contributions of all its 

midlevel and journeymen employees. However, the EAC recognizes that, 

absent this kind of authority and given some of the authorities already 

provided to the Comptroller General, some employees who may be 

demoted could otherwise face termination rather than diminished salary 

increases. 

Finally, employees had differing opinions regarding the provision to 

change GAO’s name to the Government Accountability Office. Some 

employees are concerned that the proposed change in GAO’s name to 

more accurately reflect the work that we do will damage GAO’s “brand 

recognition.” Most employees who oppose the name change do not see the 

current name as an impediment to doing our work or to attracting quality 

employees. Some employees expressed concern that the legacy of highquality service to the Congress that is embedded in the name “United 

States General Accounting Office” might be lost by changing the name. 

Other employees support the name change and cited their own 

experiences in being recruited or recruiting others and in their interaction 

with other federal agencies. In their opinion, the title “General Accounting 

Office” reflects misunderstandings and incorrect assumptions about 

GAO’s role and function by those who are not familiar with our operations 

Concerns about the loss of 

traditional pay retention 

protections 

Employees Had Differing 

Opinions Regarding a 

Change in GAO’s name 
Page 9 GAO-GAO-03-1020T 

and may serve as a deterrent to attracting employees who are otherwise 

not interested in accounting. 

We appreciate the Comptroller General’s efforts to involve the Employee 

Advisory Council and to solicit employee input through discussions of the 

proposal. As a result of employee feedback and feedback from GAO 

managers and the EAC, the Comptroller General has made a number of 

revisions and clarifications to the legislative proposal along with 

commitments to address concerns relating to the annual pay adjustment 

by issuing formal GAO policy to formally establish his intent to retain 

employees’ earning power in implementing the authorities; by revising the 

performance management system; and by deferring implementation of pay 

changes until 2005. 

Key among the commitments made by the Comptroller General is his 

assurance to explicitly consider factors such as cost-of-living and localitypay differentials among other factors, both items that were not in the 

preliminary proposal. In addition, the Comptroller General has said that 

employees who are performing adequately will be assured of some annual 

increase that maintains spending power. He outlined his assurance in 

GAO’s weekly newsletter for June 30th that successful employees will not 

witness erosion in earning power and will receive an annual adjustment 

commensurate with locality-specific costs and salaries. According to the 

Comptroller General, pay protection commitments that are not included in 

the statute will be incorporated in the GAO orders required to implement 

the new authorities. This is consistent with the approach followed when 

GAO made similar pay protection commitments during the conversion to 

broad bands in the 1980s. To the extent that these steps are taken, overall 

employee opinion of the changes should improve because much of the 

concern has focused on making sure that staff who are performing 

adequately do not witness economic erosion in their pay. 

In response to concerns regarding the performance management system 

and the related variable elements of annual pay increases raised by the 

EAC, employees, and senior managers, the Comptroller General has told 

employees that he will provide increased transparency in the area of 

ratings distributions, for example by releasing summary-level performance 

appraisal results. In addition, the Comptroller General has stated that he 

plans to take steps to improve the performance management system that 

The EAC Appreciates 

the Comptroller 

General’s Efforts to 

Address Concerns of 

GAO Employees 

About Pay-Related 

Human Capital II 

Provisions 

Retention of Earning 

Power and Locality Pay 

Parity 

Planned Revisions to 

Performance Management 
Page 10 GAO-GAO-03-1020T 

could further reduce any disparities. Specifically, on June 26, the 

Comptroller General released a “Performance Management System 

Improvement Proposal for the FY 2003 Performance Cycle” that outlines 

proposed short-term improvements to the analyst performance 

management system that applies to the majority of GAO employees. These 

include additional training for staff and performance managers and a 

reduction in the number of pay categories from five to four. A number of 

longer-term improvements to the performance appraisal system requiring 

validation are also under consideration, including weighting competencies 

and modifying, adding, or eliminating competencies. For all employees to 

embrace any additional pay-for-performance efforts, it is vital that the 

Comptroller General take steps that will provide an increased level of 

confidence that the appraisal process is capable of accurately identifying 

high performers and fairly distinguishing between levels of performance. 

Finally, the Comptroller General has agreed to delay implementation of 

the pay-for-performance provisions of the proposal until October 1, 2005. 

This change should provide an opportunity to assess efforts to improve the 

annual assessment process and lessen any impact of changes in the 

permanent annual pay increase process for employees approaching 

retirement. It should also provide an opportunity to implement a number 

of measures designed to improve confidence in the annual assessment 

process. 

In summary, as GAO employees we are proud of our work assisting the 

Congress and federal agencies to make government operations more 

efficient and effective. Although all of us would agree that our agency is 

not perfect, the EAC believes GAO is making a concerted effort to become 

a more effective organization. We will continue to work closely with 

management to improve GAO, particularly in efforts to implement and 

monitor any additional authorities granted to the Comptroller General. We 

believe that it is vital that we help to develop and implement innovative 

approaches to human capital management that will enable GAO to 

continue to meet the needs of the Congress; further improve the work 

environment to maximize the potential of our highly skilled, diverse, and 

dedicated workforce; and serve as a model for the rest of the federal 

government. 

Madam Chairwoman, this concludes my formal statement. I would be 

pleased to answer any questions you may have. 

Deferred Implementation 

of Pay Provisions 

Conclusion 

(990840) 
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