GAO Human Capital Reform Act of 2004: Final Report on GAO's Use of Provisions in the GAO Human Capital Reform Act of 2004
Published: 2010-07-06T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: As required by section 11 of the GAO Human Capital Reform Act of 2004 (Pub. L. No. 108-271), GAO is providing its final report not later than 6 years after the date of the Act's enactment. This report provides, as required by the Act, (1) a summary of the information included in GAO's annual reports for the fiscal year 2005 through 2009 reporting cycle for sections 2, 3, 4, 6, 7, 9, and 10; (2) recommendations for any legislative changes to sections 2, 3, 4, 6, 7, 9, and 10; and (3) any assessment furnished by the GAO Personnel Appeals Board or any interested groups or associations representing officers and employees of GAO.

section_title: Letter
paragraphs: On July 7, 2004, the GAO Human Capital Reform Act of 2004, Public Law  108-271, was enacted and provided GAO with additional human capital  flexibilities. Section 11(b) of the Act requires GAO to submit a final report  concerning the implementation of the Act to Congress not later than   6 years from July 7, 2004. The report requires that we summarize our  previous annual reports to Congress regarding our use of the flexibilities  authorized by section 2, Voluntary Early Retirement Authority and  Voluntary Separation Incentive Payments; section 3, Annual Pay  Adjustments; section 4, Pay Retention; section 6, Increased Annual Leave  for Key Employees; section 7, Executive Exchange Program; section 9,  Performance Management System; and section 10, Consultation.  Additionally, the report must contain any GAO recommendations for  legislative changes to the above noted sections and any assessment  furnished by the GAO Personnel Appeals Board (PAB) or any interested  groups or associations representing officers and employees of GAO.
The following report will provide you with the information required by  section 11(b). We have found that the additional flexibilities Congress  authorized in Public Law 108-271 have helped to ensure we have the right  staff, with the right skills, in the right locations to better meet the needs of  the Congress and the American people. To further assist us, on September  22, 2008, the Congress passed the Government Accountability Office Act of  2008, Public Law 110-323, which provided additional authorities to GAO.
Therefore, at this time, we have no recommendations for any legislative  changes to sections of the 2004 Act.
Regarding the requirement to include any assessment of the Act from the  PAB or other interested groups, we solicited input from the PAB, the GAO  Employees Association, International Federation of Professional and  Technical Engineers (IFPTE) Local 1921, the Employee Advisory Council,  and the Diversity Advisory Council. We only received a written reply from  the PAB which we have included. However, IFPTE Local 1921 did indicate  it will provide comments directly to Congress.
If you or members of your staff have any questions or comments about  matters discussed in this report, please contact me at (202) 512-5600 or  dodarog@gao.gov or Ms. Lynn Gibson, Acting General Counsel, at   (202) 512-5207 or gibsonl@gao.gov.
subsections: section_title: Overview
paragraphs: As required by section 11 of the GAO Human Capital Reform Act of 2004  (Pub. L. No. 108-271), GAO is providing its final report not later than   6 years after the date of the Act’s enactment. This report provides, as  required by the Act, (1) a summary of the information included in GAO’s  annual reports for the fiscal year 2005 through 2009 reporting cycle for  sections 2, 3, 4, 6, 7, 9, and 10; (2) recommendations for any legislative  changes to sections 2, 3, 4, 6, 7, 9, and 10; and (3) any assessment  furnished by the GAO Personnel Appeals Board or any interested groups  or associations representing officers and employees of GAO.
section_title: Summary of GAO’s Annual Reports, Fiscal Years 2005 2009
subsections: section_title: Section 2: Voluntary Early Retirement Authority (VERA)/Voluntary Separation Incentive Payments (VSIP)
paragraphs: Table 1 provides a summary of the number of employees separated from  the agency under both the agency-wide and exception provisions for  voluntary early retirement in fiscal years 2005 through 2009.
The voluntary separation incentive provision requires us to make the  payment out of current appropriations and to pay an additional amount  into the retirement fund, which at a minimum is equal to 45 percent of the  basic pay of the employee who is receiving the payment. Thus, the cost of  using this flexibility is considerable and, given the many demands on our  resources, this provision was not used during the 5-year reporting period.
section_title: Section 3: Annual Pay Adjustments
paragraphs: Section 3(a) of the Act authorized the Comptroller General to determine the  amount of annual pay adjustments for its officers and employees and  described the factors to be considered in making those determinations. This  provision amended 31 U.S.C. 732(c)—which required employees’ pay to be  adjusted at the same time and to the same extent as the General Schedule.  Under section 3(b) the Comptroller General’s authority to establish the  annual pay adjustment is also applicable to employees in the Senior  Executive Service (SES) and in Senior Level (SL) positions. Under both  sections 3(a) and 3(b) an employee must be performing at a satisfactory  level in order to receive an annual pay adjustment  In January 2006, we issued regulations addressing the satisfactory  performance requirement for GAO’s analysts and attorneys. Pursuant to the  regulation, GAO analysts and attorneys had to be performing at “Meets  Expectations” in all competencies to be considered satisfactory. In addition,  most Band IIB and Band III analysts, had to have a performance appraisal  that was in the top 50 percent or 80 percent, respectively, of their band and  team. In subsequent years this added condition was not required. Since the  annual adjustment is a significant component of employees’ annual  compensation, limiting its applicability to satisfactory performers is critical  to the integrity of GAO’s overall pay for performance system.
For calendar years 2006 through 2009, consistent with section 31 U.S.C.  732 (c)(3), the Comptroller General considered various data to determine  the amount of GAO’s annual adjustments, including    salary planning data reported by the professional services, public  administration, and general industry organizations;  the General Schedule adjustment;  the amount of Performance Based Compensation (PBC) and the appropriate  distribution of funds between the annual adjustment and PBC. and    GAO’s funding levels.
The Comptroller General provided an annual adjustment in 2006 and 2007 of  2.6 percent and 2.4 percent, respectively, to those who were performing at a  satisfactory level and who were paid within applicable competitive  compensation limits, except for wage-grade employees, and GAO Personnel  Appeals Board employees. In addition to the annual adjustment, GAO  employees were eligible for PBC based on their performance appraisal  ratings. PBC was calculated using a budget factor of 2.15 percent for both  2006 and 2007. Under section 3(b), the Comptroller General is required to  consider the statutory criteria set out in section 3(a) in determining an annual  increase for members of the GAO SES and SL employees. The Comptroller  General considered these criteria and determined that each member  performing at a satisfactory level would receive in 2006 and 2007 a 1.9 percent  and 1.7 percent increase, respectively—the same increase that was provided  to the Executive Schedule for calendar years 2006 and 2007, respectively. In  2007, SES and SL members were also eligible for PBC using a budget factor of  2.25 percent.
In 2008, after the Comptroller General made preliminary determinations  regarding pay adjustments as had been done in 2006 and 2007, GAO  management negotiated with representatives of the newly established  GAO Employees Association, International Federation of Professional and  Technical Engineers (IFPTE) Local 1921 to reach final agreement  regarding salary adjustments. In addition to the annual adjustment, GAO  employees were eligible for PBC based on their performance appraisal  ratings. Pay adjustments for GAO staff included an annual adjustment of  3.5 percent as well as performance based compensation using a budget  factor of 2.75 percent.
In 2008, for the first time, GAO implemented a “floor guarantee.” The 2008  floor guarantee provided that if the total increase from the annual  adjustment and PBC did not equal at least 4.49 percent of salary, the  employee would receive an additional increase to base pay to equal this  amount regardless of geographic location. For example, in Washington,  D.C., the floor guarantee ensured that all staff received a base pay increase  of at least 4.49 percent and was provided without regard to pay range  maximums limited only by the GS-15, step 10, statutory maximum rate. In  providing the floor guarantee to staff, the additional amount required to  bring the base pay adjustment to 4.49 percent of salary was deducted from  any PBC bonus. Overall, the average total dollar amount resulting from  employees’ annual adjustments, PBC base pay increases and bonuses, and  floor guarantees was approximately 6.12 percent of salary.
GAO employees participating in one of GAO’s development programs  (Professional Development Program, Attorney Development Program,  Communication Analysts Pay Process, Program and Technical  Development Program, and Administrative Pay Process) received the   3.5 percent annual adjustment, not to exceed the maximum rate of their  bands. These employees were not eligible for the floor guarantee because  they received additional performance-based salary increases every   6 months for the 2-year duration of the development program.
GAO’s SES and SL employees were provided the same 2.5 percent increase  authorized for the executive branch. SES and SL members were also eligible  for PBC using a budget factor of 2.25 percent. The PBC was provided to the  SES and SL staff as a base pay increase not to exceed $169,300.
Employees of GAO’s Personnel Appeals Board and student employees are  paid according to GS rates, and GAO’s wage grade employees are paid  according to the Federal Wage System (FWS) salary rates. These employees  received the same percentage across-the-board adjustment on the same  effective date as the increases authorized for GS and FWS employees in the  executive branch. The pay ranges for these employees incorporated the  changes made to the comparable executive branch pay ranges.
Prior to the annual adjustment for 2009, the Government Accountability  Office Act of 2008, Public Law 110-323, September 22, 2008, was passed.  Under section 2 of this Act, the so called “floor guarantee”, as described  above, was enacted into law as section 731(j) of title 31, United States  Code.
For year 2009, following preliminary determinations by the Acting  Comptroller General and negotiations between management and IFPTE  Local 1921, GAO employees received an annual adjustment equal to the  “floor guarantee,” which, for example, equaled 4.78 percent in Washington,  D.C. In addition, employees were eligible for performance based  compensation using a 2.65 percent budget factor.
GAO’s SES and SL employees rated “Fully Successful” were provided a   2.8 percent pay adjustment pursuant to 31 U.S.C. § 733(a)(3)(B) effective  January 4, 2009. SES and SL members were also eligible for PBC using a  budget factor of 2.65 percent. PBC was provided to the SES and SL staff as  a permanent base pay increase not to exceed $174,000.
As in 2008, employees of GAO’s Personnel Appeals Board and student  employees were paid according to GS rates, and GAO’s wage grade  employees are paid according to the Federal Wage System (FWS) salary  rates. These employees received the same percentage across-the-board  adjustment on the same effective date as the increases authorized for GS  and FWS employees in the executive branch. The pay ranges for these  employees incorporated the changes made to the comparable executive  branch pay ranges.
In fiscal years 2005 through 2009, there were no extraordinary economic  conditions or budgetary constraints that had a significant impact on the  determination of the annual pay adjustments.
section_title: Section 4: Pay Retention
paragraphs: Section 4 authorizes the Comptroller General to establish pay retention  regulations applicable to employees who are placed in lower grades or  bands as a result of workforce restructuring, reclassification, or other  appropriate circumstances. Table 2 summarizes these data for fiscal years  2005 through 2009.
section_title: Section 6: Increased Annual Leave for Key Employees with Less Than 3 Years Service
paragraphs: Under section 6, certain key employees with less than 3 years’ service for  purposes of leave accrual may be treated as if they had 3 years of federal  service. Therefore, they would earn 160 hours on an annual basis instead  of 104 hours. These key employees must be occupying positions that are  difficult to fill or have unique or unusually high qualifications and would  be difficult to recruit without additional incentives. Table 3 shows the  number of employees receiving this flexibility in fiscal years 2005 through  2009.
section_title: Section 7: Executive Exchange Program
paragraphs: Section 7 authorized GAO to establish an Executive Exchange Program.  After soliciting and analyzing employees’ comments on draft regulations, we  issued the final regulations for GAO’s Executive Exchange Program on May  20, 2005. The authority was not used in fiscal years 2006, 2008, or 2009.  However, during fiscal year 2007, this authority was used to bring in two  executives from private industry, each for a period of 4 months. At GAO, the  executives worked on several special projects related to federal agency  audits and agency financial statement issues. In addition to helping revise  the GAO/PCIE Financial Audit Manual, they used their experience as  auditors of agency financial statements to help develop protocols to help  GAO interact with the agency-level auditors (inspectors general as well as  public accounting firms) during GAO’s audit of the U.S. government’s  consolidated financial statement. This program was considered a success  from GAO’s standpoint and it met the expectation of the private industry  employer that was involved. The authority expired on July 7, 2009.
section_title: Section 9: Performance Management System
paragraphs: Section 9 relates to GAO’s performance management system and, among  other things, requires a link between the performance management system  and the agency’s strategic plan, adequate training on the implementation  and operation of the system, and a process for ensuring ongoing  performance feedback. Even before the imposition of these requirements,  GAO’s performance management system was in conformity with the  statutory requirements of section 9.
In fiscal years 2005 and 2006, we conducted annual reviews and  assessments of our performance management policies and processes and  made improvements, when appropriate. During fiscal year 2007, an  evaluation of the fiscal year 2006 appraisal and pay cycle was deferred  pending the outcome of the then-ongoing union election.
In fiscal year 2008, GAO undertook various initiatives to ensure the  performance management system met its objectives and provided an even  playing field for all employees. In response to continuing differences between  African American and Caucasian analyst performance appraisal averages, the  Ivy Planning Group conducted an independent assessment of the factors that  may influence these differences, and was also tasked with identifying what  additional steps GAO could take. A final report was issued on April 25, 2008,  which contained over 25 major recommendations. GAO is committed to  implementing the Ivy Planning Group’s recommendations and has a  number of efforts completed and underway to address the  recommendations.
In fiscal year 2009, the agency continued to pursue actions designed to  ensure that the system met its objectives and was fair and equitable for all  employees. GAO established its Management Improvement Priorities  Action Plan that includes five areas of concentration: recognizing and  valuing diversity; reassessing the performance appraisal system; managing  workload, sustaining quality, and streamlining processes; enhancing  staffing practices and developing the workforce; and, finally, strengthening  recruitment and retention incentives. Projects within these five areas  originated from multiple sources, including the Ivy Planning Group's  recommendations, CG Special Projects, and suggestions received over  time from GAO staff at all levels throughout the agency. These areas also  reflect the ongoing efforts of the Office of Opportunity and Inclusiveness,  QCI, the Human Capital Office, and the Chief Administrative Office.
GAO completed one of the key management improvement projects—a full,  systematic, and inclusive review of the performance appraisal system. The  objectives of the review were to examine what works, what does not, and  what could be done better. Data collected included a comprehensive  content analysis of existing data, the results of 28 focus groups of  employees, and 53 semistructured interviews with managing directors and  a random sample of SES/SL, Band III, and field office managers. In  addition, GAO conducted an agencywide, Web-based survey of employees,  with an overall survey response rate of 67 percent. Data from all of these  sources were synthesized into a final report issued in November 2009 with  extensive findings and short- and long-term recommendations for  improving GAO’s performance appraisal system. Planning for  implementing the recommendations is in progress with over 50 percent of  the short-term recommendations already under way. GAO has also  established a steering committee composed of managers and employees  including representatives from IFPTE Local 1921 to guide the direction of  a more extensive contractor review of the current system to address the  findings from the systematic review of the appraisal system.
GAO continues to provide continuing training on the performance  appraisal system and the roles and responsibilities of staff, supervisors,  and managers. To ensure that all designated performance managers are  knowledgeable about appraisal policies, procedures, and practices, GAO  required all raters to take online training prior to preparing fiscal year 2008  ratings. Each subsequent year, all new designated performance managers  must take online training. GAO also continues to expand staff, supervisory  and managerial training and development to include offerings in how to  give and receive feedback.
Lastly, during this period, GAO instituted consistent practices across the  organization with regard to the review of ratings. Designated performance  managers present their preliminary ratings of staff to all Senior Executive  Service reviewers. This panel helps to ensure that all raters are  consistently applying the rating criteria.
section_title: Section 10: Consultation
paragraphs: Section 10 requires us to consult with any interested groups or  associations representing officers and employees of GAO when  implementing changes brought about by this Act. Typically, in  implementing changes such as those in this Act, we have consulted with  interested groups and associations within GAO, provided them with draft  policies and regulations, and obtained input from them on suggested  clarifications or changes to the policies and regulations. We carefully  considered this input and have incorporated it, when appropriate, before  distributing policies and regulations for comment to all employees.
In 2007, GAO Band I and Band II analysts, auditors, specialists, and  investigators, and staff in the Professional Development Program, elected  to be represented by a union and established IFPTE, Local 1921. In 2008,  GAO and IFPTE, Local 1921, reached an interim collective bargaining  agreement. GAO is committed to continuing to work constructively with  IFPTE, Local 1921, to finalize and implement a master term collective  bargaining agreement.
GAO management actively consults with IFPTE Local 1921; the Employee  Advisory Council-which is comprised of headquarters and field  administrative, professional, and support staff (APSS), as well as Assistant  Directors in analyst and analyst-related positions, and attorneys-and the  Diversity Advisory Council-comprised of diversity representatives of  IFPTE, Local 1921, and employee liaison groups for employees who are  disabled, Asian-American, African-American, Hispanic, veterans of the  armed forces, people over 40, and advocates for nondiscrimination based  on sexual orientation or gender identity-to hear and consider employee  needs, concerns, and suggestions as they arise. IFPTE, Local 1921; the  Employee Advisory Council; and the Diversity Advisory Council (DAC) are  the primary mechanisms for fostering collaboration and open  communication between GAO management and staff.
GAO provided all employees with the opportunity to comment on draft  orders concerning proposed policies and regulations prior to publication  in final form. These steps were taken in regard to the promulgation of all  policies and regulations implementing the provisions of the Human Capital  Reform Act of 2004. The Executive Committee considered all input from  Employee Advisory Council and Diversity Advisory Council members and  other GAO employees before implementing any changes.
section_title: Assessments Furnished by Groups Representing Employees
paragraphs: Although GAO specifically solicited comments from the PAB, IFPTE Local  1921, the DAC, and the EAC, only the PAB responded to this request with  comments. These are included in appendix I. IFPTE Local 1921 informed  GAO management that it will provide its input directly to Congress.
section_title: Conclusion
paragraphs: The flexibilities provided in the GAO Human Capital Reform Act of 2004,  along with the human capital flexibilities provided in the 2002 and 2008  Acts, have provided GAO with the ability to attract and retain high caliber  employees so that GAO can meet its responsibilities to the Congress and  the American people.
section_title: Recommendations for Legislative Change
paragraphs: GAO is making no recommendations for legislative change.
section_title: Appendix I: Comments from the Personnel Appeals Board