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87–717 PDF 2003

S. Hrg. 108–91

THE HUMAN CAPITAL CHALLENGE: OFFERING

SOLUTIONS AND DELIVERING RESULTS

JOINT HEARING

BEFORE THE

OVERSIGHT OF GOVERNMENT MANAGEMENT,

THE FEDERAL WORKFORCE AND THE DISTRICT

OF COLUMBIA SUBCOMMITTEE

OF THE

COMMITTEE ON

GOVERNMENTAL AFFAIRS

UNITED STATES SENATE

AND THE

SUBCOMMITTEE ON CIVIL SERVICE AND AGENCY

ORGANIZATION

OF THE

COMMITTEE ON GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

APRIL 8, 2003

Serial No. 108–28

Printed for the use of the Committee on Governmental Affairs and the

Committee on Government Reform

(

Available via the World Wide Web: http://www.gpo.gov/congress/house

http://www.house.gov/reform
(II)

COMMITTEE ON GOVERNMENTAL AFFAIRS

SUSAN M. COLLINS, Maine, Chairman

TED STEVENS, Alaska

GEORGE V. VOINOVICH, Ohio

NORM COLEMAN, Minnesota

ARLEN SPECTER, Pennsylvania

ROBERT F. BENNETT, Utah

PETER G. FITZGERALD, Illinois

JOHN E. SUNUNU, New Hampshire

RICHARD C. SHELBY, Alabama

JOSEPH I. LIEBERMAN, Connecticut

CARL LEVIN, Michigan

DANIEL K. AKAKA, Hawaii

RICHARD J. DURBIN, Illinois

THOMAS R. CARPER, Delaware

MARK DAYTON, Minnesota

FRANK LAUTENBERG, New Jersey

MARK PRYOR, Arkansas

MICHAEL D. BOPP, Staff Director and Chief Counsel

JOYCE RECHTSCHAFFEN, Minority Staff Director and Chief Counsel

DARLA D. CASSELL, Chief Clerk

OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL

WORKFORCE AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE

GEORGE V. VOINOVICH, Ohio, Chairman

TED STEVENS, Alaska

NORM COLEMAN, Minnesota

ROBERT F. BENNETT, Utah

PETER G. FITZGERALD, Illinois

JOHN E. SUNUNU, New Hampshire

RICHARD J. DURBIN, Illinois

DANIEL K. AKAKA, Hawaii

THOMAS R. CARPER, Delaware

FRANK LAUTENBERG, New Jersey

MARK PRYOR, Arkansas

ANDREW RICHARDSON, Staff Director

MICHAEL D. DOVILLA, Professional Staff Member

MARIANNE CLIFFORD UPTON, Minority Staff Director and Chief Counsel

CYNTHIA SIMMONS, Chief Clerk
(III)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

DOUG OSE, California

RON LEWIS, Kentucky

JO ANN DAVIS, Virginia

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

ADAM H. PUTNAM, Florida

EDWARD L. SCHROCK, Virginia

JOHN J. DUNCAN, JR., Tennessee

JOHN SULLIVAN, Oklahoma

NATHAN DEAL, Georgia

CANDICE S. MILLER, Michigan

TIM MURPHY, Pennsylvania

MICHAEL R. TURNER, Ohio

JOHN R. CARTER, Texas

WILLIAM J. JANKLOW, South Dakota

MARSHA BLACKBURN, Tennessee

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

JOHN F. TIERNEY, Massachusetts

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

ELEANOR HOLMES NORTON, District of

Columbia

JIM COOPER, Tennessee

CHRIS BELL, Texas

———

BERNARD SANDERS, Vermont

(Independent)

PETER SIRH, Staff Director

MELISSA WOJCIAK, Deputy Staff Director

ROB BORDEN, Parliamentarian

TERESA AUSTIN, Chief Clerk

PHILIP M. SCHILIRO, Minority Staff Director

SUBCOMMITTEE ON CIVIL SERVICE AND AGENCY ORGANIZATION

JO ANN DAVIS, Virginia, Chairwoman

TIM MURPHY, Pennsylvania

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

ADAH H. PUTNAM, Florida

NATHAN DEAL, Georgia

MARSHA BLACKBURN, Tennessee

DANNY K. DAVIS, Illinois

MAJOR R. OWENS, New York

CHRIS VAN HOLLEN, Maryland

ELEANOR HOLMES NORTON, District of

Columbia

JIM COOPER, Tennessee

EX OFFICIO

TOM DAVIS, Virginia HENRY A. WAXMAN, California

RONALD MARTINSON, Staff Director

B. CHAD BUNGARD, Deputy Staff Director/Chief Counsel

CHRIS BARKLEY, Clerk

TANIA SHAND, Minority Professional Staff Member
(V)

C O N T E N T S

Opening statements: Page

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

Representative Jo Ann Davis from the State of Virginia .............................. 2

Representative Danny K. Davis from the State of Illinois ........................... 4

Eleanor Holmes Norton, a Delegate in Congress from the District of

Columbia ........................................................................................................ 5

Representative Tom Davis from the State of Virginia and Chairman

of the House Committee on Government Reform ....................................... 6

Senator Carper ................................................................................................. 16

Representative Chris Van Hollen from the State of Maryland .................... 17

Senator Lautenberg .......................................................................................... 19

Senator Durbin ................................................................................................. 63

WITNESSES

TUESDAY, APRIL 8, 2003

Hon. David M. Walker, Comptroller General of the United States, General

Accounting Office ................................................................................................. 7

Hon. Dan G. Blair, Deputy Director, Office of Personnel Management ............. 21

Bobby L. Harnage, Sr., National President, American Federation of Government Employees, AFL–CIO ................................................................................. 33

Colleen M. Kelley, National President, National Treasury Employees Union ... 34

Carol A. Bonosaro, President, Senior Executives Association ............................. 36

Karen Heiser, Treasurer, Chapter 88, Federal Managers Association ............... 38

Hannah S. Sistare, Executive Director, National Commission on the Public

Service ................................................................................................................... 49

Steven J. Kelman, Ph.D., Weatherhead Professor of Public Management, John

F. Kennedy School of Government, Harvard University .................................. 51

Max Stier, President and Chief Executive Officer, Partnership for Public

Service ................................................................................................................... 53

Jeff Taylor, Founder and Chairman, Monster ...................................................... 55

Major General Robert A. McIntosh, USAFR (Ret.), Executive Director, Reserve Officers Association of the United States ................................................. 57

ALPHABETICAL LIST OF WITNESSES

Blair, Hon. Dan G.:

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

Prepared statement with an attachment ....................................................... 97

Bonosaro, Carol A.:

Testimony .......................................................................................................... 36

Prepared statement with attachments ........................................................... 155

Harnage, Bobby L., Sr.:

Testimony .......................................................................................................... 33

Prepared statement .......................................................................................... 113

Heiser, Karen:

Testimony .......................................................................................................... 38

Prepared statement .......................................................................................... 190

Kelley, Colleen M.:

Testimony .......................................................................................................... 34

Prepared statement .......................................................................................... 144

Kelman, Steven J., Ph.D.:

Testimony .......................................................................................................... 51

Prepared statement .......................................................................................... 229
Page

VI

McIntosh, Major General Robert A., USAFR (Ret.):

Testimony .......................................................................................................... 57

Prepared statement .......................................................................................... 259

Sistare, Hannah S.:

Testimony .......................................................................................................... 49

Prepared statement .......................................................................................... 218

Stier, Max:

Testimony .......................................................................................................... 53

Prepared statement .......................................................................................... 239

Taylor, Jeff:

Testimony .......................................................................................................... 55

Prepared statement .......................................................................................... 254

Walker, Hon. David M.:

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

Prepared statement .......................................................................................... 71

APPENDIX

Daniel J. Finnigan, Senior Vice President, YAHOO!, and Executive Vice

President and General Manager, Hot Jobs, prepared statement ..................... 262

Responses to questions submitted for the record from:

Mr. Walker ........................................................................................................ 265

Mr. Blair ............................................................................................................ 276

Mr. Harnage ...................................................................................................... 292

Ms. Kelley ......................................................................................................... 296

Ms. Bonosaro ..................................................................................................... 299

Ms. Heiser ......................................................................................................... 304

Ms. Sistare ........................................................................................................ 308

Mr. Kelman ....................................................................................................... 313

Mr. Stier ............................................................................................................ 316

Mr. Taylor ......................................................................................................... 320
(1)

THE HUMAN CAPITAL CHALLENGE: OFFERING SOLUTIONS AND DELIVERING RESULTS

TUESDAY, APRIL 8, 2003

U.S. SENATE, OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FED- ERAL WORKFORCE AND THE DISTRICT OF COLUMBIA

SUBCOMMITTEE, OF THE COMMITTEE ON GOVERN- MENTAL AFFAIRS, JOINT WITH THE COMMITTEE ON

CIVIL SERVICE AND AGENCY ORGANIZATION, COM- MITTEE ON GOVERNMENT REFORM, Washington, DC.

The Committees met, pursuant to notice, at 9:38 a.m., in room

SD–342, Dirksen Senate Office Building, Hon. George V. Voinovich,

Chairman of the Committee on Governmental Affairs, presiding.

Present: Senators Voinovich, Durbin, Carper, and Lautenberg;

Representatives Jo Ann Davis of Virginia, Tom Davis of Virginia,

Chairman of the House Committee on Government Reform, Danny

Davis of Illinois, Chris Van Hollen of Maryland, and Eleanor

Holmes Norton, a Delegate in Congress from the District of Columbia.

OPENING STATEMENT OF SENATOR VOINOVICH

Senator VOINOVICH. The hearing will come to order.

Good morning, and thank you all for coming. Today the Senate

Subcommittee on Oversight of Government Management and the

Federal Workforce and the House Subcommittee on Civil Service

and Agency Organization are meeting to examine the Federal Government’s human capital challenges. This is the OGM Subcommittee’s 12th hearing on this issue over the last several years.

I am very pleased that Representative Jo Ann Davis is cochairing this hearing. Her presence here today represents an ongoing partnership that we have forged as counterpart Subcommittee

Chairmen since the beginning of this Congress. I believe that the

108th Congress represents a real opportunity to enact major personnel reform for the Federal Government. I am also pleased that

Senator Susan Collins and Representative Tom Davis, the Chairmen of our respective full Committees, have expressed a strong interest in moving these important issues forward this year. I think

this could be a great year.

Today’s hearing represents an ongoing Subcommittee effort that

is now in its 5th year. One of the reasons I ran for the U.S. Senate

was to transform the culture of the Federal workforce, something

I conscientiously undertook with the city and State workforces

when I was Mayor of Cleveland and Governor of Ohio. Having
2

worked with the Federal Government as an ‘‘outside force’’—as

president of the National League of Cities and chairman of the National Governors Association—I observed that investing in personnel was not a priority in the Federal Government. As GAO

Comptroller General Walker has observed—and we are very happy

to have you here with us—for too long Federal employees have

been seen as ‘‘costs to be cut rather than assets to be valued.’’

By pursuing a strategy of legislative reform and outreach, we

have made considerable progress in raising the profile of strategic

human capital management for the Federal Government.

Last November, as part of the Homeland Security Act, Congress

enacted key elements of our legislation, the Federal Workforce Improvement Act of 2002. This was the first major governmentwide

human capital reform legislation since the Civil Service Reform Act

of 1978, a quarter century ago. Our bill reflected the consensus of

a wide variety of public, private, and nonprofit stakeholders.

In the homeland security debate, we took the first step to address the pervasive problem by discussing some of the critical personnel issues in the Federal workforce. Now it is time to build on

that debate and continue working with the General Accounting Office and the Bush Administration on the issue. GAO’s High-Risk

List and the President’s Management Agenda both recognize strategic human capital management as their No. 1 priority.

This year, Chairwoman Davis and I have introduced legislation

that will advance our reform agenda. We introduced the Federal

Workforce Flexibility Act, the Senior Executive Service Reform Act,

and the Presidential Appointments Improvement Act in the Senate

and the House. These bills will help provide the tools the Federal

Government desperately needs to maximize the effectiveness of its

workforce.

At a press conference in this room last Wednesday, Representative Davis and I outlined in greater detail the provisions of these

bills. Today, we are eager to receive the input of an array of witnesses on our legislation and other reforms that they might recommend. I thank our four panels of witnesses for joining us today.

They represent some of the Nation’s foremost experts on personnel

management, and I look forward to their testimony.

I now yield to the Co-Chair of this hearing, Chairwoman Davis,

for an opening statement.

STATEMENT OF JO ANN DAVIS, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF VIRGINIA

Mrs. DAVIS. Thank you, Chairman.

I want to begin by thanking Senator Voinovich for hosting this

important joint hearing and our invited guests for joining us here

today. Many words have been spoken over the last few years about

the Federal Government’s human capital crisis. In fact, it is now

unusual to hear the phrase ‘‘human capital’’ not followed by the

word ‘‘crisis’’ when discussing the Federal workforce.

This problem takes many forms: There is the potential wave of

retirements as the workforce ages; the struggle for many agencies

to recruit, hire, and retain talented employees, particularly in technical or scientific fields; the lack of training and career develop-
3

ment; and as we will hear today, the concern of employees that

their work is not valued.

The Federal Government simply cannot function properly without good employees and managers who have the necessary tools to

do their jobs for the American people. Meeting the Federal Government’s workforce challenges is critical to the success of the Federal

Government’s core mission today and in the future.

Just last week, as Senator Voinovich said, he and I stood in this

very same room and announced that we were introducing several

pieces of legislation that begin to address some of these challenges

by giving managers more flexibility to manage their agencies,

streamlining the cumbersome Presidential appointments process,

and relieving pay compression at the senior levels.

Allow me to highlight some aspects of the bills.

The Presidential Appointments Improvement Act streamlines but

does not weaken the financial disclosure requirements, puts a process in place to reduce the number of political appointees, and enlists the Office of Government Ethics in an attempt to find a balance between necessary ethics requirements and unnecessarily intrusive ones.

The Federal Workforce Flexibility Act provides agencies with enhanced abilities to undertake management demonstration projects,

permits agencies to pay out larger recruitment, retention, and relocation bonuses under certain circumstances, and enhances training

by requiring agencies to link employee training programs with performance plans and strategic goals.

Finally, the Senior Executive Service Reform Act not only alleviates pay compression for senior executives, administrative law

judges, Board of Contract Appeals members, and other senior government workers, but it also moves the SES to a broader pay for

performance system and simplifies some hiring provisions.

I also want to repeat what I said last week. The Senator and I

fully intend to work with the employee groups and the administration in shaping these bills as we move forward. That is why we are

here today, to listen to and to gather ideas from our witnesses. I

look forward to hearing your comments, and I thank you for coming.

[The prepared statement of Mrs. Davis follows:]

PREPARED STATEMENT OF MRS. DAVIS

I want to begin by thanking Senator Voinovich for hosting this important joint

hearing, and our invited guests for joining us today. Many words have been spoken

over the last few years about the Federal Government’s human capital crisis—in

fact, it is now unusual to hear the phrase ‘‘human capital’’ not followed by the word

‘‘crisis’’ when discussing the Federal workforce.

This problem takes many forms. There’s the potential wave of retirements as the

workforce ages, the struggle for many agencies to recruit, hire and retain talented

employees—particularly in technical or scientific fields—the lack of training and career development, and, as we will hear today, the concern of employees that their

work is not valued.

The Federal Government simply cannot function properly without good employees

and managers who have the necessary tools to do their jobs for the American people.

Meeting the Federal Government’s workforce challenges is critical to the success of

the Federal Government’s core mission, today and in the future.

Just last week, Senator Voinovich and I stood in this very same room and announced we were introducing several pieces of legislation that begin to address some

of these challenges—by giving managers more flexibility to manage their agencies,
4

streamlining the cumbersome presidential appointments process and relieving pay

compression at the senior levels.

Allow me to highlight some aspects of the bills:

• The Presidential Appointments Improvement Act streamlines—but does not

weaken—the financial disclosure requirements, puts a process in place to reduce the number of political appointees, and enlists the Office of Government

Ethics in an attempt to find a balance between necessary ethics requirements

and unnecessarily intrusive ones.

• The Federal Workforce Flexibility Act provides agencies with enhanced abilities to undertake management demonstration projects, permits agencies to

pay out larger recruitment, retention and relocation bonuses under certain

circumstances, and enhances training by requiring agencies to link employee

training programs with performance plans and strategic goals.

• Finally, the Senior Executive Service Reform Act not only alleviates pay compression for senior executives, administrative law judges, Board of Contract

appeals members, and other senior government workers, but it also moves the

SES to a broader pay-for-performance system and simplifies some hiring provisions.

I also want to repeat what I said last week: The Senator and I fully intend to

work with the employee groups and the Administration in shaping these bills as we

move forward. That is why we are here today, to listen to and gather ideas from

our witnesses. I look forward to hearing your comments. Thank you.

Senator VOINOVICH. Thank you.

I now yield to Danny Davis, ranking member of the Civil Service

and Agency Organization Subcommittee, for an opening statement.

STATEMENT OF DANNY K. DAVIS, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF ILLINOIS

Mr. DANNY DAVIS. Thank you very much, Senator Voinovich,

Chairwoman Davis—a lot of Davises in this particular group—

Chairman Davis, and Ranking Member Durbin. It is a pleasure to

be here today at a joint hearing to consider civil service reform and

the General Accounting Office’s designation of the Federal Government’s human capital as high risk.

Over the last several years, the Senate Subcommittee on Oversight of Government Management and the Federal Workforce has

held numerous hearings on civil service reform. I am pleased that

this session the House Civil Service and Agency Organization Subcommittee will be equally vigorous in examining civil service reform issues.

What is emerging from these hearings on civil service reform

proposals is once again that the devil is indeed in the detail. To effectively reformed Federal operations and the workforce, we must

first understand the logic and reasoning behind the outdated and

outmoded rules and regulations. If not, we are destined to reform

everything and improve nothing.

For example, if the current system is to be reformed to give managers more flexibility, how can we ensure that a new system will

be fair and equitable and free from political influence?

Efforts to reform civil service that are based on the need for more

flexibility may indeed be valid, but offering more flexibility without

accountability is simply something that we cannot afford to do.

Legislation that offers flexibility without accountability should

not be considered unless it specifies how decisionmakers in the government will be held accountable for their actions and the decisions

they make.
5

I look forward to working with my counterparts in the Senate,

Federal employee unions, research organizations, and others as we

work together to improve the efficiency and effectiveness of the

Federal Government and to place a higher premium on civil service.

Thank you so much, Senator, and I yield back the balance of my

time.

Senator VOINOVICH. Thank you very much.

We welcome Eleanor Holmes Norton. Eleanor, it is nice to have

you here with us. Do you have an opening statement that you

would like to make.

OPENING STATEMENT OF ELEANOR HOLMES NORTON, A

DELEGATE IN CONGRESS FROM THE DISTRICT OF COLUMBIA

Ms. NORTON. Thank you very much, Senator Voinovich. I would

like to say just a few words.

First of all, I would like to thank you and Chairman Davis for

this joint hearing. I remember, Senator Voinovich, your calling just

such a joint hearing, perhaps a couple years ago when you chaired

this Subcommittee, and beginning perhaps a tradition of our working together on this really huge problem of human capital in our

Federal workforce. Beginning with that flexibility in the SES

makes some sense. I am concerned with human capital up and

down the Federal workforce, including, of course, those who manage the system.

I believe that the Federal Government has rested on its human

capital laurels now for decades. The Federal Government was a

natural magnet for the smartest people in the society, for the management jobs, and all up and down the line. From the New Deal

on, government was exciting. But the Federal Government over the

past two decades has failed to wake up to the fact that it now has

become competitive with other employers. And the real indication

of that is if you go into the public schools of the United States and

ask people what they want to be, you will have a hard time finding

somebody that says, ‘‘I want to work for the Federal Government,’’

or ‘‘I want to have a job that is associated with the Federal Government.’’ That is a problem. That is a problem whether you are talking about the SES or the line worker, and some of us happen to

be at least as interested in the line workers who deliver the service

and who are evaporating, having been trained by us and now going

to market their skills elsewhere.

I could not be more empathetic with the notion to have managers

who have the flexibility to do what needs to be done because I ran

a very troubled agency and had to reconstruct it from the ground

up, the Equal Employment Opportunity Commission, who had a

humongous backlog and literally had to change everything within

the agency. I have a keen appreciation for what managers have to

do.

What I think we have to look at is a discipline that we have in

the Federal Government that no other workforce has, and that is

that you have to work within a civil service merit system. And how

do you get the flexibility that is necessary to manage the system

while being true to merit system principles? That is the challenge,
6

and that is the challenge I think we should ourselves be accountable to. Thank you very much, Mr. Chairman.

Senator VOINOVICH. Thank you, Eleanor.

I would like to welcome the Chairman of the House Government

Reform Committee, Representative Tom Davis. Tom, it is very nice

that you came this morning. Would you like to share some opening

remarks.

STATEMENT OF TOM DAVIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF VIRGINIA, CHAIRMAN OF THE

HOUSE COMMITTEE ON GOVERNMENT REFORM

Mr. TOM DAVIS OF VIRGINIA. Senator, just very briefly. I am just

here because this is real important to our Committee, and we are

just pleased at your interest in this, and we are hoping maybe this

is the session that we can get some things moving. This is a huge

problem that faces the Federal Government in the out-years. We

are going to hear a lot from our witnesses today. I used to work

for a company out in the Beltway, a billion-dollar IT company, and

our most important asset wasn’t our computers, wasn’t our buildings, and it wasn’t our patents. It was our people. They walked out

the door every night, and we prayed they came back the next day.

That was our asset, and how we rewarded and retained those people was very important to our staying competitive and staying

ahead of the curve.

It is the same with the Federal Government. That is our most

important asset, and I think it is sometimes underutilized. And I

think we will hear some great ideas today on some of the things

we need to do in a proactive manner so that this human capital

crisis that we face in the out-years perhaps doesn’t come to pass.

So thanks for your leadership; thanks to Mrs. Davis for hers.

And I am just glad to be here.

[The prepared statement of Hon. Tom Davis of Virginia follows:]

PREPARED STATEMENT OF CHAIRMAN TOM DAVIS, HOUSE COMMITTEE

ON GOVERNMENT REFORM

Despite best intentions, reform of the civil service system is a long debated topic

with very little progress to show for it. With the exception of a few minor steps forward, there is surprisingly little difference between today’s civil service system and

the original system created fifty years ago. Unfortunately, the job market outside

of government has changed drastically over the last half century, necessitating that

Congress and the Administration take a careful look at the civil service system to

determine what changes can and should be made in order to recruit and retain the

best and the brightest civil servants.

The Administration has already taken the first step on this issue, assigning ‘‘strategic management of human capital’’ as one of five government-wide initiatives in

the FY 2002 President’s Management Agenda. More specifically, the President’s

Management Agenda calls upon agencies to (1) establish performance-oriented compensation systems, (2) adopt information systems that will minimize the ‘‘brain

drain’’ should a wave of retirements occur in the next decade, and (3) take full advantage of existing personnel flexibilities in order to determine what statutory

changes are necessary.

The recently issued final report by the National Commission on the Public Service

(the ‘‘Volcker Commission’’) iterated the importance that the Bush Administration

has placed on the strategic management of human capital. The Volcker Commission

recommended that (1) the Federal workforce be rooted in new personnel management principles that rely more heavily on government performance, (2) a more flexible personnel system be adopted, in terms of rewarding effective employees and disciplining underperformers, (3) the process of recruiting new hires be streamlined,

and (4) agency managers be given the flexibility to more closely tie compensation
7

1The prepared statement of Mr. Walker appears in the Appendix on page 71.

to current market comparisons. We held a hearing with several of the members of

the Commission (Volcker, Carlucci and Shalala) who all told us the importance of

a new system.

The Congress must work to determine which civil service system improvements

must be accomplished in the coming years and legislate such improvements.

Senator VOINOVICH. Well, thanks very much.

Will the witnesses that are going to be testifying today stand? It

is the custom of this Subcommittee that we swear in all witnesses.

If you will, raise your right hand. Do you swear that the testimony

you are about to give before this Subcommittee is the truth, the

whole truth, and nothing but the truth?

Let the record note that the witnesses have answered in the affirmative.

The sole witness of our first panel is the Hon. David M. Walker,

Comptroller General of the United States of America. It is a pleasure that Comptroller General Walker’s mother and father are here

with us. We welcome you to this hearing.

Two years ago, Mr. Walker appeared before the Subcommittee to

discuss the designation of strategic human capital management as

a new item on GAO’s government high-risk list. Today, the Subcommittee is interested in learning what progress has been made

on this issue and to receive Mr. Walker’s recommendation for

strengthening human capital management so that it can be removed from the high-risk list.

I would ask all witnesses, if possible, to limit their oral statements to 5 minutes each, and I remind you that your complete

statements will be entered into the record.

Mr. Walker, we would like to hear from you this morning. Thank

you for being here.

TESTIMONY OF HON. DAVID M. WALKER,1 COMPTROLLER

GENERAL OF THE U.S. GENERAL ACCOUNTING OFFICE

Mr. WALKER. Thank you, Chairman Voinovich, Chairwoman

Davis, Chairman Davis, Ranking Member Davis, Ms. Norton—you

are right; there are a lot of Davises here today. It makes it a lot

easier, though, quite frankly. And as you noted for the record,

Chairman Voinovich, my parents are here today, and for the record

I want to thank them for all that they have done to help me be

where I am today.

It is a great pleasure to appear before you today to discuss the

Federal Government’s greatest asset: Its people. Since GAO designated strategic human capital management as a governmentwide

high-risk area in January 2001, Congress, the administration, and

the agencies have taken a number of steps to address the Federal

Government’s human capital shortfalls. In fact, my major point

today is, I believe, that we have made more progress in addressing

the government’s longstanding human capital challenges in the

past 2 years than in the last 20. And I am confident that we will

make even more progress in the next 2 years than the past 2 years.

Despite the building momentum for comprehensive and systematic reforms, it remains clear that today’s Federal human capital

strategies are not yet appropriately constituted to meet current and

emerging challenges or to drive the needed transformation across
8

the Federal Government. Committed and sustained leadership and

persistent attention on behalf of all interested parties will continue

to be necessary to build on the progress that has been made and

is being made if lasting reforms are to be successfully implemented.

Congress has had and will need to continue to have a central role

in improving agencies’ human capital approaches. As part of the

oversight and appropriations process, Congress can continue to examine whether agencies are managing their human capital to improve programmatic effectiveness and to encourage agencies to use

the range of appropriate flexibilities available under current law—

and, yes, Mr. Davis, in fact, to hold them accountable, to make sure

that they are using the flexibilities in a reasonable manner and a

manner that does not result in abuse.

Congress will also play a critical role in determining the nature

and scope of any additional human capital flexibilities that will be

made available to agencies while assuring that adequate safeguards are incorporated to prevent abuse. Congress also has the responsibility to ensure the reasonableness and adequacy of financial

resources that are made available to agencies for their most valuable asset, namely, their people.

Congress is currently considering several pieces of legislation to

help agencies address their current and emerging human capital

challenges. I believe that the basic principles underlying these legislative proposals have merit, and collectively they would make a

positive contribution to addressing high-risk human capital issues

and advancing the needed cultural transformation across the Federal Government.

I also believe that certain additional safeguards and provisions

should be considered by the Congress, and we look forward to

working with this Subcommittee and the Congress in that regard.

Mr. Chairman, as you know, I have a lengthy statement which

I would like to have included in the record, and it includes a number of specific examples about additional safeguards and possibly

other provisions that this Subcommittee may want to consider.

For example, in our view, the SES needs to lead the way in the

Federal Government’s effort to better link pay to performance.

However, in our view, agencies should be required to have modern,

effective, credible, and, as appropriate, validated performance management systems in place before they are granted authority to significantly link pay to performance for broad-based employee

groups. In this regard, the Congress should consider providing specific statutory standards that agencies’ performance management

systems would be required to meet before OPM could approve any

such pay-for-performance effort. Our own experience at GAO in implementing such reforms and the practices of other leading organizations, which was the subject of a report issued by the two Chairs

last week, could serve as a starting point for such consideration.

We, at GAO, believe that it is our responsibility to lead by example. We seek to be in the vanguard of the Federal Government’s

overall transformation efforts, including in the critically important

human capital area. We are clearly in the lead at the present time,

and we are committed to staying in the lead.

We have identified and made use of a variety of tools and flexibilities, some of which were made available to us in the GAO Per-
9

sonnel Act of 1980, and some of which were made available by the

Congress in 2000. But many of the flexibilities we have are available to every Federal agency. Overall, we have implemented a

number of human capital initiatives, including a number outlined

in my testimony, some of which are recent, some of which are longstanding, and others of which are planned or in progress.

Many of these required one-time investments to make them a reality. We worked with Congress to present a business case for

funding a number of these initiatives, and fortunately the Congress

has supported these and other GAO transformation efforts.

In that regard, as you know, we expect in the coming weeks to

be formally approaching Congress with recommendations to provide GAO with additional statutory flexibilities in order to help us

better manage our people. The legislation we are planning to recommend would, among other things, facilitate GAO’s continuing efforts to recruit and retain top talent; develop a more performancebased compensation system; help better align our workforce; and

facilitate our succession planning and knowledge transfer efforts.

We believe that these authorities will strengthen our efforts to

serve the Congress and the American people.

As has been the case in the past, we also expect that the use of

our authorities will provide valuable lessons for the Congress and

other agencies on how human capital flexibilities can be used in a

way that provides reasonable flexibility but incorporates appropriate safeguards to prevent abuse, including reasonable transparency and appropriate accountability mechanisms.

Mr. Chairman, Ms. Chairman, all other Members present here

today, that concludes my oral statement. I would be more than

happy to answer any questions you may have. Thank you.

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

Your testimony discusses the need to reform the current Federal

pay system to reflect the knowledge-based workforce of the 21st

Century versus the heavy clerical workforce of the 1950’s. To that

end, the Bush Administration included in the 2004 budget a $500

million pay-for-performance fund to complement the annual cost of

living adjustment.

This proposal has not been that well received. I have a concern

about it, and that is, whether agencies have the infrastructure to

fairly administer a pay-for-performance system. Now, you alluded

to that in your testimony, but would you comment on what steps

agencies need to take to effectively implement such a system?

Mr. WALKER. Senator, I believe a vast majority of Federal agencies do not have the infrastructure in place in order to effectively

and fairly move to a more performance-based compensation structure. I think we ought to start with the SES, and I think that

agencies need to, with regard to the broad-based workforce, develop

modern, effective, credible, and as appropriate, validate performance appraisal systems that are based on key competencies, linked

to their strategic plan, tied to the desired outcomes and the core

values of their respective agencies. We have done that at GAO.

I also believe that it is important to be able to supplement that

new modern, effective, and credible performance appraisal system

with such other safeguards as paneling processes comprised primarily of career executives to try to assure equity and consistency
10

in application. I believe it is also important to make sure that offices of opportunity and inclusiveness such as ours and human capital offices are involved up front before final decisions are made on

performance appraisals, pay, and promotion decisions, to make

sure that they are being applied, as much as is humanly possible,

consistently, in an equitable manner and in a manner that prevents discrimination or abuse.

These are some of the things that I believe it is important to

have in place. Conceptually, I believe that the administration is

right that we need to move more towards pay for performance, but

I think agencies need to have the infrastructure in place before

they operationalize related authories. I also question the adequacy

of the amount of performance based pay they are proposing in addition to the 2-percent base.

Thank you.

Senator VOINOVICH. Would you be willing to share with us some

statutory language that could be a precondition to proceeding with

such a system? We would be very interested in having that.

Mr. WALKER. We would be happy to provide technical assistance

to these Subcommittees in that regard, Mr. Chairman.

Senator VOINOVICH. Congressman Davis.

Mrs. DAVIS. Thank you, Mr. Chairman. Which Congressman, him

or me?

Senator VOINOVICH. Mr. Chairman Davis.

Mr. TOM DAVIS OF VIRGINIA. I will just be brief. Let me ask——

Senator VOINOVICH. I am glad they worked that out.

Mr. TOM DAVIS OF VIRGINIA. The administration’s proposal right

now, your concerns about it are, first, we don’t have the infrastructure really to move this ahead in an appropriate fashion. Second,

I am concerned about pay parity issues. When you start giving

military one and the civilian branch another, it just makes it look

like this is the raise that we would have gotten and now you are

going to have to earn it. And I think it creates a whole difficulty

in implementing it.

Let me just get your comments. You have expressed some concern about it, and I wonder if you could elaborate.

Mr. WALKER. I think pay parity is an important issue. My view

is there is no question that we need to move more towards a performance-oriented compensation system and a more market-oriented compensation system. The pay parity system that we have

right now, quite frankly, treats everybody the same, virtually. It

assumes that the pay gap, for example, is the same for every position, every locality, every skill and occupation, and that is just not

true. That is factually wrong.

And so I think that clearly we need to move more towards a system that pays more based upon skills, knowledge, position, and

performance rather than the one that we have which is basically

largely a one-size-fits-all approach, so I agree that we need to move

that way, but I think that one of the safeguards needs to be that

before agencies would be allowed to do that for a broad cross-section of their workforce, they need to demonstrate that they have

the infrastructure in place to be able to implement pay for performance in a fair, equitable, and reasonable manner.
11

Mr. TOM DAVIS OF VIRGINIA. Do you think they need some additional legislation to do that, or could that be done administratively?

Mr. WALKER. I think that you could do that as part of legislation

that would provide specific statutory safeguards that would say, for

example, in order for OPM to approve an agency being able to use

more performance-based compensation, they would have to meet

these certain statutory standards that they could then administer.

Mr. TOM DAVIS OF VIRGINIA. Also, isn’t it a fact, I mean, in some

areas every time there is a vacancy, there are hundreds of applications and there is no problem getting people at a certain pay level,

and in other areas, we have difficulty getting people. We train

them a little bit and we lose them. So there is disparity throughout

the Federal system, and we don’t treat the system that way. We

seem to have a one-size-fits-all. Is that accurate?

Mr. WALKER. That is correct. There are certain critical occupations where you need to be able to use additional tools in order to

attract and retain people, and I think that our system needs to recognize that. It does to a certain extent. Agencies have the ability

to pay recruiting bonuses and retention bonuses, and I know that

one of the provisions in the legislation under consideration would

enhance that with regard to certain critical occupations. I think

that has intellectual merit as long as you have adequate safeguards

to make sure that people are using the authority when it is justified and not doing it in situations where it is not.

Mr. TOM DAVIS OF VIRGINIA. I also am concerned about so much

work is being outsourced simply because we don’t have an in-house

capacity. We don’t have any in-house check and it is going out the

door because of a capacity issue. And we are having difficulty particularly in some technical areas recruiting, training, and retaining

people in some of these areas.

Mr. WALKER. Well, the sourcing issue is a very important issue.

As you know, I chaired a panel last year, the Commercial Activities

Panel, that make some recommendations on sourcing strategy.

There are several contracting areas in the Federal Government

that have been on our high-risk list for years—NASA, IRS, DOD,

DOE, just as an example, where they have contracted out a significant amount of activities without providing an adequate number of

Federal workers who have the skills and knowledge, to be able to

manage cost, quality, and performance. It is critically important

that the Congress adopt the recommendations of the Commercial

Activities Panel, that the administration follow them, and that we

have an adequate number of people to be able to manage whatever

we decide to contract out.

Mr. TOM DAVIS OF VIRGINIA. Thank you, and I am proud to claim

you as a constituent.

Mr. WALKER. Thank you, Mr. Chairman.

Senator VOINOVICH. Representative Davis.

Mrs. DAVIS. Thank you, Mr. Chairman. Thank you, Mr. Chairman.

Mr. Walker, the Homeland Security Act of 2002 which was enacted on November 25 requires the appointment of chief human

capital officers in the major agencies. The chief human capital officers are to advise and assist the agency head and other agency officials in carrying out the agency’s responsibility for selecting, devel-
12

oping, training, and managing a high-quality, productive workforce,

as well as implementing the rules and regulations of the President

and OPM and the laws governing the civil service within the agency.

These chief human capital officers are to be appointed by the

agency head within 180 days of the enactment of the Homeland Security Act, which would be May 24, 2003.

Do you know how that process is coming along?

Mr. WALKER. I am going to be meeting with OPM Director Kay

Coles James this afternoon on several topics. That is one of the

issues that I plan to discuss with her. I believe it is critically important that we get this right rather than do it quick. These positions need to be filled with the right type of people. This is a strategic position. It is one that is fundamentally different from many

of the types of personnel or human resource positions that we have

had in the Federal Government in the past. And I think it is important that we have a governmentwide approach that assures

some consistency in how we are filling these jobs. In other words,

I think it is important, and hopefully OPM is playing an active role

in working with the agency heads, to make sure that the type of

people that they are proposing to appoint in fact are the type of

people that are necessary to get the job done. And I will be making

that inquiry this afternoon. But in the final analysis, I think it is

much more important to do it right than to do it quick.

Mrs. DAVIS. Could you, after you meet with OPM, get back to us

with a report on where they stand on these appointments?

Mr. WALKER. I would be happy to do that.

Mrs. DAVIS. Thank you, Mr. Chairman.

Senator VOINOVICH. Would you now like to call on your Ranking

Member?

Mrs. DAVIS. Yes. Now I will call on my Ranking Member, Danny

Davis.

Mr. DANNY DAVIS. Thank you very much, Madam Chairman.

Mr. Walker, it is good to see you again. I want to thank you so

much, and especially I want to thank you for the responsiveness of

your agency to inquiries and requests that I have made for information, analysis, and studies. We really appreciate that.

I appreciated your comments relative to emphasis on leadership

and accountability as well as the idea that financial resources must

be available in order to have the kind of capital structure that we

need in terms of the ability to take care of the human elements

that must be employed.

I also appreciated the idea that the Federal Government has to

be and should, in fact, be the leader, and that leadership has to go

in the areas of recruitment, development, and especially inclusivity,

that is, being able to reach out throughout the breadth and depth

of America and make sure that our workforce seriously looks like

America in a real kind of way.

It is my understanding that the Managing Director of the Office

of Opportunity and Inclusiveness reports directly to you. Could you

tell us what the value of having this person or this office report to

you is?

Mr. WALKER. Thank you, Mr. Davis. We are happy to support

your requests. You have had some very good ones
13

Ron Stroman, who is our Managing Director for Opportunity and

Inclusiveness, reports directly to me. He is directly responsible for

trying to make sure that our agency is taking affirmative steps to

reach out to hire a diverse workforce, that we have appropriate

policies, procedures, systems, and safeguards in place to maximize

opportunity for all of our employees and to prevent discrimination.

It has helped tremendously because, first, Ron is a first-class professional. He is one of the top people in his field in the country,

not just in the Federal Government. Second, by having him report

directly to me and by having us work together on an ongoing basis,

it demonstrates clear commitment from the top of the agency to

this important element of human capital strategy. And we have

made considerable progress in the recent past, in part as a result

of the efforts of Ron and his team.

Mr. DANNY DAVIS. Does each agency or government unit have

such an individual internally?

Mr. WALKER. Well, my understanding is there are a number of

offices that have Offices of Civil Rights. My view is those terms are

somewhat outdated. It is really about what you said. It is about opportunity, equal opportunity, and inclusiveness, and it is taking affirmative steps to try to achieve that while at the same point in

time not compromising standards and assuring reverse discrimination.

And so the answer is no, I do not believe that each agency has

something like we do. And to the extent that they have an office,

it may not be approaching its duties and responsibilities in the

same way that we are. I am not saying that ours is right or necessarily even the best, but it is fundamentally different from what

I saw when I headed two Executive Branch agencies.

Mr. DANNY DAVIS. And, finally, Mr. Chairman, if I might, following up on a line of questioning by Chairman Davis relative to

outsourcing, and privatizing, I have always wondered whether

much of our activity in outsourcing is philosophical or is it based

upon need, or do we have the ability to develop the competencies

that are needed in certain lines of activity? And do we have enough

call for that internally so that our own workforce would be able to

provide those services effectively and efficiently and if there aren’t

some areas where we really don’t use the talent as effectively as

we could?

Mr. WALKER. Several answers. First, I think at times it has been

philosophical. For example, in the Eisenhower administration, the

policy was if it could be done by the private sector, it should be

done by the private sector. Sometimes it is political because of campaign promises that are made that deal with this issue. But there

are market factors as well. The fact of the matter is that the government, even if it wanted to be able to attract and retain people

to perform certain functions, if because of its compensation policies

or practices or whatever else, it can’t attract and retain an adequate number of people, then you have to go to the private sector.

You don’t have a choice but to do that.

And sometimes the government hasn’t adequately invested in its

human capital, in its own people, and that has served to undercut

its capabilities, and there is an opportunity cost there. So I think

it is multidimensional.
14

Mr. DANNY DAVIS. Thank you very much, Mr. Chairman.

Senator VOINOVICH. Madam Chairman.

Mrs. DAVIS. Now I would like to call on Ms. Norton for questions.

Ms. NORTON. Thank you, Madam Chairman.

Mr. Walker, I appreciate your testimony. I myself perhaps by

training, particularly when embarked on a new adventure, I am

impressed by the power of precedent. You spoke in your testimony

of existing flexibilities that the Federal Government has had. I

would be most interested in how those existing flexibilities might

inform this far more contentious notion of pay for performance.

For example, you even say in your GAO report that the GAO has

been leading by example, and you cite examples of that—

broadbanding, voluntary early retirement, recruiting, and a number of other examples.

Of course, those are not nearly as contentious as telling people

they are going to be paid by what somehow somebody says they

have performed, especially when we were told in a prior hearing

that this is really a case study for use on the entire workforce.

So I would like to know what you have done to look at the flexibilities that the government already has, whether they have been

evaluated, and what they tell us already about flexibility and how

it is working in the Federal Government.

Mr. WALKER. Well, first, I do not believe that agencies are coming close to using all the flexibilities that are available to them, but

there are various reasons why they may not. In some cases, they

may not understand them. In some cases, they may not have the

funding.

For example, student loan repayment, which Congress passed,

GAO has the second largest student loan repayment program in

the Federal Government, yet we only have 3,200 employees, which

is very small as compared to most departments and agencies. Yet,

we have the second largest student loan repayment program in the

Federal Government.

In addition to that, we have done a number of things in the recruiting area to use some of the flexibilities with regard to retention bonuses, recruiting bonuses, things of that nature that are

available to others, and others may not have done that.

We have broadbanding. That is something that we were granted

in 1980. Most agencies don’t have that. I think that is something

that——

Ms. NORTON. Mr. Walker, has anybody looked at anybody’s

version of the flexibilities for outcomes to see whether they work

or not? I recognize what you are saying, that agencies for various

reasons haven’t always implemented them. But we have got flexibility. We are now going to even greater flexibility. I am trying to

find out whether GAO or anybody else has looked at what flexibility has done for us already.

Mr. WALKER. We are doing some work in that regard, and I

imagine that OPM can probably comment on what they are doing.

There are case studies out there. There are case studies where

there have been demonstration projects in the past, where people

have been granted certain flexibilities and have used them, and I

think it is important that they help to inform the Congresss’ decision going forward.
15

Ms. NORTON. Should this be a demonstration project? You certainly start with the SES at the smaller and top element of the

government. Again, going back to my own experience, when I had

to undertake huge changes in an agency, the reason I think it succeeded was that we didn’t do it all at one time, that we did what

we called a pilot project, in this case in various regions, learned

from that project, kept from making the mistakes writ large.

Is it your recommendation that pay for performance be implemented straight out throughout the SES or that some smaller

version or pilot project which would allow us to discover mistakes

be started once we have the appraisal system that you think is the

prerequisite for starting it all?

Mr. WALKER. Well, first, I think that we need to learn from the

demonstration projects we have already had, and that is one of the

things that we are looking at, and hopefully OPM as well—those

that have been given some flexibilities, what have they done?

Ms. NORTON. I am talking about pay for performance.

Mr. WALKER. I understand that. I am talking about that, too.

There are situations where others have been given flexibility in

that regard, and we ought to study that.

Ms. NORTON. And we have no outcome from that that has already been evaluated?

Mr. WALKER. We are doing some more evaluation, but some has

already been done. I think the SES is the logical place to start.

Ms. NORTON. With the whole SES?

Mr. WALKER. I think it is also important that you have modern,

effective, and credible performance appraisal systems for the SES

before you implement it as well. And I am not convinced that many

Federal agencies have that.

My view is that if you can end up incorporating statutory safeguards that must be considered by OPM before they could approve

an agency being able to use it either for their SES but especially

for the rank-and-file, if you could do that as a condition of being

able to operationalize additional pay for performance authority. It

would be very substantive.

Ms. NORTON. Now, you said certified—I think you used the word

‘‘certified’’—appraisal systems or performance management systems. What do you mean by ‘‘certified’’?

Mr. WALKER. I mean that OPM would have to certify that in

their view the statutory conditions have been met. Let me give you

an example in the case of GAO. For us, we have developed a modern, effective, and credible performance appraisal system that is

based on competencies, tied to our strategic plan, and for our

broad-based workforce, the competencies were validated by the employees before we implemented it.

It is not perfect. It is a huge change from the last prior system.

But our employees actively participated. They validated the competencies, and, therefore, I think that is something that is desirable

and a best practice.

Ms. NORTON. The validation, the notion of validation studies and

validation seems to me is going to be absolutely critical, or else this

system—we know what this workforce is. It is highly educated. It

is conscious of its rights. And one of the first outcomes could be a
16

whole bunch of grievances in court suits if, in fact, there is not a

validated system put in place.

Thank you very much, Madam Chairman.

Senator VOINOVICH. Senator Carper.

OPENING STATEMENT OF SENATOR CARPER

Senator CARPER. Thanks, Mr. Chairman.

To General Walker, welcome. Good to see you again. Thank you

for joining us.

To our House colleagues, to Representative Davis and to Representative Davis and each of the other Representatives, we welcome you and thank you for coming to this end of the Capitol.

As an old Governor, I was one who was interested in trying to

introduce pay for performance for our State employees in Delaware.

I suspect former Governor Voinovich had some interest in Ohio

along those lines as well.

Interestingly enough, it was our legislature which generally

blocked our efforts. We made some progress but not to the extent

that we wanted to.

There are some States and probably some cities that did better

than we did in the 8 years I was Delaware’s chief executive. Delegate Norton was talking about pilot projects and that sort of thing.

I wonder if there are some pilot projects out there that you might

be aware of within State or local governments so we can almost use

them as a pilot project because of their role as laboratories of democracy. Are you aware of any that are especially——

Mr. WALKER. Not off the top of my head, Senator, but I will tell

you that is something that we can look into, if we are not already.

One of the things that we are doing increasingly at GAO is trying

to partner with State and local officials, especially the auditor generals, State auditors and county and city auditors, to try to share

knowledge and information. And this is one I could follow up on.

Senator CARPER. You may know, there is an organization of

State budget directors and State personnel directors as well who

have a lot of interest in these kinds of issues.

Let me just ask, to back up a little bit, if you could give us a road

map of sorts.

What might be the appropriate next steps for us as legislators as

we consider pay for performance, something that actually rewards

good performance but something that tries to provide safeguards

for employees?

Mr. WALKER. My view is start with the SES with some type of

standards that would even have to be met within the SES. Look

to some demonstration projects, and provide for additional demonstration projects for broad cross-sections of the workforce within

the Executive Branch, and also the Legislative Branch, GAO specifically. But, again, they should have to demonstrate that they

have these safeguards before they end up implementing the payfor-performance system.

We have done that at GAO. We have them for most of our workforce. It is not a promise. We believe in the Missouri principle,

‘‘Show me,’’ and we can show you.

And so I think if you do that, what will happen is that we will

see what works and what doesn’t work. We will learn some valu-
17

able lessons. One of the concerns that I have is if you go too fast

on pay for performance before people have their systems in place,

then you can end up having a bunch of disastrous experiences

which could taint the whole concept. And I believe the concept is

right. I believe we need to place increased emphasis on pay based

on skills, knowledge, position, and performance, but we need to be

careful how we do it, or else we are going to get off to a bad start,

and that is not going to be in anybody’s interest.

Senator CARPER. Last year, we debated and voted on some proposals by Senator Voinovich and Senator Akaka with respect to

flexibility for Federal agencies, in the context of the creation of a

new Department of Homeland Security.

Could you make some comments on what we did legislatively,

what kind of extra flexibility that gives to Federal agencies and

how that might be used?

Mr. WALKER. Well, as you know, Senator, not only did you provide certain additional flexibility to the Department of Homeland

Security, which was controversial and contentious. If you will recall, that was kind of the last thing that got resolved in the legislation.

Senator CARPER. I recall that.

Mr. WALKER. Yes, I am sure. I didn’t have much hair that I could

lose, but some may have lost some as a result of that.

But, in any event, in addition to that there were provisions that

Chairman Voinovich proposed that were adopted governmentwide

and they provided additional flexibilities.

I might note for the record that some of those were ones that

GAO had already demonstrated could be successfully implemented,

such as the ability to provide voluntary early-outs and buyouts to

realign the workforce rather than to downsize the workforce. So I

think it was a positive step forward.

Senator CARPER. All right. Good. Thanks very much.

Senator VOINOVICH. Congressman Davis, do you want to call on

your next witness?

Mrs. DAVIS. Yes. Mr. Van Hollen.

STATEMENT OF CHRIS VAN HOLLEN, A REPRESENTATIVE IN

CONGRESS FROM THE STATE OF MARYLAND

Mr. VAN HOLLEN. Thank you, Chairman Davis, Senator

Voinovich. Welcome, Mr. Walker, It is great to have you with us

today. As you may know, I represent an area of the Washington

suburbs where we have lots of Federal employees, and so this

whole topic is, of course, of great interest to them and to myself.

Just to follow up on Congresswoman Norton’s comments with

respect to demonstration projects and phasing this in, we had a

hearing on our Subcommittee recently where we got into the payfor-performance issue, and one of the things that came out, as I understood it, was that even now we are talking about phasing in

these new performance standards and linking them, obviously pay

to performance. But there is really not any set of sort of uniform

standards now that we can apply. Is that right?

Mr. WALKER. That is correct. I think the one thing that agencies

need to do that doesn’t require any legislation at all is to develop

modern, effective, and credible performance management systems
18

and to put them in place. There is no legislative action necessary

for that to happen.

Mr. VAN HOLLEN. And that is my point. Why not as a first step

at least get the standards in place before we establish the next

link, which is to tie it to pay? I mean, let’s at least get these performance measures in place on a uniform basis. That in itself is

going to be a large task. I appreciate the fact that you have done

it at GAO. I think that is terrific. But I think we should begin to

do it in the agencies, give that time, give people time to adjust to

those performance standards before you take the next step. And I

wonder if you could respond to that.

Mr. WALKER. Well, and my point on that is I think you can do

that reasonably expeditiously among the SES, and I think that it

would make sense for you to be able to allow for some additional

demonstration projects with appropriate statutory safeguards that

would have to be met. For other agencies to do it as a test, for a

broad cross-section of their workforce, I do think that would be appropriate.

But, again, I think that the agency should have to demonstrate

that they have these systems and controls in place before they

should be allowed to implement any additional pay flexibility. But

ultimately I think this flexibility should be broad-based throughout

the government.

Mr. VAN HOLLEN. I guess my point is, the administration has introduced legislation on this issue, but they have got a lot of freedom right now to do a lot of things without the legislation that

they have not done. And it just seems to me to make sense to allow

people to become comfortable with the standards before you begin

the linkage.

Mr. WALKER. They do, but in fairness, Congress last year, for example, passed a 4.1-percent pay raise, but only funded 3.1 percent.

There was a 1-percent unfunded mandate which somehow has to

be made up. And in addition to that, that 4.1 percent was given

to every Federal worker, no matter what their skills, knowledge,

performance, and position was, even people that were unacceptable

performers, which is a very small percentage. Unacceptable performers got the same thing as the top person in the agency. That

is just wrong.

And so ultimately we need to move towards a more modern, effective, and credible system, but we need to be careful how we do

it.

Mr. VAN HOLLEN. Right. Well, I am not sure the fact that the

full 4 percent wasn’t originally provided is the reason the administration can provide for not going forward. After all, they never requested the 4.1 percent for the civil service. And, in fact, in this

year’s appropriation, they have only requested 2 percent. So I think

it is difficult for them to point to that as a reason they are not moving forward.

Let me just ask you one other question with respect to the Senior

Executive Service because, on the one hand, I understand the reasons for moving forward with the Senior Executive Service first. On

the other hand, sometimes with other jobs in the Federal Civil

Service, it is easier to measure performance. Sometimes at higher

levels, certain types of jobs—Deputy Assistant Secretary for the
19

Near East or South Asia—it is harder to measure the performance,

more difficult than, for example, if you are measuring against a

procurement contract and savings in that kind of area.

What do you think the dangers—and this is true of a Republican

or a Democratic administration. But obviously, in the Senior Executive Service you have much more interaction between the political

appointees and the members of the Senior Executive Service. How

do you analyze the dangers of really just compensating people

based on willingness to support a particular political position within an administration? This is a danger in either administration. I

just would like you to evaluate that.

Mr. WALKER. I would recommend that you do it using a competency-based approach, which actively involves employees and

their unions as appropriate in developing what those competencies

ought to be. I think you also have to not only have an appropriate

performance appraisal system, I think you have to have things like

paneling processes, which are comprised primarily, if not exclusively, of career officials that will end up taking that information

and others to try to make recommendations on pay, promotions,

and other types of human capital issues.

So I think there are a number of things that can and should be

done. In most cases, we have already done them at GAO, and selected other people may have as well.

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

Senator VOINOVICH. I would like to point out to Members of the

House and Senate here this morning that Mr. Walker has to be at

a hearing on the House side at 10:30.

Mr. WALKER. And I do not believe in cloning. [Laughter.]

Senator VOINOVICH. Senator Lautenberg, would it be all right

with you if we excused him, or would you like——

OPENING STATEMENT OF SENATOR LAUTENBERG

Senator LAUTENBERG. Yes, if he agrees with us, absolutely.

[Laughter.]

I understand that Mr. Walker takes a somewhat cautious view

of the quick conversion to commercial or to the private sector side.

And I will just say, Mr. Chairman—I commend you for holding this

hearing—that I have spent much of my life in the corporate world

and I built a large company and saw people hard at work. I then

came here and saw people work for a lot less money, who were

equally committed, dedicated folks. I think we have to keep that

in mind before we arbitrarily decide that we can put out everything

on the cheap and hire the lowest-cost labor that we can find. That

is no way to do things.

So I concur, Mr. Chairman, as long as I can put my statement

in the record as if read.

PREPARED STATEMENT OF SENATOR LAUTENBERG

Mr. Chairman, I commend you for holding this hearing and for your recognition

of the looming human capital crisis in the Federal Government.

Today’s joint hearing is about people. Civil servants are the backbone of our government and we should remember that the skills, talent, and professionalism of the

men and women in the Federal workplace are the best in the world.
20

The overwhelming majority of civil servants are dedicated to their jobs. Many of

them could make more money in the private sector but they work in the government

because they see public service as a higher calling.

It’s crucial that we all hold civil servants accountable for the jobs they do. But

it’s also important that we avoid demeaning and denigrating them. Too often, administration officials, political appointees, and Members of Congress take potshots

at career Federal employees who can’t defend themselves and that does nothing but

lower morale.

As a former businessman, I appreciate the administration’s need for flexible recruiting, hiring, and retention policies.

But as a public official I am equally aware of the fact that ‘‘flexibility’’ should not

mean undermining basic civil service job protections. The Civil Service was created

as a remedy to the rampant political excesses and abuses of the previous system.

While the Civil Service may need to be modernized, at its core it has served this

country well over the years.

I must say that I am very concerned about the administration’s announced intention to ‘‘complete’’ 127,500 Federal jobs by September 30, 2003.

I am particularly concerned about the administration setting an arbitrary quota

and an impossible deadline for privatization, and then deliberately withholding from

agencies the financial resources they need to conduct the public/public competitions.

I get the impression that the administration has determined in advance the way

these competitions should go, and that’s to the private sector.

We need to address the way in which we plan to balance privatization—the contracting out of Federal jobs—with Federal employee recruitment, retention, and morale.

Beyond the issue of deciding what to contract out, there is something even more

fundamental: That’s giving agencies the personnel and the other resources they

need to do their jobs. If we don’t do that, we are just setting them up to fail.

I’ll give you an example of what I mean: We have created the Department of

Homeland Security (DHS) but the administration has repeatedly submitted appropriation requests that are—frankly—insufficient to enable DHS to achieve its mission to protect Americans here at home.

Government should be as efficient as possible but we simply can’t expect government to do its job ‘‘on the cheap.’’

There is an old saying, ‘‘You get what you pay for.’’ To continue recruiting and

retaining skilled and dedicated civil servants, the Federal Government needs to

offer competitive wages, health benefits, and retirement plans.

Many people correctly point out that taxpayers are the owners of the Federal Government and deserve the most effective and efficient government possible. I agree,

but I would also point out that Federal employees are taxpayers, too, and they have

‘‘invested’’ even more than their taxes—they have invested their working lives. They

deserve to be treated fairly and with respect. Doing so will maximize all taxpayers’

value.

Mr. WALKER. Mr. Chairman, I am happy to answer any questions for the record or meet with any Member on this issue if they

so desire. And I appreciate your understanding.

Senator VOINOVICH. Thank you very much, and I think Senator

Lautenberg is very valuable in this because of his experience in the

private sector. He has some insight into it that a lot of us don’t

have.

Thanks for being here again.

Mr. WALKER. Thank you. My pleasure.

Senator VOINOVICH. Our next witness is the Hon. Dan G. Blair,

Deputy Director of the Office of Personnel Management. Dan, I

want to welcome you back to the Senate.

Prior to his appointment with the Bush Administration, Mr.

Blair served as senior counsel to Senator Fred Thompson, former

Chairman of the Governmental Affairs Committee. He brings nearly two decades of experience in personnel and government management to his position, and we are glad to have you here this morning. Dan, you may proceed with your statement.
21

1The prepared statement of Mr. Blair appears in the Appendix on page 97.

2The information referred to submitted by Mr. Blair appears in the Appendix on page 109.

TESTIMONY OF HON. DAN G. BLAIR,1 DEPUTY DIRECTOR,

OFFICE OF PERSONNEL MANAGEMENT

Mr. BLAIR. Thank you, Mr. Chairman, Madam Chairman, Members of the Subcommittees. Thank you very much for the invitation

to testify this morning.

On behalf of OPM Director Kay Coles James, I am pleased to

provide the Subcommittees with an overall assessment of the state

of the Federal workforce. I have a rather lengthy written statement, and with your indulgence, I will gladly summarize.

So, where do things stand today, some 2 years after GAO first

put the Federal workforce on its high-risk list? Back then, almost

all the news was bad. We saw an impending retirement wave

which threatened a debilitating brain drain as well as the risk of

outstripping the capacity of agencies to find skilled applicants to

take their place.

Now there is some good news to report. While the number of retirement-eligible employees remains high, we haven’t seen the

mass exodus that was predicted. Indeed, separation rates have declined. Further, our recent human capital survey showed that over

90 percent of our employees think that their work is vitally important, and a similar percentage said they believed their work contributes to their agency missions. Hence, the importance of the

President’s Management Agenda and its priority in placing the

strategic management of human capital as first on the list.

The President directed OPM to take the lead responsibility for

assessing how well the departments and agencies managed their

most vital asset—their people. We measure our success by the

progress agencies make in placing the right people in the right jobs

and managing them in ways that help achieve mission goals.

OPM, the Office of Management and Budget, and GAO collaborated this past year in adopting the ‘‘Human Capital Standards for

Success’’ 2 to help agencies address their human capital management more strategically. These are the standards we use to score

agency performance each quarter, and the scoring process has

eliminated agency efforts to better manage their workforces. As a

result, most agencies recognize the need to assess the strategic

value of their position and the competencies required to perform

that function. Managing the workforce effectively is recognized as

a means to achieving mission goals.

To aid the agencies, OPM developed a human capital and accountability framework to help agencies better understand exactly

what we are looking for when we are assessing them. We use it as

a tool in assessing the agencies as well as making it widely available as a self-assessment tool. This shared framework has made

our discussions more focused and more productive.

While red scores still predominate on the scorecard, the scores

reflect the need for agencies to operate better. Agencies spent their

first years concentrating on linking human capital practices to mission results. Workforce planning strategies are being used to identify and anticipate skills gaps, and agency leadership is taking

ownership of the initiative. Aligning human capital strategies with
22

departmental mission goals has been challenging, yet progress has

been made.

While green is the ultimate goal, achieving yellow status indicates significant progress. Agencies that have shown progress include the Department of Energy and the Department of Labor for

successfully linking performance expectations for managers to

agencies’ strategic plans and mission objectives. Their performance

appraisal systems are designed to make meaningful distinctions by

rewarding high performance. Other agencies have also shown improvement in workforce planning, identifying competencies for mission-critical occupations, and other human capital strategies.

Just as the GPRA, Government Performance and Results Act, directs agencies to track organizational performance, we believe the

government must adopt compensation practices designed to spur

and measure individual employee performance. Indeed, performance-oriented pay is embraced by the merit system principles

which call for appropriate incentives and recognition for excellence

in performance.

To bolster these efforts, the administration has proposed allocating $500 million to the new Human Capital Performance Fund

to allow agencies to give extra pay raises based on an employee’s

superior performance or possession of skills critical to the agency’s

mission. The Fund provides an incentive for agencies to begin making meaningful distinctions in and rewarding superior individual

performance.

While progress is needed in developing robust performance appraisal systems, the Departments of Energy and Labor show it can

be done. Further signs of progress can be found in last year’s

Homeland Security Act, which included a number of significant

governmentwide human capital reforms. Thank you, Mr. Chairman

and Members of the Subcommittees, for work that you performed

in obtaining enactment of those very important legislative initiatives.

Included in these reforms were the ability for agencies to replace

the rule of three with category ranking and hiring assessment and

for limited direct hire ability for critical and shortage occupations.

Further, the workforce shaping tools of voluntary early retirement

and governmentwide buyout authority will help agencies address

skills and balances.

The most attention, however, will be paid to the actions of the

OPM Director and the Department of Homeland Security Secretary

in designing new pay and personnel systems to bring together the

employees of the 22 agencies that now make up the Department of

Homeland Security.

Your letter of invitation also asked that we address specific legislative proposals. First, I am pleased to report that OPM supports

many of the provisions of the Federal Workforce Flexibility Act of

2003, S. 129 and H.R. 1601. We recognize that the proposal builds

on the Managerial Flexibility Act from the last Congress, and we

look forward to working with you in the Congress on this important

legislation.

We also look forward to working with you to refine the proposed

Senior Executive Service Reform Act of 2003, noting that the basic
23

features of the proposal were included in the President’s budget for

fiscal year 2004.

Again, thank you for your leadership and the opportunity to address these important issues. I am pleased to answer any of your

questions.

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

OPM’s recent human capital survey of Federal employees pointed

out something that was rather astonishing to me, and that is that

only 27 percent of Federal employees feel that poor performers are

dealt with. As you know, S. 129 and H.R. 1601, the Federal Workforce Flexibility Act of 2003, includes a provision to provide special

training to managers to help them deal with poor performers. I

suspect, however, that legislation alone will not solve the problem.

I would like to know what you have done across the board to provide managers with the tools, resources and knowledge to effectively handle poor performers.

Mr. BLAIR. Well, I think training, as you recognize, is a very important component of any performance management system, and

training in government oftentimes has lagged behind what our expectations should be.

Given that, the Director is very committed and has put forth in

the scorecard efforts ways of rating and ranking the agencies—not

ranking, but rating the agencies in terms of what they are doing

in performance and what they are doing to train managers to perform better.

This is extremely important if we are going to have a successful

performance management system.

Senator VOINOVICH. Well, you heard the testimony from David

Walker. The administration is talking about going forward, and if

you have only 27 percent of Federal employees that feel that poor

performers are being handled properly, how in the world can you

possibly go to a new system that is going to provide pay for performance across the Federal Government?

Mr. BLAIR. Well, let’s recognize that right now our pay systems

have very little performance component to it. There is very little

incentive for agencies or for managers to exercise vigorous performance management because we don’t back it up with real money or

real dollars. The creation of the Human Capital Performance Fund

actually puts real dollars behind what our efforts will be and says

that we want you to rank your employees, we want you to look at

individual performance and assess it accordingly, and if you are

performing in a superior manner, we are going to pay you for it.

Our systems don’t allow us to do it right. There is no incentive to

do so.

Senator VOINOVICH. Well, you heard the testimony from David

Walker talking about the effort that they made in GAO to get

ready for pay for performance, and then his comments about the

posibility of conducting some demonstration projects to test this

concept in other agencies. And we were just talking about the Senior Executive Service. The general opinion is that across the board,

apart from the SES, there is no infrastructure in place to really do

pay for performance. And what I just heard from you is that if we

simply provide this additional money, all of a sudden, voila, we are
24

going to have a pay-for-performance system because there will be

incentive for it.

The President has announced this initiative. I would like to know

specifically what do you have in place to handle this system in the

event that it would become a reality.

Mr. BLAIR. Well, we have this scorecard process in place in which

we are assessing agencies on how well they perform performance

management. It is a key component in an agency’s effort to get

from red to green. We are in the process of doing that.

In addition, the Homeland Security Department last year, in

order for agencies to raise the total aggregate compensation cap,

they were asked to—OPM and OMB were asked to develop regulations in order to certify the agencies can make those meaningful

distinctions. So processes are already beginning to be in place, but

you have to remember that in order to move to a system like this,

you have to provide the incentive.

The Human Capital Performance Fund doesn’t jettison the General Schedule. The General Schedule remains in place. Step increases remain in place. And the President has also provided 2 percent across the board. And so it builds on the present General

Schedule system.

However, we strongly believe that we need to put more than just

words behind our efforts at better performance management, and

that is why we say let’s dedicate some real dollars to it. And that

is what the Human Capital Performance Fund would do.

Senator VOINOVICH. Well, I would like to see the letters and recommendations to the departments. I would like to see the standards that you have set for whether or not agencies have pay-forperformance systems in place and whatever else you have done to

prepare for this, because this is a major undertaking to go forward

with it. I have been through it. And unless you have had some real

significant training for people in that process, you are setting it up

for failures. I guess the suggestion here, and you might carry it

back to Director James, is that a lot of us believe—and this is in

a bipartisan basis—that we are not prepared to go forward with

this system, perhaps even in the Senior Executive Service. We

might have to just pick out certain areas in the Senior Executive

Service where we have really validated that they do have a real

performance-based pay system in place before we would move forward with it.

Mrs. DAVIS. Thank you, Mr. Chairman. I have to agree with you.

I almost feel like we are getting the cart before the horse. And I

may be wrong on that, but I am anxious to see what you do have

in place. And I have a lot of questions here with regard to the $500

million Human Capital Performance Plan, and I am going to submit them for the record because I don’t have time to ask them all.

But just for instance, the compensation that OPM would allot to

the different agencies would depend on the strength of the plan

that the agency puts forth, which to me is contrary to the whole

performance-based merit system that you are talking about for the

individual’s work because it wouldn’t have anything to do with the

individual’s work. It has got to do with the plan, the strength of

the plan that the agency comes forward with.
25

And you heard me ask the question to Mr. Walker about the

chief human capital officers, and I would be curious if you could get

back to us on what OPM has done for guidance, if you have been

involved at all with the guidance, and when you expect them to

come out.

Mr. BLAIR. We will be putting out further guidance on that. In

addition, the legislation calls for the council to be up and running

by May 24, I believe, and we are on schedule to meet that deadline.

Mrs. DAVIS. You are. As far as the SES goes, in our hearing last

week we heard testimony that they would prefer that—the SES

would prefer that we not do a one-band pay schedule, but they

would prefer to see something like a three-band. Is it the administration’s policy—do you believe that they would be looking at reducing the pay of some of the SES with that one——

Mr. BLAIR. Well, under the proposal as it is written, no member

of the SES would receive a reduction in pay the first year. And we

certainly are not about in our proposal stripping or taking away

current safeguards. We want to make sure that there are safeguards in place, and we believe that we can do so by regulation to

ensure against arbitrary and capricious behavior on the part of

agency managers.

But let’s remember the context in which this proposal is being

made. We are talking about pay compression, and we are talking

about giving significant raises to members of the Senior Executive

Service. The quid pro quo here is that the raises are going to be

based on performance and merit, and we need to tell it to the

American people that, yes, in order to justify these raises, we can

justify them based upon the good performance and that these executives are helping their agencies meet their critical mission

goals, and we think that is very important. It shouldn’t be acrossthe-board pay raises.

Mrs. DAVIS. Let me get to an issue that I don’t know if you can

answer or not, but on the monster.com website, there is a very interesting section on diversity and inclusion. It mentions that in

2001 women earned 76 percent of what men earned, according to

the Bureau of Labor Statistics. Further, it mentions that though

the gap has been closing, it is still a reality in the American workplace. This has been attributed to the fact that most women do not

negotiate their compensation, though they are better at negotiating

for others than they are for themselves.

Does the Federal sector have as abysmal a record as the private

sector in the pay gap area for women? And if not, has this been

indicated in the recruiting materials that are available to potential

hires, not just the equal opportunity information that you have to

give?

Mr. BLAIR. I believe GAO may have done some work on this

issue back in the late 1980’s and early 1990’s in looking at femaledominated occupations. I can’t exactly remember the work they did

in this area.

I do know that in the Federal Government we have an abundance of what we call internal equity within our system, and that

means that we look at the job and we pay the job according to not

who you are but on what you do. And so we can provide for the
26

record information on what the pay gap—if it exists in the Federal

Government, what that would be, and for possible reasons for that.

Mrs. DAVIS. I would like to see that diversity across the board,

not just women but diversity totally, because I do hear from folks

that we just don’t have enough in the Federal workforce, and I

haven’t seen any reports on it so I can’t speak to it.

Thank you, Mr. Chairman.

Senator VOINOVICH. Congressman Davis.

Mr. DANNY DAVIS. Thank you, Mr. Chairman.

Mr. Blair, you began your testimony with the good news that

there had been a decline in separation from what was projected 2

years ago. Has there been any effort to determine why this declination is occurring beyond the fact—I mean, you did mention that the

economy had been flat and that may have had some impact. But

has there been any effort to determine other factors that may have

attributed to this decline?

Mr. BLAIR. Well, I think we can look at the events of September

11 and people realizing the work that they were doing was important, and it contributed to the agency’s mission. We saw in the

human capital survey that overwhelming numbers, large numbers

of Federal employees believe that the work that they did contributed immensely to the work of their agencies.

So I think that is good news, and projecting retirement rates in

the future always has an element of chance to it. A flat economy

means that there aren’t the opportunities out there. However, the

flip side of that is that once the economy starts to become robust

again, are we going to find ourselves facing a huge retirement

wave? And one of the things we did also find out in our human capital survey is that we don’t do a good job in government of rewarding good performance. And so those are some of the things that we

are trying to change in government.

I think things have improved for the better over the last 2 years.

The attention that the House and Senate have paid to this issue,

the attention that GAO has paid to this issue, the President’s Management Agenda listing the strategic management of human capital as first on the list, I think all put together it spells good fortune for us.

That said, we have a long ways to go, and we are working hard

making sure that we have further improvements.

Mr. DANNY DAVIS. Mr. Walker in his testimony stated that OPM

plays a central role in helping agencies tackle the broad range of

human capital challenges. Are the agencies coming to OPM seeking

guidance and really asking for your assistance, help, and direction?

Mr. BLAIR. We are going out there and giving it. We recently restructured at the Office of Personnel Management, and effective

March 1, we have an OPM which is structured with the intent to

more effectively deliver our goods and services to our customers.

And we view chief among our customers as the agencies and departments that we serve.

We have a new division for Human Capital Leadership and Merit

System Accountability which is the driver of the President’s scorecard. At the same time, they are also the ones out advising agencies who are seeking help on better ways to effectively manage

their human capital.
27

Mr. DANNY DAVIS. So you are saying you are going out to them

more than they are coming to you?

Mr. BLAIR. We are going out to them and they are coming to us.

As a matter of fact, we have had requests in over the past year to

the Director from different agencies on specific HR issues, and we

have sent out strike forces to the agencies to help them address

those in terms of hiring or in terms of performance management.

And so it is a two-way street. We see the communications as improving, and that is what we are there for, is to help them improve,

to better improve their performance.

Mr. DANNY DAVIS. Does OPM have its own performance management system in place?

Mr. BLAIR. Yes, we do. We have a performance management system in which we evaluate our executives. In addition, I am the second-level review on a number of employees’ evaluations, and so employees are given their expectations at the beginning of the year;

mid-year, managers get back with them to tell how they are doing.

Keep in mind, however, that managers and supervisors and frontline employees are constantly in communication, and so if there is

a particular problem or a particular success, that may be followed

up in writing. In addition, at the end of the year, evaluations are

given at that time.

Mr. DANNY DAVIS. Let me just ask you, the administration indicated that it wanted to contract out 850,000 Federal employee jobs

and diminish collective bargaining in some instances.

Do you see this impacting one way or the other the ability to recruit the human capital that we need?

Mr. BLAIR. Well, I think to perform effective outsourcing, you are

going to need to have in place good contract managers. If you are

going to be involved in labor negotiations and labor relations, you

need to have people who are skilled in labor-management, skilled

in backgrounds associated with labor-management relations.

We are open for employment at the Federal Government. As far

as competitive sourcing is concerned, those are issues that are best

addressed by my colleagues at the Office of Management and Budget. However, I know that is being done pursuant to the FAIR Act,

which asks that agencies identify those jobs which are not inherently governmental. And so this is the atmosphere in which we are

operating, and I think that we are doing a good job. We are doing

a good job of making improvements, and we want to keep on that

track.

Mr. DANNY DAVIS. Thank you very much.

Senator VOINOVICH. Delegate Norton.

Ms. NORTON. Thank you very much, Mr. Chairman.

Mr. Blair, I need to know where you come down on the GAO testimony that we have just heard. You heard Mr. Walker—and I am

going to look directly now at his testimony and report—that he apparently agrees with the administration, and I am quoting from

him, ‘‘We must move beyond this outdated, one-size-fits-all approach to paying Federal employees,’’ etc.

Then he says, ‘‘However, agencies should be required to demonstrate to OPM’s satisfaction that they have modern, effective,

credible, and validated performance management systems before
28

being able to adopt broader pay-for-performance systems for nonSES personnel.’’

Now, do you agree that should also be the case for SES personnel

as he testified?

Mr. BLAIR. Well, we have performance management to a better

degree in the SES, but what the President proposes to do is to say

that future pay raises for the SES will be performance-based. Remember, the Senior Executive Service is comprised of approximately 7,000 individuals in a workforce of 1.8 million people. It

gives us a better laboratory, if you want to use a better word, so

to speak, in which we can really implement a pay-for-performance

system.

Ms. NORTON. But you agree there should be a validated system

of accountability before pay for performance?

Mr. BLAIR. I am not sure what we mean by ‘‘validated.’’ Is that

certified or——

Ms. NORTON. I asked him what ‘‘validated’’ meant. Were you

here when I asked him what ‘‘certified’’ meant? And he is going to

leave it to you, if you listened to him, to indicate what ‘‘certified’’

is. So if you don’t know what it means, that really makes me wonder whether or not we are going to be——

Mr. BLAIR. Well, that is why I wasn’t using those terms. Let me

just——

Ms. NORTON. What terms would you use, Mr. Blair?

Mr. BLAIR. Well, I would say that we can certainly develop within a regulatory scheme a performance management system which

can effectively guide agencies in the way that they evaluate and

compensate their Senior Executive Service.

Ms. NORTON. But you are using this system as a kind of demonstration project for the entire Federal workforce. You are seeing

if it works here, and then you are going to take as much of it as

you can and apply it to the Federal Civil Service System if you can.

Mr. BLAIR. Well, I would almost say—I would be stronger than

that in saying that if we can’t effectively do it for our senior executives, then it doesn’t bode well for the rest of the workforce in applying performance management principles.

Ms. NORTON. So it is a test case, it is your pilot project.

Mr. BLAIR. It is a foundation.

Ms. NORTON. Given the state of the Federal workforce today, my

colleague just indicated we had to fight—the Chairman has talked

about pay for parity, had to fight to get it in the last budget, the

retirements, the difficulties with recruitment. If you look at the

Civil Service Reform Act of 2003, in order of priority which do you

think should come first: Increasing the pay gap, dealing with the

pay range, or pay for performance?

Mr. BLAIR. I kind of feel like you are asking which of our children is our most favorite. It is——

Ms. NORTON. In other words, you regard them as of equal importance to do——

Mr. BLAIR. I think that they are all equal at this point. We want

to be able to work with the Committees in both the House and the

Senate to see that we can work towards these reforms. I am not

prepared at this point to identify a priority because things may

change in the next few months. But I think that it shows—the in-
29

troduction of this legislation at the hearing today and hopefully

continued progress on this front shows Congress’ continued commitment to improving the way that we effectively manage our

workforce.

Ms. NORTON. Well, one of the things you have to do is put yourself in the place of the workforce you are talking about, and if you

are talking about taking the pay cap off, before you even talk about

that, you are talking about giving increased pay to only a relatively

small number of people. One might want to consider the effects on

the workforce itself, not simply what——

Mr. BLAIR. Well, let’s remember the context in which that is

being proposed though: That executive pay has been linked to congressional pay over the years, and when Congress has denied itself

a pay raise, it has effectively capped the top rates for the SES. The

result has been over the years that the six levels have been compressed, and in a number of the localities around the country many

levels are being paid at the same rate despite varying degrees of

difficulty and responsibility.

That is the reason for the SES pay proposal, is to more effectively manage the SES through the use of pay, and by making

those distinctions.

Ms. NORTON. I can understand that, and, of course, that is a real

problem that we have to deal with, and I couldn’t agree with you

more.

I am going to ask you if you would write to the Chairman, considering your answer to me, on a certified performance management system, what the OPM regards as certification so we can be

clearer on validation and certification.

Mr. BLAIR. Certainly.

Ms. NORTON. Finally, let me just say, Madam Chairman, I am

on the Select Committee on Homeland Security, and I see you have

at page 13 of your testimony, I think quite appropriately, a discussion of what you are having to go through to design a new pay and

personnel system, as you say, to bring together the employees of

the 22 agencies that now make up the Department of Homeland

Security. I do not envy you.

Let me ask you, in light of that, wouldn’t you at least recommend

that you put off dealing with SES pay on top of all the pay problems you are going to have to deal with in bringing 22 agencies together. Do you think all of this should be taken on at one time plus

pay for performance in this new agency?

Mr. BLAIR. I think it is incredibly important that we take on the

two proposals that I mentioned, and we will meet all our statutory

obligations required under the Homeland Security Act.

We can’t allow other pressing issues to remain an excuse for the

status quo, and the status quo is that we, in the past year, have

awarded over $5 billion in an across-the-board pay adjustment of

which performance was not a component at all. I think that is inexcusable, and I don’t find a way to justify it. Neither does the administration. And so that is why we are proposing to move aggressively in incorporating pay-for-performance proposals across the

board. We would like to do it for the SES, and we would like to

do it by virtue of enactment of the Human Capital Performance

Fund.
30

At the same time, we are moving aggressively forward in meeting our responsibilities in homeland security. As I said, as we meet

today our design team is meeting at OPM in hammering out these

very important issues.

Ms. NORTON. Thank you, Madam Chairman.

Mr. BLAIR. Thank you.

Mrs. DAVIS. Mr. Van Hollen.

Mr. VAN HOLLEN. Thank you, Madam Chairman.

Just to follow up on this issue of to what extent the Executive

Branch is prepared to move forward with pay for performance in

terms of performance appraisal and evaluation systems, you single

out in your testimony two departments—the Department of Energy

and Department of Labor. Getting back to Congresswoman Norton’s question about validation, are those two performance systems

that you have evaluated them and you determined that they meet

whatever criteria you set forth? Is that right?

Mr. BLAIR. We have looked at the Department of Labor, and they

have done a good job at better linking performance expectations for

their managers to the strategic plans. This is really a follow-on to

the efforts that were first identified in the Government Performance and Results Act in which we asked agencies to identify their

mission goals and to evaluate how well they are doing it.

Really, the next step in this is to have that cascade down

through an agency and making agencies link their senior executives and have them link their goals to the overall agency mission

and strategies, and from there to carry that down to the front-line

agencies as well.

Mr. VAN HOLLEN. Right.

Mr. BLAIR. And to evaluate that, and that is what we would like

to do. That is our intent, and we see some agencies making

progress in that area, specifically the Department of Labor and the

Department of Energy.

Mr. VAN HOLLEN. OK. But as I understand it, you singled them

out really for that first part then, linking their agency mission with

different personnel decisions.

Mr. BLAIR. Exactly.

Mr. VAN HOLLEN. Not the next step, which is the individual performance pay appraisals. Is that right?

Mr. BLAIR. They appear to have done a good job of linking their

senior executives, but the front-line managers, they are still in the

process of doing that.

But remember that under the current system we don’t have incentives for agencies to do that, and we talked earlier about are we

putting the cart before the horse. Well, you need to put the carrot

before the horse in order to get the horse to move, and that is what

we are trying to do with the Human Capital Performance Fund.

Right now, if an agency doesn’t have an incentive, if there is no

incentive existing to have a robust performance management system, then why will agencies do it other than being told that they

have to do it? One of the best ways of incentivizing organizations

like this is to put real money with real results and real actions behind it, and that is what we are trying to do. Again, we didn’t jettison the current pay structure for Federal employees. The General

Schedule remains in place. Step increases remain in place. Given
31

that, however, we are saying if you possess skills of immense value

to your agency, if you perform admirably at your job in a superior

fashion, the current structure of classification doesn’t allow you to

move from a GS–14 to a GS–15 because what you are doing is still

at the skills level of a GS–14, but you are doing it in a very exemplary way, why don’t we reward you? And our current system

doesn’t allow us that flexibility. The Human Capital Performance

Fund would.

Mr. VAN HOLLEN. Let me just follow up, Mr. Chairman, then I

will finish. It seems to me we would want to have at least in place

the performance criteria for everyone to look at, to become comfortable with before you take the next step, which is to make the

linkage between the pay, and I think you said that it is a terrible

thing we haven’t moved in this direction, but it seems to me the

administration has a lot of flexibility and leeway to do a lot of this

on its own without passing legislation. If you wouldn’t mind, if the

Chairman wouldn’t mind requesting, I would be very interested in

you providing the Committee information as to what performance

criteria the Department of Labor and the Department of Energy

have in place that you think provide a model, as I understand it,

for the rest of the Federal agencies.

Mr. BLAIR. We will be happy to provide that.

Mr. VAN HOLLEN. I would be very interested in seeing that, if

you wouldn’t mind, Mr. Chairman. That is all. Thank you.

Mr. BLAIR. Thank you.

Senator VOINOVICH. Mr. Blair, you, I think, heard from all of us

that there is a little skepticism about going forward with pay for

performance, and I think that it would be wise for you to carry that

message back. In fact, I am going to be sending a letter off or calling Kay and talking to her about this. Unless there is some major

effort made to identify next steps and a more complete plan, this

is not going to happen this year. I hope that came across to you,

and I know that you have got this goal in mind, but we don’t think

agencies are ready. And I think at this stage of the game it would

be good to drop back and put together what the plan is. Even for

the Senior Executive Service, there is some issue about whether or

not they have a verifiable system in place. What are there, 8,000

or 9,000 members in the Senior Executive Service?

Mr. BLAIR. Roughly 7,000.

Senator VOINOVICH. Yes, that they in some instances in some of

those agencies there are not real pay-for-performance systems in

place. So it is a question of identifying agencies that are ready.

Maybe we need to conduct some demonstration projects on this. If

you feel that the Department of Labor and some others have a good

system in place and they are ready to do this, perhaps those could

be appropriate demonstration projects. That is just a little humble

recommendation that you ought to fall back and regroup the troops

on this and maybe come back with a different proposal.

Mr. BLAIR. Well, I want to emphasize that our concern is that we

don’t maintain the status quo, that the status quo is unacceptable

in terms of awarding $5 billion in pay raises, none of which are

performance-based, or that you have your top executives all making

the same amount of money and you can’t use your most strategic

tool, which is pay, in order to recognize differentiations in perform-
32

ance levels. I think we are all on the same scorecard—not scorecard—song sheet there, and we will work with you. But I can’t

overemphasize that we think that more progress needs to be made

on the human capital front. I know that you agree with us on that,

and that we want to begin taking the next steps of incorporating

performance as a key element in the way we pay our employees.

Senator VOINOVICH. Well, one of the provisions of the bills that

we have creates broadbanding of the Senior Executive Service

which would provide a lot more flexibility and enhance the whole

concept of pay for performance. But I think the worst thing that

could happen is to get started with this thing, and then have it become a disaster to which everybody points and says, ‘‘I told you so,

it wouldn’t work.’’ For those of us that have been through the

mill—and I have on a couple of occasions as mayor and governor—

this is something you really have to spend a lot of time on to do

it right.

Thank you very much for coming here today.

Mr. BLAIR. Well, thank you, sir.

Mrs. DAVIS. Mr. Chairman.

Senator VOINOVICH. Yes, I am sorry.

Mrs. DAVIS. I would just like to make a comment. Being a

horsewoman myself, if you give that horse the carrot and you don’t

hook the cart up properly, you have a problem. [Laughter.]

Senator VOINOVICH. OK. Thank you very much.

Mr. BLAIR. Thank you very much.

Senator VOINOVICH. Our third panel of witnesses is composed of

four individuals who represent the interests of Federal employees

at a variety of levels. During the past few years, I have worked

closely with these and other Federal employee groups to ensure

that their voices are heard in the debate over personnel reform.

During my 18 years as Mayor of Cleveland and Governor of Ohio,

I developed a firm belief that in order to have reform truly take

root in any organization, the front-line employees must be involved

in the decisionmaking process. This kind of employee empowerment is essential at the Federal level as well.

Our witnesses are Bobby Harnage, National President of the

American Federation of Government Employees; Ms. Colleen

Kelley, President, National Treasury Employees Union; Ms. Carol

Bonosaro, President of the Senior Executives Association; and Ms.

Karen Heiser, Treasurer, Chapter 88, of the Federal Managers Association.

We are pleased to have all of you here today. I think you have

all been here to hear the other witnesses’ testimony, and my feeling is that, in terms of pay for performance, we have really given

it a whole lot of attention. If in your testimony you want to mention it, that’s fine, but I sure would like to hear what you think

about these three pieces of legislation that we have introduced, because we have pretty much spent all of our time on pay for performance.

I will now call on Bobby Harnage. Bobby, we are glad to have

you here with us today.
33

1The prepared statement of Mr. Harnage appears in the Appendix on page 113.

TESTIMONY OF BOBBY L. HARNAGE, SR.,1 NATIONAL PRESIDENT, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES

Mr. HARNAGE. Thank you. It is my pleasure. I appreciate the invitation. On behalf of the more than 600,000 Federal employees

represented by AFGE, I thank you for the opportunity to testify

today.

I will focus my remarks on two items. The written testimony, as

it goes quite in detail on your question, so I will deal with two

items, the provisions of the bills providing various expansions and

managerial authorities, and the larger issue of how to resolve the

government human capital crisis.

Federal employees will view these legislative proposals from the

vantage point of a workforce under siege. The administration is

pursuing an aggressive policy of mandatory privatization quotas

aimed at up to 850,000 jobs. It is not only ignored but constantly

criticized for principles of comparability that is supposed to go in

Federal pay. It has tried to define the traditional civilian/military

pay parity three times at the same time that it has reintroduced

big bonuses for political appointees and proposed letting management spend 20 percent of the meager amount set aside for salary

adjustments any way it wants.

The administration has stripped various Federal workers of their

collective bargaining rights, and insisted on taking away five chapters of Title 5 from the law that covers Homeland Security. Finally,

they have questioned the patriotism, loyalty, and love of country of

the members of my union. Will the authority to pay slightly bigger

recruitment and retention bonuses to a few lucky employees and

embark on a huge demonstration project undo these unmistakable

messages of hostility and encourage new people to come build a career at Federal agencies? Not likely.

Allowing larger bonuses and demos and streamlined critical pay

is not objectionable unless one considers the proposals in the context of either solving the self-inflicted human capital crisis or the

more pressing needs of Federal employees and agencies. We believe

that the financial incentives for recruitment and retention in the

legislation are at best incomplete and at worst misplaced. Salaries

are too low, not just for prospective employees or for employees

who threaten to leave if they do not get a bonus. Salaries are too

low for all Federal employees.

There is a law on the books that will solve the pay problem. It

merely has to be enforced and funded. FEPCA, passed just over a

decade ago, introduced a very long list of pay flexibilities—and I

list those in my testimony—in spite of the insistence of today’s

would-be reformers that it is a rigid or inflexible system. Indeed,

FEPCA introduced the existing recruitment and retention bonus

authority that has almost never been used because it has never

been funded. The legislation also takes the limits off the number

of workers covered by demos. AFGE strongly opposed this measure.

It effectively allows entire agencies to be under alternative to Title

5. It has taken away congressional right to approve such changes.

It also undermines the very idea of demos, since without limits on
34

1The prepared statement of Ms. Kelley appears in the Appendix on page 144.

the number of workers they cover, there will not be an adequate

baseline against which to compare the outcome of the demos.

We support the provisions of the legislation that provide training

for managers and other employees. We applaud the recognition

that failure to deal with poor performers is not a matter of any absence of authority, but rather a problem of either reluctance or

poor training. Further, it recognizes dealing with poor performers

as a management problem and a discipline problem, not a pay system problem.

It is well known that DOD is shopping legislation that will allow

it to waiver parts of Title 5 and impose a pay-for-performance system on its workforce. They are eager to get these authorities before

the outcome of the grand experiment at DHS is done. Federal

employees recognize these efforts as hostile to their interest and

understand that DOD pay-for-performance schemes will require

substantial financial sacrifice for them and their families. The government human capital crisis is not like the weather. It did not

just happen. It was a result of misguided policies, and a reversal

of those policies is what is necessary to solve it.

To that end, AFGE recommends the following: Require full funding and implementation of FEPCA’s comparability provisions as a

trigger for the exercise of the expanded bonus authority in the proposed legislation; enact legislation that would put an end to privatization quotas that would guarantee Federal employees the chance

to compete in defense of their jobs, and that would prohibit OMB’s

controversial rewrite of A–76 to go forward; pass legislation already

introduced in the House and the Senate to improve the funding formula for Federal employees’ health insurance; resist the temptation to jump onto anti-employee pay-for-performance bandwagon

whether for DOD, DHS, or any other Federal agencies or department. Pay for performance is a recipe for mismanagement, discord

and discrimination, and will undermine the merit system principles.

This concludes my testimony, and I would be glad to answer any

questions you might have.

Senator VOINOVICH. Thank you. Ms. Kelley.

TESTIMONY OF COLLEEN M. KELLEY,1 NATIONAL PRESIDENT,

NATIONAL TREASURY EMPLOYEES UNION

Ms. KELLEY. Thank you, Chairman Voinovich, Chairwoman

Davis and Members. On behalf of the 150,000 Federal employees

represented by NTEU, I appreciate the opportunity to appear before you today.

The message often received by today’s workforce is that they are

not valued. Many believe their pay is inadequate, but they do not

see a fair pay setting process on the horizon. Based on experience,

they believe their agencies will not receive sufficient funding for

training. They also know that on any day their jobs may be contracted out from under them. It is no wonder the government has

a hard time recruiting and retaining employees.

Although the fiscal year 2003 Federal pay raise was recently settled, it came only after a very long and public fight that again sent
35

the wrong message to the Federal workforce. Today is April 8,

2003, and the full 4.1 percent pay raise that employees should have

received in January has still not arrived in Federal employee paychecks. There is no question again as to what message this sends.

In its 2004 budget, the administration continues to show a lack

of concern for what failure to properly compensate public employees means for the future of public service. Ignoring bipartisan calls

for pay parity, the administration recommended a 2 percent Federal pay raise. The message again that this sends to civilian employees, even to those on the front lines of securing our Nation’s

borders, is that their work is not as important, not as valued, and

not as vital as that of their military counterparts. Instead of pay parity, the administration proposes a $500 million

human capital performance fund. Funding for this gimmick comes

at the expense of the 2004 Federal pay raise, and would give managers unfettered discretion to give incentive pay to a fraction of the

Federal workforce. Benefits, too, are key to the government’s ability

to attract and retain the workforce.

The Federal health program is in crisis. This year’s 11 percent

premium increase marked the fifth year in a row of steep rate increases. Many employees have been forced to give up their health

insurance and those considering employment with the Federal Government are turned off. Private sector employees continue to pay

on average less for their health insurance in terms of percent of

premium and in terms of cost.

Employee training is another critical piece of the pie. Unrealistic

funding levels have restricted the ability of agencies to adequately

train their employees to perform their missions effectively. Without

proper training everyone loses. Customers do not receive the best

service and employees do not find their work rewarding or challenging.

The administration’s march to contract out 850,000 Federal jobs

through arbitrary quotas is another disincentive to Federal employment. One-size-fits-all quotas are being forced down agencies’

throats without thought to their impact on the government’s ability

to recruit and retain employees. Employees have told me that the

message their agencies convey is this: We may hire you; we may

train you; we may even promote you; but when it comes time to

meet our contracting out quotas, we may eliminate your job in

order to meet our targets. These blind quotas erode the morale of

the Federal workforce and disrupt agency operations.

With regard to S. 129, the Federal Workforce Flexibility Act of

2003, NTEU is not opposed to the use of demonstration projects.

We believe, however, that the collective bargaining process must be

used to ensure that both management and employees understand

the nature of the project and are committed to its success. The legislation also proposes the expanded use of bonuses. Expanding the

availability of these incentives makes little sense without the resources to accomplish the goal, and, NTEU has concern about expanding critical pay authority. NTEU believes that properly compensating the Federal workforce would make further critical pay

authority unnecessary.

We welcome provisions drawing attention to the government’s

need to properly train its employees. Again, however, the bill does
36

1The prepared statement of Ms. Bonosaro with attachments appears in the Appendix on page

155.

not address the resource problems that have prevented agencies

from providing training to their employees. Proposals to enhance

annual leave for certain new Federal employees need further review. If Congress believes that annual leave limits are a barrier to

hiring, then the system should be reformed for all employees.

In summary, NTEU thinks the messages we must send employees are these. We want you to come to work for the Federal Government. We want you to be successful. We want to appropriately

compensate you for what you do. We value what you do every day

for the American public, and we want to treat you with the dignity

and the respect that you deserve. I, and all of NTEU look forward

to working with all of you in the House and the Senate toward this

end.

I thank you again for the opportunity to appear today, and would

be glad to answer any questions you might have.

Senator VOINOVICH. Thank you. Ms. Bonosaro.

TESTIMONY OF CAROL A. BONOSARO,1 PRESIDENT, SENIOR

EXECUTIVES ASSOCIATION

Ms. BONOSARO. The Senior Executives Association appreciates

both the invitation to testify and the Subcommittee’s interest in

and concern for Federal human capital management. We are especially grateful to Senator Voinovich and Representative Tom Davis

for their legislative efforts to address civil service issues, both in

this and the last session.

We welcome the proposal contained in the President’s budget

with regard to SES compensation because this is the first time in

10 years that an administration has addressed this issue. That proposal and the Senators’ bill can alleviate pay compression which

has reached the point, as you know, where 70 percent of all career

executives are now paid the same. We look forward to resolving

this issue indeed after many years of effort.

What we seek, however, with regard to executive pay, is stability,

so we need not keep returning to this issue as we have over 20

years, and due process rights for career executives to ensure that

the merit system is protected. Thus we recommend some tweaking,

if you will, to ensure that the administration’s and the Senators’

proposals meet these objections. I think particularly because of the

view of the SES as a proving ground, it is especially important that

we maximize the possibility, the likelihood of success of pay for performance, and minimize the possibility of, for example, politicizing

the career executive corps. The safeguards must be in the statute,

not just in regulations.

Specifically we recommend that you eliminate the cap on locality

pay so that executives can receive the full locality pay adjustments

and we prevent further pay compression based upon the new locality cap; that you reform the Homeland Security Act language which

calls for certified performance systems so that only OPM and not

OMB promulgate the implementing regulations; that once certified,

certifications cannot be removed for a 4-year period; that if an

agency loses its certification, pay that was set while the system
37

was certified will not be reduced; and the certified system cannot

force a distribution of performance ratings. I think that is especially important. It is only fair that each individual executive be

evaluated on his or her merits and accomplishments, and not on

the basis of some normal curve.

We recommend that you include all bonuses and awards for executives in the high-3 computation for retirement annuities, thus

creating a true pay-for-performance system; provide that SES and

all equivalent executives automatically receive the same annual increase to base pay that the General Schedule receives each year regardless of the cap. Such annual increases should not be at the sole

discretion of supervisors. Raise the base pay cap each year by the

amount of the annual comparability increase, irrespective of what

Congress does for its own pay or that of the Executive Schedule;

replace the wide proposed SES pay range with three overlapping

pay bands; the lowest base pay within band one would be the current minimum for ES–1, an amount sufficient to give a reasonable

pay raise to a GS–15/10 promoted into the SES. And executives

would receive promotions to pay bands two and three based on

demonstrated capabilities, attained executive experience and level

of responsibility. Pay band three would be set so that its highest

base salary is Executive Schedule 3.

Finally, we would like you to require the following safeguards on

SES pay: Establish a minimum pay increase of at least 5 percent

for those promoted from the General Schedule into the SES—that

would then become the executive salary floor; provide executives

denied a salary increase for performance reasons the opportunity

to appeal to their agency Performance Review Board under the

same process used currently for appealing performance appraisals—the boards would be required to have a majority of career

members; limit any reduction in pay within a pay band only to reasons related to conduct or performance, and to an amount not more

than 3 percent of base pay in any calendar year; provide executives

the opportunity to appeal pay reductions based upon performance

to the agency’s Performance Review Board, and those based upon

conduct to the MSPB; finally, provide an executive who is demoted

to a lower pay band the right to an MSPB appeal.

Even with these recommendations, however, we have one overriding concern. That is, if agencies have total flexibility to set base

pay, pay rates may inevitably be influenced by budgetary considerations, namely insufficient funds for appropriate raises. FAA executives have already experienced that situation. In tight budget times

their performance based system has not been funded and awards

not paid, while annual increases in awards remain funded for

lower-level employees. What will you do to ensure that result is not

repeated across the entire Senior Executive Service corps?

In closing, we hope to work with the Subcommittees and the administration to implement these recommendations. We surveyed

our members about the administration proposal and provided the

Subcommittee with a compilation of those comments which I will

appreciate being placed in the record along with my full state-
38

1The survey referred to appears as Attachment II of Ms. Bonosaro’s prepared statement in

the Appendix on page 172. 2The prepared statement of Ms. Heiser appears in the Appendix on page 190.

ment.1 Those observations from the government’s highest ranking

career employees express substantial concerns with regard to the

administration’s proposal, concerns which we think can be addressed with the reasonable changes we recommend.

And finally, we also hope to work with the Subcommittees for

full consideration of our other proposals which are detailed in my

full testimony. Thank you.

Senator VOINOVICH. Thank you very much for being here. Ms.

Heiser.

TESTIMONY OF KAREN HEISER,2 TREASURER, CHAPTER 88,

FEDERAL MANAGERS ASSOCIATION

Ms. HEISER. Thank you, sir. Chairman Voinovich, Chairwoman

Davis, Members of the Subcommittees, my name is Karen Heiser.

On behalf of the 200,000 managers and supervisors in the Federal

Government whose interests are represented by the Federal Mangers Association, thank you for inviting us to present our views at

this very important joint hearing regarding the human capital

challenges facing the Federal Government.

I am currently the Organizational Development Manager at

Watervliet Arsenal in New York, the U.S. Department of the Army.

My statements are my own in my capacity as a member of FMA,

and do not represent the official views of the Department of Defense or the Army.

The inability to make public sector more attractive has made it

increasingly hard for the Federal Government to recruit and retain

the high-caliber workers it needs to sustain a strong civil service.

One such deterrent is the scrutiny of Federal functions and the

lack thereof for contractor work. While previous administrations

have taken credit for creating the smallest Federal Government,

the illusive nature of the government’s less visible and less accountable shadow workforce of contractors makes it nearly impossible for policy makers to know if the current course of downsizing

and contracting out is in the Nation’s best interest.

The General Accounting Office listed strategic human capital

management across government to its list of ‘‘high-risk’’ areas over

2 years ago. In a recent update GAO noted ‘‘Importantly, although

strategic human capital management remains high risk governmentwide, Federal employees are not the problem.’’

As part of legislation creating the Department of Homeland Security, several positive reforms were enacted governmentwide that

will help agency recruitment and retention efforts while highlighting the critical nature of human capital planning. On behalf

of FMA, I would like to thank you, Chairman Voinovich in particular, for your hard work on the inclusion of these important provisions.

Two specific notes of concern to FMA. It is worth noting that the

provision to provide Federal employees compensatory time off for

official travel was left out of the final bill. OPM regulations do not

permit comp time for credit hours unless travel occurs during

working hours. Given that most meetings are scheduled during
39

work hours, and travel to and from those meetings often takes

place outside working hours, FMA asks for reconsideration of this

provision.

Another issue of particular concern to FMA is the current statutory cap on overtime pay for managers. Between 1994 and 2001 the

nonpostal Executive Branch civilian workforce was reduced by

more than 452,000 positions. Much of the reduction was arbitrary

and not related to workload. One result of this is overtime. The

current cap is outdated and serves as a disincentive to potential

and current managers, as those above GS–12, Step 6 are paid less

for overtime than for regular work hours, and managers and supervisors often earn less on overtime than the employees they are supervising.

Mr. Chairman and Madam Chairman, you have introduced legislation that would allow managers to use a variety of compensation

tools such as recruitment, relocation and retention bonuses, and

give agencies streamlined critical pay authority to fill key positions.

These are sensible reforms that would begin to address the workforce problems that will only worsen with the forthcoming retirement wave. As an expansion of the direct hiring authority granted

to agencies, FMA recommends that full-time equivalent ceilings be

made more flexible for agencies to fill highly-needed positions without the burden of arbitrary FTE caps.

Student-loan repayment has long been identified as a recruitment and retention bonus that would help attract and retain high

performing employees. FMA would like to see this benefit also extended to those seeking graduate degrees. The ‘‘GOFEDS’’ legislation would increase the student loan forgiveness benefit by relieving Federal employees of the obligation to pay income tax on the

money provided by their agency. Thank you again, Mr. Chairman,

for your leadership in introducing this bill.

In terms of managing this new approach to human capital, whatever it looks like in its finished version, the numbers and roles of

Federal human resources professionals needs to be assessed. Additional training may be necessary to prepare these HR experts to

chart future human resources needs and steer personnel and funding accordingly. Often times, however, agencies do not have adequate funding for such incentives, even those that currently exist.

Annual appropriations should include additional line items for recruitment and training. The public sector should ‘‘walk the talk’’ in

appreciating that the most valuable organizational asset is the

workforce itself, and in recognizing that ‘‘you get what you pay for.’’

Agencies must also be prepared to invest in their employees by

offering skill training throughout their career. FMA has long recognized the need to prepare career-minded Federal employees for the

demand of the 21st Century workplace through its establishment

of the Federal Management Institute, FMA’s educational arm

which sponsors valuable professional development seminars and

workshops. FMA recently teamed with Management Concepts to

offer the Federal Managers Practicum, a professional certificate

program designed for Federal managers, and as the official development program for FMA, the Practicum helps managers develop

critical skills and enhance their capabilities.
40

History has shown that training dollars have been a low priority

in many agency budgets. In fact, in the rare event that training is

available, those monies are often usurped to pay for other agency

priorities. Toward the end of reversing this ideology, FMA supports

including a separate line item for training and agency budgets, to

allow Congress to better identify the allocation of annual training

funds.

The Federal Government must once and for all take the issue of

continuous learning seriously. There needs to be a developmental

component for every position to facilitate performance management

and effective succession planning. For agencies to perform at optimum levels, employees must have clearly defined performance

standards. These standards should be directly linked to the agency’s mission, customer service goals, and its annual performance

plan and/or strategic plan. FMA supports implementing a more

comprehensive governmentwide appraisal system, with a pay-forperformance component. Any system adopted must be rooted in

long-held merit principles and should not be used to undercut fair

and appropriate annual increases for Federal employees.

In conclusion, ‘‘do more with less’’ when less has been based on

numbers and not efficiency has eroded the remaining employees’

morale and dedication, and the reputation of the Federal Government as an employer. And again, simply put, there are fundamental services that should be deemed core to the government.

While calls are heard daily to further examine the performance of

employees of the Federal Government, there continues to be silence

in response to suggestions that the same level of oversight be focused on its contractors.

Government leaders must now take the side of the Federal employee.

Senator VOINOVICH. Your time is up, Ms. Heiser.

Ms. HEISER. Thank you, sir. I will be available for questions if

you wish.

Senator VOINOVICH. Thank you.

Have we made any progress? Most of you talked about FEPCA

and outsourcing. The administration has announced its goal of

850,000 jobs for public-private competition, and I suspect that a figure was arrived at by taking the percentages that were originally

announced. I was under the impression that there had been some

backing off from those percentages, and that the secretaries of the

departments were basically told that they ought to shape their

workforce without first looking to competition.

Health insurance is another issue that we have talked about.

From my observations of the private sector, the cost for employees

has gone up a lot more because the Nation’s whole health insurance system is out of control. That is a whole other subject, that

the system is not working. I know in my State, when we went to

HMOs and to another system, we reduced the employee contribution from 12 to 10, and now the governor’s talking about increasing

it to 20. So that is going on around the country.

The impression that I get is some of the things in this legislation

you think are good, but you are kind of reluctant to be supportive

of some of it because of what you perceive the administration’s atti-
41

tude is toward Federal employees. Is that it in a nutshell? Does

anybody want to comment on that?

Ms. KELLEY. I thought it interesting, sir, that Mr. Blair——

Senator VOINOVICH. What things do you think that they could do

rapidly to—besides having honest to goodness dialogue with you on

the new Homeland Security Department—help create an environment where you might be more supportive of some of this legislation.

Ms. KELLEY. Well, that would be a good start, and we would welcome the conversation on Homeland Security. But in addition to

that, fully funding pay raises, proposing an appropriate pay raise

for civilian employees. Just right out of the box that would send a

very different message than what has been received recently.

The issue around the human resource performance fund and regardless of what they say, that money is money that can and

should have been part of the civilian pay raise that was proposed

for January 2004, and the idea that for a change, funding is being

provided for a flexibility like this, because that of course is usually

the issue, the flexibilities are provided but no funding. So this time

the funding is provided at the expense of the civilian workforce and

with no criteria or rules around how that money will be distributed.

One of the things that amazes me is they say they need this to

reward performance for those who are performing above the acceptable level. They have a lot of other processes in place to do that,

that are not used today, one of which is high quality increases or

quality step increases, whatever you call them in your agency,

HQIs or QSIs. These are raises that every agency has the authority

to use. They do not need legislation to do it. They can give these

to as many or as few employees as are meeting the criteria, and

most agencies are not even using them at the average rate they are

being used average across the government, which I understand

now is at between 4 and 5 percent of the workforce. And the agencies that NTEU works with, we are working with them to try to

get them up to the 4 and 5 percent range.

So they have this tool, and they do not use it, and I have never

heard them say it is because it is not funded, although I guess they

could say that. But now to see this human resource performance

fund created with no rules, and to have money just being able to

be delivered by managers with no criteria, no credible performance

appraisal system, no infrastructure, no nothing, really adds insult

to injury, when regardless of what they say, it was at the expense

of the proposed January 1 pay raise.

Senator VOINOVICH. Carol, you commented that the legislation

would address the problem of SES pay compression.

Ms. BONOSARO. Well, with the kinds of recommendations we

have made as safeguards, we would be, obviously, a lot more comfortable with it. As the administration has noted it would not deal

with compression suffered by every executive within the current

system, which did not occur because of performance, but rather because of congressional freezes, nonetheless, we are prepared to support that, provided those safeguards are indeed part of it.

Senator VOINOVICH. Do you believe that from your observation

over the years, there are adequate, credible performance evaluation
42

systems across the board? On a scale of 1 to 10, if you looked at

them for the 7,000 SES employees, where would you say agencies

stand in terms of having adequate performance evaluation systems

in place?

Ms. BONOSARO. I would point a couple of things out, I suppose.

First, there are a lot of differences across agencies that we are familiar with. That the IRS has gone through the most elaborate

process of trying to develop something that is very clear, that relates to levels of responsibility, levels of effort, and that is shared

up front with their executives, so they know in the end what they

have to do vis-a-vis the bonus system, which is part of SES compensation right now. I understand other agencies, such as VA, for

example, have gone through a fair amount of work with regard to

their performance systems.

On the other hand we do have just a couple of levels within some

of the agency performance management systems, and their appraisals and rating levels are not automatic indicators of how bonuses

will be paid. There are separate systems in place.

So it is very different across government, and I think it is very

hard to come down and give you a precise answer about where we

stand.

Senator VOINOVICH. It would be interesting for me if you would

contact your membership at various agencies and provide me with

their opinions about where they think agencies stand in terms of

managing performance evaluations.

Ms. BONOSARO. We will be happy to do that. We will do a quick

survey and turn that around and get that back to you.

Senator VOINOVICH. Thank you. Congresswoman Davis.

Mrs. DAVIS. Ms. Bonosaro, you stated in your written statement

I think that you would not support a certified performance appraisal system as a condition for increasing the salary caps unless

the bonuses and awards were made a part of the annuity computation, and that without this treatment of the bonuses and awards

it would not be, ‘‘true pay for performance compensation system.’’

Since awards and bonuses have never been made a part of the retirement computation for employees in or out of the general schedule, why do you believe so strongly that they must be included in

the retirement pay to go to pay for performance?

Ms. BONOSARO. We are now placing base pay in the situation

that bonuses and awards were previously, in saying it is not going

to be automatic that you are going to have an annual adjustment

each year. Adjustments have not been automatic in any event,

given the caps within the SES, as we know. Their base pay will be

at jeopardy and therefore, arguably, I think it is reasonable to say

that the work that folks do that enables them to in fact go even

beyond that and earn bonuses and awards, would demonstrate that

we are really taking the performance business seriously and it will

have real meaning to you, and not just in terms of this year, but

in terms of your annuity.

Mrs. DAVIS. You also said in your testimony that the regulations

on the pay-for-performance process must not come from OMB but

must come from OPM. I was just curious what the reasoning is behind this, because do you believe that the President should not

have any control in his administration? If you are concerned about
43

political influence at OMB, I think you would probably have the

same thing at OPM. So I am just curious as to why.

Ms. BONOSARO. Yes, we are concerned about that, to be frank.

But on the other hand, OPM has certainly got the personnel expertise, and we think they should be left to that job. Certainly the

President has exercised authority up until now, it is true, with regard to the pay rates for the SES. But in any event, we think that

this is a function that appropriately belongs to OPM and should

stay there.

Mrs. DAVIS. Just another quick one, and your testimony led me

to a few questions. That is why I am coming to you with so much.

You said that if we put this appraisal system, if it is approved, that

it needs to be in there for 4 years regardless? I think I heard you

right on that. So what if OPM comes back and says that the agency

is not implementing it correctly, there is problems. Does that mean

that OPM, that we are stuck for 4 years and nothing can be

changed?

Ms. BONOSARO. What we are concerned about, I think obviously

there is the opportunity for OPM to go to the agency, and given the

fact that you have presidential appointees in that agency as well

as OPM, presumably they should have some influence to get the

system running properly. But in any event, what we are concerned

about is that an agency might be viewed as having given too many

outstanding ratings in a given year, and see their certification

evaporate for that reason alone, to be frank.

Our primary concern is that each executive be indeed judged on

his or her merits, and that we do not have that kind of driver. So

our view is also that, with the 4 years, that might span administrations from time to time as well.

Mrs. DAVIS. Thank you. I am going to go to my colleague. Ms.

Norton.

Ms. NORTON. Thank you very much, Madam Chairman.

I think listening certainly to the GAO and to your testimony, and

especially reading it closely, that we should put aside any notion

that the employee organizations are simply opposed to any change.

Indeed, many of the employee organizations have raised the issue

of a human capital crisis generally in the workforce with retirements and early retirements, with problems in recruitment, quite

apart from the clear problems with the existing workforce and its

own anxieties.

I think the problem we are faced with is how to use an approach

that avoids worsening a problem we are trying to fix, and perhaps

doing what successful reform generally requires, and that is looking at a win-win approach. The reason I asked Mr. Blair, for example, whether he saw any order of priority in the SES 2003 act, was

because I was looking for some sensitivity that employees would be

looking perhaps at one part of the act and maybe management,

meaning the administration, at another part of the act, and maybe

if you looked at both of them you could develop a win-win approach. But instead he said, well they are all the same and they

have equal priority.

We just heard testimony from Ms. Bonosaro, for example, that

there is great concern, as anyone would expect, in pay compression,

the pay cap. But clearly the administration’s priority is pay for per-
44

formance. One begins to wonder if you can get what you want if

you do not look at what this huge workforce wants and try to find

some way to get a win-win.

I am looking at your testimony. Sometimes they are rather small

things. Sometimes they are clearly larger things. For example,

Chairman Voinovich mentioned health insurance. One begins to

wonder if in fact there was some movement on what is a critical

problem, which is the increasing amount of one’s pay in effect that

goes to health insurance, whether or not the workforce would be

more open to changes that the administration may want. Or they

can be smaller problems. He mentioned that one. It can be things

that may seem smaller such as the one that was just discussed,

OMB as the agency that looks at pay for performance, and not

OPM. Well, any Federal worker will tell you that is a big no-no.

OMB is a White House agency, is a political agency. OPM comes

out of the old civil service system, and its job is to look at everything in light of merit principles.

So if you are trying to find some way to ease the anxieties of the

workforce, after all you have appointed the OPM Director just as

much as you have appointed the OMB Director, there is administration policy. One might look, if you are looking for a win-win, at

the agency whose job it is to put into play something that is a complete departure, and break away in the merit system which is pay

for performance. I am just trying to go off of your testimony. Now

I am looking at Mr. Harnage’s testimony.

Says on page 4, ‘‘Does not find the provisions highly objectionable

in and of themselves,’’ and then goes on to say, ‘‘unless one considers them in the context of far more pressing needs of Federal

employees and agencies, again, a suggestion that there may be

some way to make these proposals less objectionable if they are too

objectionable.’’ I have already indicated to Mr. Walker, that all you

are going to get is a blizzard of grievances and court suits and the

rest, so what have you accomplished with all of the lowered, with

all of the problems that brings for employees and for employers.

So I am looking at Ms. Kelley’s testimony in which she says that

the NTEU is not opposed to the use of demonstration projects, and

in fact, continues to believe that demonstration projects are a valuable method of experimenting with new pay and work arrangements. Again, it looks like we are not dealing with black and white

here, but we are dealing with something that says, hey, in order

to do particularly massive reform, you have got to look at all the

parties and they all have to think they are getting something out

of it. Or let’s take the problem of new employees, where your testimony indicates that you have difficulty with these new employees

getting all of these bonuses, all of these incentives, while employees

who have been waiting in line do not get anything.

There has been testimony here about training and the failure to

offer training. If existing employees thought they were getting

training, even as one was trying to deal with the fact that 40 percent of the government can retire in 5 years, maybe one could come

to some kind of understanding that everybody is getting something

out of personnel reform and even pay for performance.

I must say for the record, about the last way I would begin pay

for performance is giving $25,000 bonuses to political appointees.
45

It is all down hill from there. You have to begin from the ground

up. People who are political employees, they come at lower pay

than they may get in the private sector, but then they leverage

that to humongous pay within a year or two.

So I guess my question really goes to approach.

Mrs. DAVIS. Ms. Norton’s time has expired about 21⁄2 minutes

ago.

Ms. NORTON. Yes, but other people went over their time, Madam

Chairman, and I would like an answer. I finished my question. My

question was not a series of small questions about this and that.

I am looking for an approach that gets us to something other than

what we have here, which is apples and oranges, and nobody is

going to eat them together. So I would like to know whether there

is an approach that can bring you together with the administration, that focuses on win-win.

Ms. BONOSARO. I would like to respond to that just because it

also will enable me to follow up on something Mrs. Davis asked.

I think you are quite right, and I was reminded as you were talking of the start of the Senior Executive Service, when those of us

who were in the old Super Grade system were enticed in, if you

will, because the SES was a system that, while it indeed had far

greater risk than the system we were in, also carried the potential

for a greater reward. And that is the reason why we are suggesting, for example, if you are going to eliminate all the ranks

within the SES and really change the structure and create pay

bands, let us entice in folks and say, but gee whiz, there is going

to be an additional reward, and that is that the bonuses, the

awards you get, can count towards your high-3, for example.

If we are going to move in to the pay-for-performance system, let

us at least adopt the kind of safeguards that we have talked about

so that people can feel more assured that merit principles indeed

will still apply. So I think there is a way to have a win-win.

Mrs. DAVIS. If the others would like to respond?

Mr. HARNAGE. Yes. I have not had the opportunity to read Carol’s entire statement, but her oral statement, I certainly think we

can embrace. There are three matters that Chairman Voinovich

touched on that I think deals with where you are coming from. One

is the administration has not slowed down on its quotas for privatization, and 850,000 jobs comes from the FAIR Act, the FAIR list

and the percentage of jobs that have to be competed under this administration’s quota system and their de-rewrite of the A–76 has

currently taken place in OMB.

He made a very good point that on the health insurance in his

State they have gone from 8 percent to 12 percent, and then they

might be going to ask the employees now to make a 20 percent contribution. Federal employees have been making 28 percent contributions for years, so that is just an indicator that this would be

an incentive for recruitment and retention. Even if the State increased it to 20 percent, the legislation we have asked for just

brings the Federal employee to that same level.

Then finally in the $500 million slush fund that is being created

by the administration—and the Subcommittee needs to understand

that in 1997 NTEU and AFGE wrote to the then administration

asking to sit down and work on pay with what the problems were,
46

identify the problems and find the solutions. We never got around

to that. We went from year-to-year battles here in Congress to try

to get pay to what it should be. Same thing with this administration. Within a month of taking office, Colleen and I wrote to this

administration, asking to sit down and work on pay. Their response

was more or less they were too busy.

We are more than willing to sit down and work with anybody.

I prefer working with Congress, and I will tell you why. I am still looking for $200 million. When the administration came up with a

2 percent across-the-board increase and a $500 million slush fund,

the figure is 2.7 percent. Therefore there is $200 million missing

somewhere. So if they are going to treat pay that way, I am not

too sure sitting down with them would be too fruitful, but they in

effect, even with their slush fund, where some employees are going

to get that $500 million and some employees are just going to get

the 2 percent increase. There is $200 million that should be in

that—somewhere in that pay scheme it should be 2.2 percent or it

should be a $700 million slush fund.

But we are more than willing to work with anybody that will

work with us on coming up with a solution to the pay, and my concern is that FEPCA never has been fully implemented and so we

do not know whether it would work until we first tried it. As both

of us pointed out in our testimony, there is all kinds of incentives

and managerial flexibilities in FEPCA that have yet to be fully utilized, such as the step increase, the step increase as both a penalty

and a reward. You can withhold a step increase if an employee’s

performance is not of an acceptable level. That is rarely done, but

nevertheless, that is a tool. In the same token if you have a high

performer you can give them a quality step increase. That is a step

increase in addition or sooner than they would have otherwise gotten on. Rarely used today.

Senator VOINOVICH. Thank you. We have another panel here,

and it is 12 o’clock. Representative Van Hollen.

Mr. VAN HOLLEN. Thank you, Senator. I will be very brief. I just

want to make an observation, get a quick reaction.

It is striking, as all of you in your comments have said, you do

not oppose to use of financial incentives and bonuses to award for

performance. I mean Mr. Harnage has made that clear, so I think

it is important that no one is dragging their feet. What is striking—and I appreciate all your testimony, and look forward to going

through it in more detail—is the amount of flexibility and a lot of

the opportunities that already exist under the law to provide rewards. Ms. Bonosaro, in your testimony you say not only does the

Senior Executive Service have a performance system, that it is currently a model pay-for-performance system.

So the question really is the question of resources. It is not that

they do not have the ability, the administration does not have the

ability to provide bonuses right now. It is a question of whether or

not the funds are separately provided for this purpose. With respect to the SES, it is a question not of performance measures

being in place and the system being in place, it is just the fact that

you have these caps in place.

I would just like to get a very quick response from all of you to

that observation, that it is not a question of lack of flexibility and
47

the ability to provide bonuses. It has been a lack of resources to

make the system work

Ms. BONOSARO. I think that the one thing that we know is yes,

indeed, there are a lot of flexibilities within government right now.

I have not heard anyone really satisfactorily explain yet why they

are not all used. We know in some cases they are not always—personnel do not always know about them. Certainly they are not always funded. Sometimes there is simply a lack of will, so that

there are a whole variety of reasons.

The one thing I think we would be concerned about is, if because

of the view of the lack of performance management systems being

at the rate they should be, that therefore we do not resolve the

issue of pay compression within the SES. I really think that cannot

wait.

Ms. KELLEY. I would say, Congressman Van Hollen, it absolutely

is an issue of resources. In fact, Senator Voinovich and I have had

this conversation many times, where I have said, ‘‘Please do not

provide any more flexibilities to the agencies until the resources

are provided because all it does is make the list longer and longer

of things that are not being used by the agencies.’’

As far as setting priorities—and I think this goes to Delegate

Norton’s question about process, how we prioritize, in order to do

that, you have to have a two-way conversation, an ongoing conversation. We do not have that with the administration. Therefore,

our discussions take place at these forums and in the media because there is not an ongoing conversation to try to figure out the

really tough questions about priorities and how to create a potentially win-win situation, which is very different from working

through all of the flexibilities we have with you, Chairman Voinovich, because we have these conversations one-on-one, over and

over throughout the year before legislation is ever introduced, because you are interested in working with us to figure out what the

employee issues are and how they can be addressed. That is the

way that I think we can make much more progress on behalf of the

employees, the American public, and the agencies, not the way that

we do business today, but that is how we do it today.

Mr. HARNAGE. I think you are right on target. OPM’s own survey

indicated that less than 1 percent of the current workforce received

incentives, cash awards, and the reason for that is that they were

not funded. The agency, in order to give one employee a cash

award, had to take money away from other employees or simply

not fill a position. So that is the first problem. It is not an incentive

and it is not a reward for performance if you are not receiving the

pay that you are entitled to to begin with, and as we have said,

we have got to bring FEPCA up to par, and then any incentive that

you give is in fact a performance award.

The second thing that you have to watch out for, if you recall,just

a couple of years ago we had to get a legislative change in the VA

system on nurses’ pay because we found hospital directors were

balancing their budget on the backs of the nurses. Instead of giving

them the pay increases they were entitled to, they were diverting

that money to other parts of the budget. So we changed the pay

system of the nurses just 2 years ago. Let’s not create a monster

here of all civil service.
48

Ms. HEISER. I would concur with my colleagues that the incentive awards program as it currently exists needs some further examination in terms of the tools that are available and the effect

that it could have were it properly funded. But I would put to you

that first and foremost, as we have said, the appraisal systems

really do need to be revised. Pass/fail does not accomplish our objectives—we have to look at why performance appraisals are done.

Pass/fail should not be kept—the carrot before the horse is not a

good example in this case because hay is not going to be the

motivator for people to do a good job of performance management.

The driver for performance management needs to be organizational

improvement and employee development. That is the way to start

with this whole program. I would also take some umbrage with the idea that a $5 billion

annual increase is wasted because it is not based on performance,

and I would put to you that if we assume safely Federal employees

are performing, then it certainly is based on performance and not

wasted money. Thank you.

Senator VOINOVICH. We thank the panel very much for your testimony this morning, and we will take it into consideration. Obviously we have some systemic problems that we have had for several years.

Senator VOINOVICH. Our fourth panel of witnesses includes some

of the Nation’s top experts from the public, private, and non-profit

sectors, academia, and the military. I am pleased to have met

many of you at Harvard’s Executive Sessions on the Future of Public Service and that you agreed to serve on my Washington-based

human capital working group. Hannah Sistare is the Executive Director of the National Commission on Public Service. Hannah, I

want to welcome you back to the Senate. I enjoyed working with

you during your time as Senator Thompson’s Governmental Affairs

Committee Staff Director.

Again, I apologize to the fourth panel for the delay. I hope you

have enjoyed the testimony of the witnesses. It certainly gives you

a little perspective for your clean-up role.

Dr. Steven Kelman is the Weatherhead Professor of Public Management at the John F. Kennedy School of Government, Harvard

University. Steve, glad to have you here. Steve has had a lifetime

of public policy work, both as an educator and as a public servant,

most recently as Director of the Office of Federal Procurement Policy at OMB during the Clinton Administration.

Max Stier is the President and CEO of the Partnership for Public

Service. Max, I want to congratulate you on the good job that you

are doing with the Partnership. It looks to me like we have to do

a few other things to attract and retain good people of public service, if we have listened carefully to what the other witnesses had

to say.

Jeff Taylor is the President and CEO of Monster. It was good to

meet with you, Jeff, up at the Kennedy School, and I am eager to

hear what you are doing to improve the ‘‘USA Jobs’’ website.

We are fortunate to have Major General Robert McIntosh, U.S.

Air Force Reserve (Retired), Executive Director of the Federal Officers Association of the United States, and appreciate you being

here today.
49

1The prepared statement of Ms. Sistare appears in the Appendix on page 218.

2The Commission report entitled ‘‘Urgent Business for America, Revitalizing the Federal Government for the 21st Century,’’ report of the National Commission on the Public Service, January 2003, submitted by Ms. Sistare, is retained in the files of the Subcommittee.

We will start off with Ms. Sistare.

TESTIMONY OF HANNAH S. SISTARE,1 EXECUTIVE DIRECTOR,

NATIONAL COMMISSION ON THE PUBLIC SERVICE

Ms. SISTARE. Thank you very much, Chairman Voinovich, Delegate Norton and Representative Van Hollen. The National Commission on the Public Service, and our Chairman Paul Volcker,

thank you for your interest in their recommendations for the reform and the renewal of the public service. They are encouraged by

action in the House and the Senate to tackle this critical challenge.

The title of the Commission report,2 ‘‘Urgent Business for America’’ reflects their conviction that we must seize the opportunity at

hand for reform. Our 13 commissioners are of all political persuasions and from both political parties. They came together with a

shared concern about the declining level of public trust in government and its correlation to the public’s negative view of government performance. They were troubled by surveys indicating that

Federal workers are frustrated in their efforts to get the job done

and have difficulty seeing how their efforts contribute to the government’s critical missions.

The Commission began its work examining the challenges confronting Federal employees and the difficulty in attracting and retaining the Skilled Workforce 21st Century government demands.

Soon, though, they were convinced that to be fully effective, Federal workforce reforms must take place within a modernized government structure.

The Commission’s vision is greater consolidation of related and

overlapping agencies into mission-centered departments brought together in an environment of more administrative and personnel

flexibility, but with strong political leadership.

The commissioners were convinced that organizational cohesion

and mission clarity would enhance the morale of the Federal workforce and improve government performance. The goal was not

smaller government, but government that works better.

The Commission does not take lightly what it will require to

make this work. Some critical ingredients are: An Office of Personnel Management and OMB with the resources to support these

systems; strong leadership from well-qualified and well-trained political leaders, career executives and managers; and as Paul

Volcker repeatedly stresses, strong oversight by the Executive and

the Congress.

To optimize Congressional oversight, the Commission recommends that Congress itself reorganize its own committees around

the key missions of the reformed Executive Branch structure. Recognizing that this reorganization will be the work of years, the

Commission recommended that Congress pass legislation reauthorizing the Executive reorganization authority that Presidents had,

in one form or another, from 1930 to 1984.

Now, the Commission anticipated this authority would be exercised within a framework established by the Congress. They rec-
50

ommended including the requirement that personnel systems be

governed by the established merit principles of government employment. They also envisioned significant consultation in the development of reorganization plans with Congress, Federal workers and

other affected parties.

The purpose of the expedited consideration, once a proposal

reaches Congress, is to protect a broadly and well-considered reorganization plan from being pulled apart by partisan or individual

turf battles.

On the issue of pay, the Commission recommends that the government pay reflect current market conditions so government can

retract and retain talent it critically needs. The market for the

workforce, generally, was seen to be the private sector. The market

for government’s senior leadership was seen to be the nonprofit

workforce, and this latter group includes Federal judges, political

appointees and Members of Congress. The Commission was particularly concerned with the damaging impact of declining real pay

for Federal judges.

As I indicated, the Commission was concerned about the perception and reality of government performance and was critical of the

current GS system under which time on the job becomes the major

determinant of pay.

Some, including Members and witnesses here today, have voiced

concern that a pay-for-performance system is beyond the capabilities of the Federal Government and will be abused by managers.

In response, Paul Volcker would point out that clarity and cohesion of mission is what gives managers the ability to establish performance objectives and measures. Once agencies have credible

performance measures, it is possible to judge individual and group

performance in a transparent, nonsubjective way. The whole process becomes much less daunting and visibly fair.

I believe the Commission would applaud the administration for

getting the ball rolling and would also agree with the Comptroller

General on how to proceed. Furthermore, as Secretary Donna

Shalala—former Secretary Donna Shalala—noted in her recent testimony before the House Government Reform Committee, you have

to have credible people in both political and career management positions for the system to work. And here again, ongoing, effective

training plays a critical role.

The Commission had completed its work prior to the introduction

of the legislative reforms before the Subcommittees. However, the

members of the Commission would enthusiastically applaud the

proposals’ goals of enhancing recruitment, retention and training,

linking training to performance plans and strategic goals, encouraging flexibility in personnel systems, alleviating pay compression

for the SES and other senior-level employees, encouraging mid-career entrants, and improving the presidential appointments process. The Commission would add, act with urgency. Thank you.

Senator VOINOVICH. Thank you. Mr. Kelman.
51

1The prepared statement of Mr. Kelman appears in the Appendix on page 229.

TESTIMONY OF STEVEN J. KELMAN, Ph.D.,1 WEATHERHEAD

PROFESSOR OF PUBLIC MANAGEMENT,, JOHN F. KENNEDY

SCHOOL OF GOVERNMENT, HARVARD UNIVERSITY

Mr. KELMAN. Chairman Voinovich, Chairman Davis, Senator

Durbin, and Congresswoman Norton, I am not going to talk about

pay for performance. I will talk briefly about both attracting talented young people into government—as a teacher of young people

considering careers in public service, I am interested in that—and

creating workplaces for those people to come into government that

will help us retain them and also workplaces that deliver results

for the American people.

First of all, I want to assure you I do have some good news, Senator Voinovich. The government still retains an ability to recruit

and attract talented young people. This year, half of our graduating

students in the Master of Public Policy program at the Kennedy

School at Harvard have applied for the Presidential Management

Internship program, and recently we were very happy to find out

that 40 of our students, out of a graduating class of 180, have been

accepted into the Presidential Management Internship program.

One more piece of good news, a student of mine, who has been

accepted into that program, Amy Dain, came by my office last week

to tell me that within 1 week of her receiving her PMI notification,

she had received communication from three government agencies,

three different agencies, seeking to recruit her and find out if she

was interested. So I think that is a real tribute to your efforts to

create interest in human capital issues, to those of the Comptroller

General, to Director James and her team at OPM that we are making some progress in that area.

Amy said to me that the three communications she got included

agencies she might not have thought of working for otherwise. It

has opened up some new opportunities for her.

Senator VOINOVICH. You had out of how many?

Mr. KELMAN. Out of 180 students, about 90 applied to the PMI

and 40 have been accepted.

Senator VOINOVICH. And the fact is they moved very quickly.

Once they were designated, the agencies did not wait around. They

were after them right away.

Mr. KELMAN. Correct. So good news.

Let me briefly comment on some of the provisions of the proposed

legislation. I essentially support everything in S. 129. The one provision I wanted to call particular attention to is the provision in

Section 302, allowing using non-Federal service time as a base for

annual leave. The idea behind this, this is one small step in making it easier for people to enter the Federal Government in mid-career.

Hannah pointed this out, the Partnership for Public Service has

been very interested in this. Young people no longer see themselves

as working in one place throughout their careers, and we need to

make it easier. A source of talent for the Federal Government is

people wanting to come in, maybe only for a few years, mid-career,

as one of several jobs. We make that much too hard now in the government.
52

Another student of mine who is graduating this year, who was

a Teach for America person before he came to the Kennedy School,

was looking at a job in intelligence at the FBI that he wanted to

apply for. The job said, ‘‘Open to current or formal Federal employees only.’’ He cannot apply for that job. I think that is bad news,

from the perspective of the public. I think he would have been a

very good person for that job.

The Partnership for Public Service has made a number of excellent proposals in this area. One is to set up a mid-career Presidential Management Internship program. I think that is a great

idea.

Let me, finally, with regard to hiring good talent, make one suggestion for an additional provision for S. 129, that the bill include

a provision to amend Title 5, which currently states that hiring

and promotion decisions should be made on ‘‘knowledge, skills and

abilities,’’ and add the word ‘‘accomplishments.’’

Right now the current language is too bureaucratic, too formulaic, time served, things like that. I think we send a good signal

about an orientation toward results by adding that word ‘‘accomplishments’’—knowledge, skills, abilities and accomplishments—

into the statute.

Last, just a word about the other thing, once we get these people

into the workforce, creating workplaces that inspire them, continue

their commitment to public service. The kinds of things that you

did, actually, Senator, as Mayor of Cleveland, with your work on

total quality management, I think that a lot of the work here is

going to have to be done at the agency level. I think there are some

contributions the Hill can make—oversight hearings, looking at

ways that agencies are developing nonbureaucratic, more empowering ways of doing business for their employees.

I would urge you to urge OPM to establish a Presidential Management Internship Advisory Council to the President’s Management Council, to allow young, talented employees to interact with

deputy secretaries and give them ideas for how to improve the Federal workplace.

Finally, in terms of creating good workplaces, never forget the

Hippocratic adage ‘‘Do no harm.’’ Because I think that probably one

of the biggest sources of counterproductive agency practices that

create too much bureaucracy, too much hierarchy, is the kind of

what I call ‘‘management by scandal’’ approach that, unfortunately,

a lot of current congressional oversight encourages.

So I would urge you, as elected officials, to realize that every

time the pursuit of scandal creates more rules, more bureaucracy

and so forth, you are really decreasing the attractiveness of Federal

service to young people.

My student, Amy Dain, describes what she is looking for in a

Federal job as follows:

‘‘I am looking for a job where I will be able to learn, where I will

be challenged, where I will find mentors who will show me the

ropes, introduce me to decisionmakers and open doors and opportunities for me, where I will be able to work in a team to seek solutions to complicated problems, where I will be supported in taking

risks, where I will have a sense of making a meaningful contribu-
53

1The prepared statement of Mr. Stier appears in the Appendix on page 239.

2The brochure entitled ‘‘Service to America Medals,’’ submitted by Mr. Stier is retained in the

files of the Subcommittee.

tions to issues I find important and relevant and where I will find

a warm community.’’

Let us work towards a situation where she will not be disappointed. Thank you.

Senator VOINOVICH. That is wonderful. Thank you very much.

Mr. Stier.

TESTIMONY OF MAX STIER,1 PRESIDENT AND CHIEF

EXECUTIVE OFFICER, PARTNERSHIP FOR PUBLIC SERVICE

Mr. STIER. Thank you very much, Mr. Chairman, Madam Chairwoman Davis, Senator Durbin, and Congresswoman Norton. It is

a pleasure being here.

We have heard all morning, and now coming into the afternoon,

about the human capital crisis. It is truly, I think, best viewed as

a multi-tiered problem that is going to need a multi-tiered set of

solutions. One approach that we would propose to organize these

sets of problems is to see them as a succession of three major barriers:

The first barrier literally being lack of information, lack of information about government jobs, public service, and the value of

those jobs and government service;

The second being a broken hiring process, which right now takes

too long, is too difficult and is nontransparent;

And the third, as Steve mentioned, are the jobs themselves,

which are not always representative of a high-performing work environment which is so critical on the retention side and on the recruitment side.

So I would like to talk, in my oral remarks, about some of the

things that can be done in each one of those barriers to address

them.

The first piece is what we have learned from our polling is that

the most effective way of telling the story of government is through

the story of Federal workers, individual workers. And in that light,

we have created the program called the Service to America Medals,

which recognizes excellence in the Federal service. Eight Federal

workers were honored last year. This is done in conjunction with

the Atlantic Media Group, and we are doing the same this year.

You will notice, and hopefully—I am sure many of you take the

Metro—you will see the ad campaign that we have up. I also have

one of the brochures here from the ‘‘Service to America Medals,’’2

and I cannot help but take this time as an opportunity to ask all

of you to find great Federal workers to nominate for this program,

either in your district or otherwise in your experience.

Last year, we had a nomination from a member. It is a fabulous

program that really makes a difference both for the workers themselves, but also, most importantly, for telling the American people

the story of the Federal Government and public service.

The second piece I would like to highlight is the fact that, by and

large, the relationship between the Federal Government and our

college and universities has been broken. To respond to that, we

started a program with the Office of Personnel Management called
54

1The brochure entitled ‘‘Red White & Blue Jobs, Finding a Great Job in the Federal Government,’’ submitted by Mr. Stier is retained in the files of the Subcommittee.

‘‘A Call to Serve.’’ To date, there are 400 universities that have

signed on, 60 Federal agencies, to raise the profile of the Federal

workforce on college and university campuses.

One of the productions that we have created for that network is

this ‘‘Red, White and Blue Jobs’’ handbook, again, to address the

real inadequacy right now. Most young people know a lot about private-sector options, but not about public-sector options. And if I

could, I would ask that both of these brochures be added to the

record.1

The third piece on the first barrier, the lack of information on

the recruitment side that I would like to focus on, is the issue of

student debt. Obviously, Chairman Voinovich, Senator Durbin,

your leadership with the GO FEDS legislation, I think, is very important.

What we know today is that two-thirds of graduates from our colleges and universities have student debt. The size of those debts

have increased exponentially. And even where there is interest in

public service, oftentimes, young people do not have the choice to

pursue it because of those debts, and I think the GO FEDS legislation is an important step in addressing that problem.

The second barrier of the broken hiring process is one that has,

again, multiple components. There is a pledge to applicants that we

have designed in conjunction with the Office of Personnel Management which I think is very important to see enforced that includes

making sure that job vacancy announcements are in plain English

and that the process is an easier one.

I would also note that there are many very quick things that

could be done: Internships, for example—the private sector uses

them as a critical talent pipeline into their organizations. The Federal Government does not do a very good job about that. In fact,

it is very difficult to convert superb interns into full-time employees. There is a distinction made between interns that are brought

in under a government program versus a nonprofit program like by

the Hispanic Association of Colleges and Universities, and those

kind of changes could be made very easily and would result in a

lot of good talent and, in particular, diverse talent coming into the

Federal Government.

I am rushing here, and so I will jump into the third barrier,

which is fundamental and, in many ways, the hardest nut to crack,

which is the job themselves. Here, again, I would suggest that the

starting point ought to be with the management and leadership.

We can note, from the OPM survey, which was very well done,

that only 43 percent of Federal employees hold their managers and

leaders in high regard. That is a problem. Your suggestion on starting with the SES, I think, is the right one, and we strongly support

the proposal that is before these Subcommittees.

We would also suggest that an additional element that ought to

be included is a requirement that agencies conduct regular employee surveys, and this can be done agency-by-agency, with some

joint element, so that you can do governmentwide work, but we believe that is absolutely essential.
55

1The prepared statement of Mr. Taylor appears in the Appendix on page 254.

And then, finally, I would note that it is very important for us

to focus on the flexibilities and the improvements that have already

been passed, in particular, the Chief Human Capital Officer Act—

wonderful legislation. Implementation is really the name of the

game right now, and we need to make sure that it is done right.

Thank you very much.

Senator VOINOVICH. Thank you, Max. Mr. Taylor.

TESTIMONY OF JEFF TAYLOR,1 FOUNDER AND CHAIRMAN,

MONSTER

Mr. TAYLOR. Chairman Voinovich and your esteemed team, I

want to thank you for an opportunity to come here today. I have

a mission to help people love their jobs, and a big part of this for

me has been to try to educate to the government about the window

of opportunity that I see, and this is really competing with the private sector for talent.

I decided I would do kind of time line because I think it shows

where the opportunities are. And with the advent of the Internet

and the worldwide web and the invention in 1993, we really

launched our next mass media, radio, television and now the Internet and, for the first time, a reason for a PC on every desk top,

and maybe more importantly, an affordable medium to communicate.

The result, when you overlaid that on top of a tech boom and a

telecommunications boom, was 1999 tech and dot-com euphoria,

and with that, a booming economy, entrepreneurial fever, unprecedented venture capital and IPOs, so advantaged private-sector

businesses. You ended up with 3.9-percent unemployment, rapid

pay acceleration and stock options, as currency, which then gave

the advantage to the job-seeker or the employee.

So I look at this. In fact, there is a measurable shift in 1999 and

the beginning of 2000, where employees really started, for the first

time in 100 years, to take control of their own lives and companies

were in a panic.

Then, we have April 2001. We have the dot-com and the tech

bubble is really exposed. I talk about the ‘‘Emperor has no

Clothes,’’ and by summer of 2001, we had dot-coma. I know we are

not supposed to laugh in this, but that is kind of funny, come on.

[Laughter.]

So here we are today, it is 2003. The treadmill has slowed. I call

it ‘‘the eye of the storm.’’ This is kind of the calm. It is the reprieve

in business and for government that you never really get—6 percent unemployment, give or take 8.5 million people out of work.

Recently, President Harry Truman—well, maybe in relevant

form—said, ‘‘If your friends are out of work, it is a recession. If you

are out of work, it is a depression.’’

And I think that what we have now is longer job search cycles,

extended benefits that we have provided, which are running out. A

stable job is in fashion maybe for the first time in 10 years.

Employee or talent attitudes are more realistic than they have

been, and I look at employers momentarily are regaining control,

but there is very little dry powder. The economy has basically put
56

us in a position where the private-sector companies do not have

much to go on.

So here is the opportunity. I think the government needs to capitalize on the economic slowdown to seize talent in the private sector. You have e-Gov initiatives right now, very positive. You have

new initiatives with TSA and Homeland Security. I look at the

positives. There are many new jobs that are going to be created.

Go USA sentiments from the tragedy and terrorism of September

11 comes the pride of America, and for the first time in recent

memory, for me, an opportunity to think about working for the government and some of the stability factors that are there in a new

way.

Candidates have an open mind. A recent Monster survey of

51,000 job-seekers on Monster, 80 percent indicated that they

would consider working for the government. In a Monster survey

of our campuses—we partner with over 1,400 campuses—86 percent of students said they would think about working for the government.

So I look at the Internet as a new mass medium. It is inexpensive distribution. It is fast adoption by the target groups for the

government, and I look at early successes as a way to prove this.

Through a partnership with Monster, through NCS Pearson, TSA

needed security people fast. We posted the jobs on Monster. We

had over 6 million job-seekers view those jobs, 1.7 million applicants, 417,000 went through assessment. They hired 61,000 people

through the Monster interface in a very short window of time. We

have 66,000 people that are placed in the ready pool.

So what I am trying to show is it is not just the Internet, but

your new partners in the private sector can actually be an answer

for some of these recruiting challenges.

I look at the challenges that you have ahead are equally

daunting. The aging workforce, it has been well-covered. But it is

not just the talent, it is the knowledge that is going to leave your

ranks and your agencies. Insular recruiting, which has been a dynamic way that you have recruited, is really going to fail because

there are not enough candidates.

Your outside systems, and what I will call ‘‘old habits,’’ I have

got to challenge, I guess. According to a recent survey done by

MSPB, it is just being printed now, 300 Federal human resource

specialists were interviewed. Ninety-six percent used the

USAJOBS site to recruit, 30 percent used agency bulletin boards,

6 percent used the newspaper, zero used the Internet job boards

that are out there.

Monster, for one, had 20 million unique visitors in our highest

month, which was in January, coming 54 million times a month.

This is the private sector that is ready to go to work for the government.

Thirty percent of government agencies still do not accept electronic applications. Many agencies have no staffing automation,

and this can create 4- to 6-month backlogs. Ultimately, the vacancy

announcement, the description itself is daunting. And if you would

share, this is a description—could you bring that up here into the

light, just so you see—this is a description on Monster for the
57

1The prepared statement of General McIntosh appears in the Appendix on page 259.

Army for one position, and you can see that it is a little longer than

your average private-sector position.

So two last things: The brand and culture concerns, although I

am amazed at the war kind of power of the United States, and the

spirit, and the branding that is going on right now, I think we have

to transfer that to a new war which is happening, which is the war

for talent. And I look at the window closeing. In 2008, the privatesector competition will reenergize. Economists predict 4-percent unemployment by 2010. The Bureau of Labor says 10 million jobs will

go unfilled by 2010. Private-sector fuel, it will go back to venture

capital, rapid pay acceleration. The window will close.

I am predicting the worst labor shortage ever in our lifetime that

will start in 2008. If we do not act on some of the things I have

talked about, in my judgment, baby boomer exit, 10-year shortening, broadened skill shortages, e-commerce to e-business transition, where all businesses will change, and ultimately the free

agent world is going to create an incredible scenario for the government, and it is going to be very difficult to hire.

The window from 2002 to 2005 is where I am suggesting that we

look. We have already burned 1 year.

Senator VOINOVICH. Thanks very much. General McIntosh.

TESTIMONY OF MAJOR GENERAL ROBERT A. McINTOSH,

USAFR [RET.],1 EXECUTIVE DIRECTOR, RESERVE OFFICERS

ASSOCIATION OF THE UNITED STATES

General MCINTOSH. Chairman Voinovich, Chairwoman Davis,

Senator Durbin, and Delegate Norton, it is certainly a pleasure and

an honor for me to be here representing the 80,000 members of the

Reserve Officers Association. I am going to shorten my 5-minute remarks in the interest of time, but I do have a couple of things I

need to cover.

S. 593, the Reservists Pay Security Act of 2003, is a significant

step toward resolving the pay hardship issue for a portion of the

Reservists who have been mobilized to support Operation Iraqi

Freedom. The bill would entitle any employee of the Federal Government who is called to perform service as a member of the uniformed services to receive civilian pay in the amount, which taken

together with his military pay, would be no less than the basic pay

he would then be receiving if no interruption in his civilian employment had occurred.

Simply put, the bill would ensure that, at least financially, no

harm would be done to a mobilized Federal employee. There are

approximately 120,000 Federal employees who serve as members of

the Reserve components. A significant number of these, between

12,000 and 13,000, are currently mobilized, and of course that is

of the total number being mobilized of 220,000 Guardsmen and Reservists for Iraqi Freedom.

As we noted, we predict there will be more Reservists and

Guardsmen activated over time in many contingency operations in

the future, and certainly we look toward several over the few years

in the part of the world we are now engaged.
58

More importantly, however, this bill is an opportunity for the

Federal Government to lead the way and to set the example for

other employers of members of the Guard and Reserves. There are

already many employers—city, State and private—who pay all or

some part of the difference between their employees’ civilian salaries and their military compensation. There could be more.

If we are to encourage employers to help protect their employees’

financial well-being when they are serving their country, the Federal Government must lead the way and set the example. If the

Federal Government does not do the right thing, what kind of a

message does it send to those employers whose connection is more

tenuous?

The Federal Government, whose actions in this regard can only

be legislated, must lead by example and encourage the private sector to do what cannot, and ought not, to be legislated in the private

sector.

There is more to this issue than Federal mobilized employees

and their families, but we must start here, now at home, as it

were. This provision is a first step in demonstrating a practical and

meaningful way that the contributions of our Reserve forces are

fully recognized and appreciated by the Nation. Thank you.

Senator VOINOVICH. Thank you very much.

It is interesting that my staff director for this Subcommittee was

mobilized with the U.S. Navy for the conflict in Iraq. I just inquired about what his leave situation is, and what he is going to

receive. I think he has cobbled together some vacation time and

some other things, but after that is over, he will be getting his lieutenant junior grade pay, which is substantially less than he is making in his staff position here.

You all were very patient to hear the testimony of the other witnesses, and it seems to me that there are some fundamental things

that need to be addressed if we are going to capitalize on, as Mr.

Taylor suggests, this window of opportunity that we have. At this

stage of the game, it does not appear that pay comparability health

care costs, or concerns about outsourcing have negatively impacted

on our recruiting.

Would anyone like to comment on that?

In other words, Steve, your Harvard graduates are coming to

work for the Federal Government. But I remember when I was up

there talking to a couple of your students, one of the things they

said to me was, when they looked at the Federal service they were

wary about the outsourcing of Federal jobs. They were thinking

about, instead of coming to work for the Federal Government, going

to work for the companies that are getting the outsourced work.

I would just like you to comment on that, if you would, or anybody else.

Mr. KELMAN. It is interesting that they said that to you. I actually have not heard that. When I talk to my students about why

are you thinking why might you work in the government, why

might you not work in the government, probably the two single biggest issues that come up again, and again, and again, one is student loan repayment because the students have very high debt burdens, and they are often getting job offers that are much higher in

the private sector.
59

So one is student loan repayment, and then the second is quality

of work, and Max and I have both been talking about this.

There is a not necessarily fully unjustified perception that too

many jobs in the Federal Government are too bound up by rules,

and procedures, and clearances, and so many things that make it

harder for an individual to feel that he or she is making a difference. I almost hear that more than I hear even student loans.

Student loans is a very big issue for our students, but what is the

quality of the work going to be once I get on the job is a theme

that comes up again, and again, and again.

Ms. SISTARE. The surveys that the Center for Public Service at

Brookings has conducted confirm what Steve says. Even at the

Schools of Public Administration, most of the students are looking

to go perhaps to State and local government or more likely to the

nonprofit sector and, again, it is the job that the students are primarily looking for. They are interested in pay and the other benefits, but the ability to make a difference really makes a difference

for them.

Senator VOINOVICH. That is really interesting because, over the

years, the Federal Government was always more attractive than

State and local government, and in the last decade or so there has

been a shift to go to work for State and local governments.

Mr. STIER. Chairman Voinovich.

Senator VOINOVICH. Yes?

Mr. STIER. I just wanted to add to that, though, that I think this,

again, is a multi-tiered problem. Clearly, it is fabulous that people

at the Kennedy School are coming to the government or are interested in the government in greater numbers, but you will expect

that in a School of Public Policy.

There are a lot of people out there that the government needs,

whether it is IT workers or engineers or scientists, who simply are

not informed about the opportunity to come to government or the

value, and even when they are, you run into the student debt issue.

Senator Durbin is a lawyer. We recently did a poll of third-year

law students. Two-thirds said that they could not make the choice

to go into public service or public interest because of their debts.

It is extraordinary how big of an issue that is.

And then once they are interested, and if their debts are not a

problem, the hiring process is often an enormous deterrent. And so,

again, this is a multi-tiered set of issues, and while all of these factors are going to influence it, even in this day talent is always

going to have choices. Even when there is an economic slowdown,

the real top talent has choices, and we need to make sure, obviously, that we get the very best, and therefore make sure that all

of these elements line up in the way they need to for the government.

Senator VOINOVICH. So the thing is, if you were going to really

do something quickly to handle this problem, you would deal with

the loan situation. I think there is legislation that would increase

the aggregate maximum from $40,000 to $60,000 and the annual

cap from $6,000 to $10,000. Would that help?

Mr. STIER. I think the loan situation would absolutely help. I

think that working on making the hiring process a faster, easier

system would absolutely help, and then making sure, once they get
60

to those jobs, that high performers and innovators are supported,

and then starting off with the outreach would do the trick.

Senator VOINOVICH. Right. But the fact is right now, to take advantage of the situation we must address the loan situation, get

OPM to really concentrate on this very complicated hiring process,

shortening it up and making it easier to get people in. And then

once we have done those things, we should consider the quality of

the jobs.

Mr. STIER. Correct.

Senator VOINOVICH. But now the thing is you have to go out and

land them.

Mr. TAYLOR. Could I just make one comment here? Is that I do

not think we are educating the general private-sector population

about the possibilities. I think if you look at this like a funnel, we

are about to open the funnel up, and we are letting too many employees out of the Federal Government, and we do not have enough

input coming in. So we need to make that process easier, but we

also need to work on our branding to position the organization, the

Federal Government as a whole, all agencies, to bring new talent

in. You do not have enough young workers coming in here to basically feed the system.

We recently won the Federal contract to run USAJOBS, and we

are able to take our back-end systems and basically start to fix

some of the systems and make it so it will work, but we are still

going to have to tell the general population that we have got jobs

out there, and we are going to make it easier for them to go

through that process.

Senator VOINOVICH. Max is helping with branding it on the college campuses.

Mr. TAYLOR. He sure is, right.

Senator VOINOVICH. And a lot of people are cooperating with

him. How long is it going to take you to launch that new website?

Mr. TAYLOR. We are ready. So we need a formal announcement,

probably about the end of this month. We really just got the contract at the end of January.

Senator VOINOVICH. That is fast action.

I have to say that I asked my staff in Cleveland to compile a list

of Federal jobs, because people call, and ask, ‘‘What jobs are available,’’ and it is a nightmare. I do not know how many pages of information that we had, but in terms of being user friendly, it was

awful, just awful.

Mr. KELMAN. One very operational suggestion to OPM, a big deterrent is that because of the traditional ‘‘rule of three,’’ which is

now eliminated, students had to give an entire, not just a resume,

but this enormous amount of information just to apply for a job.

In the private sector, that does not happen. You apply for the job

with a simple resume, and then if they are interested in you, you

start getting more information.

In the Federal Government, we have had to do everything up

front, and students look at this and say, ‘‘It is going to take me 20

hours just to apply for this job, where for a private-sector job, I just

give them a resume.’’ I hope that OPM is going to be dealing with

that and that the agencies will deal with that.
61

Senator VOINOVICH. Jeff, are you dealing with that at all? Have

you made the recommendation to them, that even when they get

the website up, they still have to deal with that long list of stuff

that you just showed us? Are they aware of that problem?

Mr. TAYLOR. We are actually working with the OPM Office on a

number of different dynamics. Obviously, as part of the process of

putting a website up, we have had a chance to question some of

the stuff that is going to actually be in the content of the website,

but there is a fairly complex process surrounding this, and I think

we are going to do it in phases.

I think Ms. Norton likes that kind of ‘‘pilot project’’ approach,

and I am looking at USAJOBS as our pilot project to try to help

the Federal Government to attract the talented workers.

I think what you will see is, just when we launch, there is going

to be a whole new set of steps, and working with Max and the

Partnership, we are actually trying to get a theme out there to

really expedite the whole process of applying for a job and also how

we respond back to them so they know what is happening in the

process.

Senator VOINOVICH. Great. I have taken too much of your time,

Congresswoman Davis.

Mrs. DAVIS. Thank you, Senator.

Ms. Sistare, you said that, and I am not sure I have got your

words exactly, but urgency to get with it on this pay for performance, I guess it is.

Ms. SISTARE. Well, urgency to address the problems of the public

service.

Mrs. DAVIS. But you said, if I heard you correctly, that you did

agree with the Comptroller General that we should not just jump

into it; we should have set things in place, and I forget what he

called it.

Ms. SISTARE. The Commission’s report is more of an architectural

drawing than a blueprint, but the commissioners did feel strongly

that performance needed to play more of a role in government and

then the rewarding through pay, and I think they would applaud

the administration’s effort to get it going, but you do have to have

a system in place. You do have to have measures. You have to have

confidence in the system. As Secretary Shalala said, you have to

have people trained to run the system.

Mrs. DAVIS. So you agree we need to do a little bit of work before

we jump into it.

Mr. Stier, your organization is actively promoting Excellence in

the Federal Workforce. Do you see any inherent contradiction in

the President’s proposed management reforms and his attempt to

privatize more Federal jobs with what you are doing?

Personally, if I was looking for a Federal job, I would be very

nervous because of privatization.

Mr. STIER. I think that one of the key issues right now is an informational one, to make sure that the American public, as Jeff

said, really understands the value of public service and the opportunities that are there. We did a set of focus groups, and one of

the things that we found was that, basically, people in the labor

market had no idea about government jobs. When we gave them
62

a list of government jobs, many of their perceptions about the government changed.

You asked the question about privatization. The issue of privatization, in fact, has been an ongoing one for the government for

many years. I believe that upwards over 300,000 jobs were shed

from the Federal workforce during the 1990’s and, in fact, some of

the workforce imbalances we are seeing today are a result of some

of that privatization that occurred.

I think that it is absolutely essential that the message go out

that Federal Government jobs are incredibly valuable, that they

offer not only something for the country, but for the individuals

that are taking them, and that it is a chance to really make a difference.

I believe that you can, in fact, have an environment in which the

value of public service is maintained in the context of still allowing

some jobs to be open for competition, and I think that the employee

groups are open to that as well. I think where the difficulty comes

is when you start seeing quotas that are set that are not really

based on any particular jurisdiction, and it is also, I think, really

essential to focus on the fact that where there are competitions, it

does not mean that these jobs are being privatized.

In fact, in many instances, public-sector workers win those competitions, and that is something that, I think, ought to be used as

a demonstration of the great work that the public sector, in fact,

is doing.

So, again, I think that they do not necessarily have to be in contradiction. Unfortunately, currently, they are, at times, in contradiction.

Mrs. DAVIS. General McIntosh, the administration is concerned

about paying Federal Reservists their differential because many

times they would be out, at least it is my understanding, many

times they would be out in the field, and they would be making

more than their commanding officer, and there is some concern

that would be bad for morale and the like, and then they would be

out there with other Reservists who are not getting the differential

from the private sector. How do you address that?

General MCINTOSH. Well, certainly, today we have those differences in individuals because we have people in the field whose

companies are paying the differential because they are such strong

supporters of the Guardsmen and Reservists. We had the same situation in Desert Shield and Desert Storm. And, of course, those

who did not get differential pay or had their own businesses or

were professionals, some of them lost their businesses.

In Desert Shield/Desert Storm, where we had a little higher

number mobilized than we do today, we had no negative feedback

from the field, in terms of morale, and people talking in the foxhole

about difference in pay. That did not come up. It was not an issue.

The troops did not talk about it, and I would really question the

logic of saying that would be a problem.

Mrs. DAVIS. Well, serving on the House Armed Services Committee and last year on the Personnel Subcommittee, I heard that

a lot, and I wish we could pay everybody, private sector and the

works, but I thank you for your service.

Thank you, Mr. Chairman.
63

Senator VOINOVICH. Senator Durbin is the Ranking Member of

our Subcommittee.

OPENING STATEMENT OF SENATOR DURBIN

Senator DURBIN. Thank you. I will be very brief because I know

Congresswoman Norton has been waiting too.

Let me ask you this, Major General McIntosh. It is my understanding that 10 percent of the Guard and Reserve in the United

States today are Federal employees.

General MCINTOSH. The data we have looked at, our estimates

built on estimates, show about that 120,000 of about a 1.1-million

force.

Senator DURBIN. So it is a significant portion.

General MCINTOSH. Very significant.

Senator DURBIN. Second, it is my understanding that some 6 or

7 percent of those who have been activated for Enduring Freedom

in Iraq are also Federal employees.

General MCINTOSH. That number is emerging, Senator, but it is

approaching that percentage, that is correct.

Senator DURBIN. I think it goes back to an earlier point that has

been made over and over again in different ways, and that is

whether or not a career with the Federal Government is going to

result in treatment comparable to other jobs in life. And the point

that you made is that States, counties, cities and many private corporations have decided that if you are willing to make the sacrifice

to serve your country in the Guard and Reserve, and you are activated, that they are going to make certain that your family does

not suffer in the process.

This just strikes me as a reaffirmation of the fact that Federal

public service should not be a disincentive to serving our country

in the Guard and Reserve. It should be consistent with it and an

incentive. I understand, as you said, there are disparities in how

troops are treated in the field. I hope that this notion that we have

to play to the lowest common denominator instead of to the middle

ground or higher common denominator does not argue against this.

I have used the example of a friend of mine back in the Midwest,

leaving a job with the FAA as an air traffic controller, facing the

prospect of being activated and taking a position serving his country, that it would cost him roughly $30,000 a year.

Now, that is a very dramatic hit, in terms of income, and he is

going to do it one way or the other, but whether the person is

working for Congress on Capitol Hill or working for the Federal

Government, I hope that we will consider this Reserve pay security

as a way to approach this, and I thank you for being here today

to tell us about your support for that.

General MCINTOSH. Thank you, Senator.

I would like to make a comment. I have been in and out of the

Reserve, going from reserve to active, and back and forth, for a 37-

year career, and I have yet to hear one troop in the field talk about

the difference in pay, relative to a Reservist serving side-by-side

with an active component.

The other thing I would say, these two gentlemen to my right,

I was just handed a note, their companies pay differential. So, as

a retired Reservist and someone who cares about our Guard and
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Reserve and the defense of the country, I would just like to personally thank you on the record.

Senator DURBIN. Thank you. Let me ask you, I have raised this

question about student loans as long as I have been around this

Subcommittee. I have not been as passionate an advocate as my

colleague, Senator Voinovich, has been on the general human capital question. He has become our Senate expert, as he has devoted

a major part of his public career to this issue. And we have managed to put some money into congressional appropriations to deal

with the staff on the Senate side—I do not know, Congresswoman

Norton, whether it is the same case on the House side yet—for student loan forgiveness.

Let me just ask if any of you would like to comment on one of

the quandaries and one of the difficulties. If you were putting student loan forgiveness into the package as part of an incentive for

recruitment and retention, where do you draw the line? That has

been the tough thing.

We have had people on Capitol Hill in different offices who have

said, ‘‘Wait a minute. This employee has been with us for 2 years,

has a significant student loan, has a significant monthly payment.

There is no talk about this employee leaving,’’ but what would it

take then for retention for me to provide student loan forgiveness?

Do I give it to everyone who has a student loan who works in my

office, only if they say they might leave, only if it is an incentive

to bring them? Where would I draw this line? Because it is becoming ubiquitous. Student loans, as I know from my own family experience, turn out to be an issue that younger people face as a reality.

Do you have any thoughts on that, Dr. Kelman?

Mr. KELMAN. I guess I would say this is not something that

should be addressed in legislation. That is the thing I feel most

strongly. This is a very workplace level, I mean, this is what we

pay managers for, to make decisions like this. I guess I would say

that we should maximize the flexibility that an organization has to

use whatever limited pot of student loan forgiveness money to be

used most effectively.

My quick inclination is that the only thing that legislation should

say is that it is up to the organization to determine how whatever

limited pot is available is used.

Senator DURBIN. Mr. Stier, do you have any thoughts on that?

Mr. STIER. I think that Steve is exactly right. It really is a management issue, and really it should be viewed, again, as a tool, and

I think your emphasis that it is not only a recruitment tool, but

a retention tool, is quite important. Because, indeed, they are really two sides of the same coin, and I think it is important for a manager to see the panoply of different benefits that they can give to

get and keep the talent they need as good managers.

Now, that said, one would hope that, particularly in the government context, that the managers would be held accountable, and

one would hope that, as part of their own evaluation, you would

look to how they are doing in terms of recruiting and retaining talent in their organizations. There are Federal entities that do that—

the Bonneville Power Administration is one of them—to great success.
65

And I think that is one of the really key elements, Mr. Chairman, that you had asked about earlier. If you have to start someplace, one of the key places is really starting on making sure we

have a management and leadership corps here that can get the job

done. There are a lot of things we could do with that.

There is a Commission recommendation about creating a technical line, in addition to a managerial line, in the SES. That is

something I think would be very valuable to explore, to make sure

that you are actually selecting managers for their management

competencies and not simply because you want to give them a

raise, and in fact they deserve a raise. So make it an option so that

people can get the money they deserve and still maintain the competencies that you need.

Senator DURBIN. I would just close with this. I think the student

loan forgiveness issue is a generational issue that we have to deal

with because I think many of us in Congress making the decisions

on student loan forgiveness never lived through what kids are living through today.

Mr. STIER. Right.

Senator DURBIN. Maybe we can identify with our children who

are living through it. My daughter is, in just a few weeks, completing her 28-year educational training. [Laughter.]

And it turns out that, and God bless her, she has done wonderful

things, but it turns out the meter has been running, and when she

finishes, as we discussed over the weekend, she has to think about

a job she can take where she can pay back that student loan.

Mr. STIER. Right.

Senator DURBIN. It is just a fact of life, and if you do not deal

with it, then, frankly, you are going to deal the Federal Government out of the picture.

Mr. STIER. Right.

Senator DURBIN. Thank you all for your testimony.

Senator VOINOVICH. Thank you. Congresswoman Norton.

Ms. NORTON. Thank you, Mr. Chairman.

Just to you, General McIntosh, quite apart from issues of fairness, I am almost frightened by the extent to which the defense of

the United States today is dependent upon the Guard and Reserves. So if, for no other reason, if we want to continue to recruit

people to defend our country, we have got to begin to deal, in some

way, with the questions you raise.

One thing we have not faced is the extent to which the Reserves

and the Guards are race- and class-based; people who have gone

to get expertise, to get training opportunity that they did not have

in this society. My son would not have gone into the Reserves or

the Guard because he is a middle-class boy that went to college.

There are such people who go into the Guard and Reserve.

But one of these days we are going to look and see who goes and

who does not go, and I think we will come particularly to understand that we owe them much more than the waving of the flag,

and even in the bills that we put forward, and certainly we have

got to begin to deal with this differential problem in some way.

I have a question for Ms. Sistare and Dr. Kelman. I believe you

were here and heard testimony of the previous panel that we are

not using the flexibility we have. There may be a number of rea-
66

sons for that, but one reason that clearly came out was the winlose situation that the agency faces, that there is one pot of money,

and if you go to reward employees, even with the existing flexibility, you are taking it out of that pot, and more often than not,

taking it from other employees. And rather than do that, people

simply do not move on the flexibility at all.

I am asking you whether you think pay for performance and

other changes involving pay would be better implemented and better received if, in fact, there were additional resources to accomplish this departure from what has been the norm in the merit system.

Ms. SISTARE. I think, definitely, the Commission definitely feels

that adequate funding of any of these kinds of programs, including

training, which has not been adequately or consistently funded

over the years, is absolutely necessary to its being effective.

Mr. KELMAN. I very much appreciated what you said before

about trying, as a general matter, during the earlier colloquies, to

look for win-win solutions. It has been really tough in this area,

and it has been very frustrating looked at from Boston to see all

of the partisanship and so forth that has taken place here.

I think, inevitably, money is not going to be unlimited. There, inevitably, are going to be some choices and sometimes tough choices.

Obviously, more money greases things. I guess I am personally inclined partly to agree with Ms. Sistare that, for me, actually a priority for additional funds, in addition possibly to some versions of

pay for performance—I do not want to go into great lengths of my

own views on this, I have sort of mixed views, but be that as it

may—I think more money for training, which our friends on the

Appropriations Committees, both in the House and Senate, usually

is the very first thing that gets taken out of any agency’s budget

I think is extraordinarily ‘‘penny wise and pound foolish.’’

I guess we are in a tight budget environment, and, yes, it would

be wonderful to have all of this money to give out and, yes, that

would make things easier, but I also think we have to choose priorities, for whatever pot of money we have, what is going to do the

most to create a public service that attracts and retains good people. I think, at the end of the day, there are going to be some tough

choices. We are not simply going to be able to say let us give more

to everybody.

So I like the idea of trying to look for win-wins. I think we

should do it to the maximum extent we can, but also funds are limited.

Mr. STIER. Congresswoman, I think, bottom line, that the Federal Government has insufficiently prioritized the Federal workforce, and that includes not only resources, but clearly focusing on

good management. I think we have dug ourselves very much into

a hole that we need to fill in and to do better with, and that in

the long term, those kinds of investments, as we have seen from

a lot of private-sector data and public-sector exploration, pay off.

And so I do believe that we do need to see more resources, and

I think, ultimately, for pay for performance to work. A lot of the

skepticism that was raised is the right skepticism, but it is the

right goal for us to be trying to achieve, and we should be figuring
67

out how to get there through a win-win strategy such as the one

that you were suggesting we need to pursue.

Ms. NORTON. And, Dr. Kelman, when I said win-win, that does

not mean that dollar-for-dollar you get as much here as you get

there. Win-win also means lose-lose; that everybody loses something usually, as well. And I will tell you what win-lose is. If you

are trying to do something in the workforce that has not been done

in 100 years, and you begin by giving $25,000 to political appointees, that is win-big lose. Or you begin by saying pay for performance and no additional money, but it comes out of your pot,

that is win-lose.

Now, I am just looking for not—give me an equal amount of

money here. If the world were so simple, that would not be winwin, it would be an inexhaustible supply of resources, and we

would have no problems.

This takes deeper thinking than I am seeing come forward. And

simply saying, ‘‘well, you are not always going to get more money,

gets us back to where they are.’’

Let me ask you a question, Dr. Kelman, further. I think you or

somebody cited a very good example that brings to mind something

that some of us are working on. Was it you, Dr. Kelman, that cited

the example of a brochure that says ‘‘only former and current employees’’?

Mr. KELMAN. Yes, it is actually a job announcement.

Ms. NORTON. Let me try that one on win-win. Because I would

agree, you see, I am looking for some way to streamline and modernize the gargantuan civil service system, while being fair enough

to employees so that they are stakeholders also in that system, and

I have never seen any system, particularly systems I know in the

private sector, that worked any other way.

I am still a professor of law at Georgetown, but when I was a

free citizen, I was on the board of three Fortune 500 companies,

and I never saw them do anything except on a win-win basis. Some

of those companies were unionized and some were not, but they did

understand how to get personnel on-line with you, and if you did

not, you did not have a system.

So I agree that if you are a bright, young person, and you see

you have to already have been a government employee, it makes

you pretty cynical.

Some of the employees that would be most valuable to us are

people at mid level who have considerable expertise. Both of you,

Mr. Taylor and Mr. Stier, in effect, are talking about some of those

employees.

One of the things some of us are considering is a bill that would

invite people at mid level to apply, but it would be open to employees who are not Federal employees and to employees who are Federal employees.

Mr. KELMAN. You mean apply for like a Presidential Management Internship——

Ms. NORTON. Oh, no.

Mr. KELMAN. No. What are you thinking?

Ms. NORTON. Mid level. I am talking about attracting people at

mid level. You know that some of those people are in the private

sector. You know for sure some of them are in the private sector.
68

You know some of them are kind of fed up with the private sector.

They would like to do some public service work. You want to bring

them in. You even want to bring them in at mid level.

But the reason—and I have no idea—you have this brochure that

says ‘‘former and current employees only’’ is because there is perceived to be a competition between these two kinds of employees.

Why not eliminate the competition, and say those of you at mid

level, whether you are in the government or out of the government,

whether you are, I do not know, a GS–12 in the government or you

come from Metropolitan Life Insurance Company, you can compete

for this series of jobs; would that be something——

Mr. KELMAN. Oh, absolutely. No, I mean, it would make no more

sense to exclude current Federal employees from competing for jobs

than it is to limit it. So, no, obviously both groups should be there,

and I guess the worry has been that with more and more people,

younger people, are not looking any more in the same way as our

generation did for one career your whole life, whatever, just stay

in an organization, they are moving around a lot, that the government is cutting itself off from a potential source of talent.

And some people who want to have, as you indicated, a period

of doing public service, but maybe, for whatever reason, feel they

cannot do it their whole career, give them a chance, but certainly

not at the expense of saying we are going to exclude the existing

Federal employees.

Mr. TAYLOR. I would like to make the comment that on that 7-

or 8-foot-long job description, right near the bottom it says, ‘‘Do not

E-mail or fax or call on this position. Only mail your resume.’’

And so what happens at the mid level for talented individuals is,

by the time that system works for that person, it could be 3 or 4

months, in some cases I have had Federal applicants come up to

me at these different conferences and say 9 or 10 months later they

get a call back that says they are interested in talking to you. Well,

you are 7 months into a new job when you get that request.

So it is a balance here is that it is, for Federal employees, they

understand the process and the expectation. So they are the perfect

candidate for the job, which is why there is a lot of insular trading

of employees back and forth between the agencies.

To get somebody from the outside in the private sector, we are

going to have to clean up some of these systems, get the momentum going, which is a lot of what Max has been working on with

the Partnership, and working with Monster, so that we can get

these candidates in, in a timely fashion, get them responded to so

we keep them warm and ready to go to work.

Mr. KELMAN. I once actually asked Jeff what percentage of the

jobs advertised on Monster are entry level versus nonentry level,

and I think you told me it was like over 90 percent are nonentrylevel jobs.

Mr. TAYLOR. Entry-level jobs, like very senior executive jobs, are

not listed, for the most part. Entry-level jobs, most companies,

whether it is hubris or not, think that entry-level workers will

come to them in droves anyway. That is really changing, as we

speak, as more campus recruiting takes center stage.

Ms. NORTON. The Chairman has a vote.
69

I want to say to General McIntosh and to the Chairman, one of

the reasons why I am so attuned to what you had to say is that

I have people in Iraq, people who are second per capita in Federal

income taxes. They have nobody here in the Senate and only me

in the House, and I do not intend to see one more denial to them.

And I want to say to you, Mr. Taylor, there are some agencies

where you can only apply on-line. So we have got to have the balance, too, because not everybody in the world is computer literate,

and we are not only applying for those kinds of jobs. We need

equity for those who are technically competent——

Mr. TAYLOR. Absolutely.

Ms. NORTON [continuing]. And those who might be competent to

come to the Federal Government, but are not on-line.

Thank you very much, Madam Chairman.

Mrs. DAVIS. Thank you, Ms. Norton.

I thank you all. It has been a very long hearing, and thank you

for your patience. If there are no further questions, there may be

additional questions for the record, which we will submit to you in

writing. And for the information of my colleagues, the hearing

record will remain open until the close of business Thursday afternoon.

With that, this hearing is adjourned.

[Whereupon, at 1:09 p.m., the Subcommittees were adjourned.]

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