Assessment of Public Law 106-303: The Role of Personnel Flexibilities in Strengthening GAO's Human Capital
Published: 2003-06-27T00:00:00

Fast Facts:

Highlights:
section_title: What GAO Found
paragraphs: Leading public organizations here and abroud have found that strategic human capital management must be the centerpiece of any serious change management initiative and effort to transform the culture of government agancies. GAO is not immune to these challenges facing the federal government. Over the past 3 years, however, we have made considerable progress toward addressing a number of our major human capital challenges through various initiatives. While many of the initiatives were administrative in nature, the additional flexibilities that the Congress authorized in Public Law 106-303 have helped to ensure that 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.

section_title: Letter
paragraphs: Leading public organizations here and abroad have found that strategic  human capital management must be the centerpiece of any serious change  management initiative and effort to transform the culture of government  agencies. GAO is not immune to these challenges facing the federal  government. Over the past 3 years, however, we have made considerable  progress toward addressing a number of our major human capital  challenges through various initiatives. While many of the initiatives were  administrative in nature, the additional flexibilities that the Congress  authorized in Public Law 106-303 have helped to ensure that 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.
As we approach the third anniversary of Public Law 106-303’s passage, we  are submitting this assessment in accordance with section 6(b) of that law.  This report contains information about our use of the flexibilities  authorized by section 1, Voluntary Early Retirement; section 2, Voluntary  Separation Incentive Payments; and section 3, Modified Reduction in  Force Procedures; and presents our recommendations on the retention of  sections 1 and 2. We do not have any recommendations for modifying  section 3 at this time. To the extent possible, we have provided our  assessment of the effectiveness of the flexibilities in addressing the  challenges we faced when we requested the legislation. We have also  included information about our use of the law’s senior-level provision.  Lastly, we have included a summary of the responses provided by the  Personnel Appeals Board, GAO’s Employee Advisory Council and GAO’s  senior executives with regard to this report and our recommendations.
If you or members of your staff have any questions or comments about  matters discussed in this report, please contact me at (202) 512-5500 or  walkerd@gao.gov or Gene L. Dodaro, Chief Operating Officer, at (202) 512- 5600 or dodarog@gao.gov.
subsections: section_title: Introduction
paragraphs: The U.S. General Accounting Office exists to support the Congress in  meeting its constitutional responsibilities and to help improve the  performance and assure the accountability of the federal government for  the benefit of the American people. Given GAO’s role as a key provider of  information and analyses to the Congress, maintaining the right mix of  technical knowledge and subject matter expertise as well as general  analytical skills is vital to achieving the agency’s mission. GAO spends  about 80 percent of its resources on its people. And yet, like other federal  agencies, GAO has faced significant human capital challenges—challenges  that if not effectively addressed, could impair the timeliness and quality of  its work for its congressional clients and the American people they  represent.
A number of these challenges were created by the significant reduction in  the size of GAO undertaken in the mid-1990s. Specifically, from 1992  through 1997, GAO underwent budgetary cuts totaling 33 percent in  constant fiscal 1992 dollars. To achieve those budgetary reductions while  meeting other agency needs, GAO reduced the number of its employees 39  percent through extensive field office closings and targeted reductions in  headquarters staff. To conform to the reduced budgetary ceiling, GAO then  instituted a virtual hiring freeze at the entry level, cut training for all staff,  suspended agencywide incentive programs, and at times used mid-level  promotions as a retention strategy. Because of the reduction in hiring, the  average age of the agency’s workforce increased, and the retirement  eligibility of staff accelerated. GAO’s analyses showed that by the end of  fiscal 2004, about 34 percent of all GAO employees would be eligible to  retire. For upper-level staff, the proportion eligible to retire was even  larger— 48 percent of all band III management-level employees and 55  percent of all Senior Executive Service members.
Thus, as at many federal agencies, GAO’s human capital profile reflected a  workforce that was smaller, closer to retirement, and at increasingly  higher-grade levels. In addition to the succession-related concerns raised  by such a profile, GAO also faced a range of skills gaps. As major policy  issues have become more complex and as technology has radically altered  the way the federal government conducts business, the types of skills and  knowledge needed by GAO staff have been evolving, and the need for  sophisticated technical skills has been increasing.
Early in his tenure, Comptroller General David Walker recognized that  GAO’s human capital profile and selected skills gaps presented serious  challenges to GAO’s future ability to serve the Congress. Comptroller  General Walker also sought to have GAO become a model federal agency  and a world-class professional services organization that focuses on  delivering positive results for the Congress and the country. The agency’s  ability to operate in an efficient, effective, and economical manner and  meet the ever-changing and increasingly complex needs of the Congress  could be seriously compromised if GAO’s human capital challenges were  not effectively addressed.
As a first step in addressing these concerns, GAO used its internal  administrative authority to implement measures to improve the alignment  of its human capital with the agency’s overall strategic goals and  objectives as contained in GAO’s Strategic Plan. Subsequent to developing  its first strategic plan, GAO undertook a number of major human capital  initiatives, including an agencywide realignment and reorganization, an  overall human capital self-assessment, the revitalization of its recruiting  and college relations programs, an agencywide knowledge and skills  inventory, the development of competency-based performance appraisal  systems, the establishment of an Employee Advisory Council, the  enhancement of GAO’s employee benefit programs, a comprehensive  employee feedback survey, a workforce-planning process, and the  establishment of a professional development program for entry-level  analysts.
In addition to these initiatives, GAO’s leadership recognized that  additional steps to reshape the agency’s workforce were necessary and  that preexisting personnel authorities did not allow the agency to address  these challenges effectively. Therefore, GAO sought legislation  establishing narrowly tailored flexibilities that would help to reshape the  agency’s workforce and recruit and retain staff with needed technical  skills. Based on a sound business case, Public Law 106-303—known as the  GAO Personnel Flexibilities Act—became law in October 2000. The act  authorized the Comptroller General to implement the following personnel  flexibilities:  1.  Offer voluntary early retirement to realign the workforce to meet  budgetary constraints or mission needs; correct skill imbalances;  or reduce high-grade, managerial, or supervisory positions.  2.  Offer separation incentive payments to realign the workforce to  meet budgetary constraints or mission needs; correct skill  imbalances; or reduce high-grade, supervisory, or managerial  positions.  3.  Establish modified regulations for the separation of employees  during a reduction or other adjustment in force.  4.  Establish senior-level scientific, technical, and professional  positions and provide those positions with the same pay and  benefits applicable to the Senior Executive Service while  remaining within GAO’s current allocation of super-grade  positions.
subsections: section_title: Implementation of the Act
paragraphs: After the Congress passed the act in 2000 and the President signed it into  law, GAO began the process of developing regulations to implement the  four authorities it established. Because stakeholder involvement is a  critical component of successful human capital management, particularly  when initiatives are being introduced, GAO established a standard practice  to ensure employee involvement in significant agency initiatives.
GAO’s standard practice involves the initial discussion and presentation of  draft proposals to members of GAO’s Employee Advisory Council—a  panel of employees representing a variety of employee constituent  groups—and also to the agency’s senior executives. The Comptroller  General was personally involved in the vast majority of those exchanges,  which afforded an opportunity for the direct communication of employees’  and managers’ reactions. After the views of employees and managers were  considered, further changes were made, if needed, before the draft  proposal was issued to all employees for their review and consideration.  Materials were posted on GAO’s intranet home page, and employees were  notified by E-mail that proposals were available for their review,  comments, and suggestions for a period of 30 days. The documents were  posted in a user-friendly format that allowed employees to access the  documents and provide comments directly on any or all of the provisions.  Generally, the regulations were accompanied by “Frequently Asked  Questions,” which elaborated on and explained the details of the  provisions. The agency received 60 comments on the voluntary early  retirement order, 33 on the workforce restructuring order, and 12 on the  senior-level order. These comments were collected, reviewed, and  carefully considered by GAO’s Executive Committee prior to finalizing the  regulations.
The approaches that GAO took in implementing these four flexibilities as  well as the results that the agency has achieved are described in the  following four sections.
section_title: Public Law 106-303
subsections: section_title: Section 1: Voluntary Early Retirement
paragraphs: At the time the GAO Personnel Flexibilities Act was passed, GAO’s  workforce was sparse at the entry level and plentiful at the midlevel. The  agency was concerned about its ability to support the Congress with  experienced and knowledgeable staff, given the significant percentage of  the agency’s senior managers and analysts reaching retirement eligibility  and the relatively small number of entry-level employees who were in  training to replace more senior staff. The use of the voluntary early  retirement authority provided in section 1 of the act is one of the tools that  the agency has used to confront this serious issue—one that is facing  much of the federal community.
The act allows the Comptroller General to offer voluntary early retirement  to up to 10 percent of the workforce when necessary or appropriate to  realign the workforce to address budgetary or mission constraints; correct  skill imbalances; or reduce high-grade, supervisory, or managerial  positions. This flexibility represents a proactive use of early retirement to  shape the workforce to prevent or ameliorate future problems. GAO Order  2831.1, Voluntary Early Retirement, containing the agency’s final  regulations, was issued in April 2001 and is included in appendix I. Under  the regulations, each time the Comptroller General approves a voluntary  early retirement opportunity, he establishes the categories of employees  who are eligible to apply. These categories are based on the need to  ensure that those employees who are eligible to request voluntary early  retirement are those whose separations are consistent with one or more of  the three reasons for which the Comptroller General may authorize early  retirements. Pursuant to GAO’s regulations, these categories are defined in  terms of one or more of the following criteria:    organizational unit or subunit,    occupational series,    grade or band level,    skill or knowledge requirements,    performance appraisal average,    geographic location, or    other similar factors that the Comptroller General deems necessary  and appropriate.
Since it is essential that GAO retain employees with critical skills as well  as its highest performers, certain categories of employees have been  ineligible under the criteria. Some examples of ineligible categories are  employees receiving retention allowances because of their unusually high  or unique qualifications; economists, because of the difficulty that the  agency has experienced in recruiting them; and staff in the information  technology area. In addition, employees with performance appraisal  averages above a specified level have not been eligible under the criteria.
To give the fullest consideration to all interested employees, however, any  employee may apply for consideration when an early retirement  opportunity is announced, even if he or she does not meet the stated  criteria. The Comptroller General may authorize early retirements for  these applicants on the basis of the facts and circumstances of each case.  The Comptroller General or his Executive Committee designee(s)  considers each applicant and makes final decisions on the basis of the  institutional needs of GAO. Only employees whose release is consistent  with the law and GAO’s objective in allowing early retirement are  authorized to retire early. In some cases, this has meant that employees’  requests must be denied.
GAO held its first voluntary early retirement opportunity in July 2001.  Employees who were approved for early retirement were required to  separate in the first quarter of fiscal 2002. As required by the act,  information on the fiscal 2002 early retirements was reported in an  appendix to our 2002 Performance and Accountability Report. Another  voluntary early retirement opportunity was authorized in fiscal 2003, and  employees were required to separate by March 14, 2003. Table 1 provides  the data on the number of employees separated by voluntary early  retirement as of May 30, 2003.
Of the 79 employees who separated from GAO through voluntary early  retirement, 66, or 83.5 percent, were high-grade, supervisory, or  managerial employees. High-grade, supervisory, or managerial employees  are those who are in grade GS-13 or above, if covered by GAO’s General  Schedule, in band II or above, if covered by GAO’s banded systems for  Analysts and Attorneys or in any position in GAO’s Senior Executive  Service or Senior Level system.
GAO’s transformation effort is a work-in-progress and, for that reason, the  agency supports additional legislation to make the voluntary early  retirement provision in section 1 of Public Law 106-303 permanent. While  the overall number of employees electing early retirement has been  relatively small, GAO believes that careful use of voluntary early  retirement has been an important tool in incrementally improving the  agency’s overall human capital profile. Each separation has freed  resources for another use, enabling GAO to fill an entry-level position or to  fill a position that will reduce a skill gap or address other succession  concerns. Importantly, these separations are accomplished voluntarily  with the acquiescence of both the employee and the agency. Although  GAO has made progress in improving its human capital profile, there is  still work to do. GAO needs to retain its option to use this flexibility when  necessary to address current and future concerns.
In making this recommendation, GAO points to its progress in changing  the overall shape of the organization. As illustrated in figure 1, by the end  of fiscal year 2002, GAO had almost a 74 percent increase in the proportion  of staff at the entry level (Band I) compared with fiscal year 1998. Also, the  proportion of the agency’s workforce at the midlevel (Band II) decreased  by about 16 percent.
Since the beginning of fiscal 2001, a total of 447 employees have retired  from GAO; 79 (or 17.6 percent) of those retirements are the result of  GAO’s early retirement offerings, and as noted above, 83.5 percent of those  retiring were high-grade, supervisory, or managerial employees. The loss  of these higher-level staff, along with other employees whose skills are no  longer essential to GAO has helped the agency address succession  planning and skill imbalance issues, in addition to increasing the numbers  of entry-level staff who can be hired.
section_title: Section 2: Voluntary Separation Incentive Payments
paragraphs: In addition to authorizing voluntary early retirement for GAO employees,  the act permits the Comptroller General to offer voluntary separation  incentive payments—also known as “buyouts”—when necessary or  appropriate to realign the workforce to meet budgetary constraints or  mission needs; correct skill imbalances; or reduce high-grade, supervisory,  or managerial positions. Under the act, up to 5 percent of employees could  be offered such an incentive, subject to criteria established by the  Comptroller General.
The act requires GAO to deposit into the U.S. Treasury an amount  equivalent to 45 percent of the final annual basic salary of each employee  to whom a buyout is paid. The deposit is in addition to the actual buyout  amount, which can be up to $25,000 for an approved individual. Given the  many demands on agency resources, these costs present a strong financial  incentive to use the provision sparingly, if at all. GAO anticipates little, if  any, use of this authority because of the associated costs. For this reason,  as well as to avoid creating unrealistic employee expectations, GAO has  not developed and issued agency regulations to implement this section of  the act.
GAO also supports legislation making section 2—-authorizing the payment  of voluntary separation incentives—permanent. GAO notes that the  Homeland Security Act of 2002 provides most federal agencies with  buyout authority. Agencies with preexisting legislative authority to offer  buyouts retain their authority, although they may be covered under the  Homeland Security Act provision as well. Although GAO has not yet used  its buyout authority and has no plans to do so in the foreseeable future,  GAO recommends the retention of this flexibility and the elimination of  the expiration date of December 31, 2003. The continuation of this  provision maximizes the options available to the agency to deal with  future circumstances. Since GAO is also eligible to request buyouts under  the provisions of the Homeland Security Act, the agency will consider its  options under this provision as well.
section_title: Section 3: Reduction in Force
paragraphs: Section 3 of the act allows the Comptroller General to prescribe  regulations for the separation of GAO employees during a reduction in  force or other adjustment in force consistent with those issued by the  Office of Personnel Management under section 3502(a) of title 5. In the  event that GAO is required to initiate involuntary job reductions,  employees would compete for retention on the basis of the following  factors in descending order of priority: tenure, veteran’s preference,  performance ratings, and length of federal service. At the discretion of the  Comptroller General, retention may also be based on other objective  factors, including skills and knowledge in addition to the preceding  criteria.
After careful analysis and deliberation, GAO Order 2351.1, Workforce  Restructuring Procedures for the General Accounting Office, containing  final agency regulations, was issued in January 2003. Those regulations,  which are included in appendix II, provide for establishing “zones of  consideration,” which define the geographical and organizational  boundaries within which employees compete for retention. All employees  would be placed in “job groups” that comprise all positions within a zone  of consideration that are at the same grade or band level and that perform  the same duties and responsibilities. The highest priority would be placed  on an employee’s tenure of employment and veteran’s preference. After  consideration of those two factors, an employee would be ranked on the  basis of his or her retention score. This score is based on the employee’s 3- year appraisal average and his or her length of creditable federal service;  greater weight is placed on performance than on length of service.
GAO has not taken any actions under its workforce restructuring  regulations and is sensitive to concerns that were expressed prior to the  passage of Public Law 106-303 about the potential impact of GAO’s  modified reduction in force procedures on veterans. GAO is committed to  protecting the rights of veterans in a manner consistent with title 5 and has  retained all veterans’ protections in GAO orders. Therefore, GAO does not  foresee any impact on veterans that would differ from those at any other  agency involved in realigning or reducing their workforce.
Section 3, authorizing the Comptroller General to develop modified  regulations for the conduct of a reduction or other adjustment in force, is  a permanent authority. The act requires GAO to provide any  recommendations for changes to the section at this time. GAO is unable to  offer recommendations, however, because the procedures have not yet  been used. Circumstances leading to the decision to separate employees  involuntarily are infrequent, and it may be years before the agency has any  significant experience with the use of its procedures. Therefore, GAO has  no recommendations for changes to section 3 at this time.
section_title: Section 4: Senior- Level Positions
paragraphs: To address a variety of complex issues, GAO needed to increase its skill  base in such highly competitive hiring areas as economics, information  technology, actuarial science, and evaluation methodology. Section 4 of  the act permits GAO to establish senior-level positions to meet critical  scientific, technical, or professional needs. To recruit and retain qualified  individuals, the act allows GAO to extend the rights and benefits of Senior  Executive Service employees to these positions. GAO Order 2319.1,  containing the agency’s regulations for the employment of senior-level  staff, was issued in March 2001 and is included in appendix III.
GAO has used this authority to fill eight senior-level positions, including  that of a Chief Accountant, Chief Economist, Chief Statistician, and Chief  Actuary. In addition, three senior-level technologists have been appointed  as well as a senior-level technologist with expertise in cryptography. The  expertise of these senior experts in highly specialized areas of economics,  technology, statistics, and cryptography has contributed significantly to  GAO’s efforts to support the Congress. The accomplishments achieved  with the expertise and contributions of the agency’s senior-level  employees include work on biometric technologies for U.S. border  security, anthrax irradiation of U.S. mail, and National Missile Defense  systems. These experts have also contributed to ensuring that GAO’s work  is based on the most technically accurate methodologies for conducting  cost-benefit studies and for utilizing appropriate data sources. GAO has  found this flexibility to be a critical component in its efforts to ensure that  the agency maintains the skills and knowledge necessary to address the  many highly complex areas of interest to the Congress.
The act does not require recommendations from GAO on section 4, which  permits the agency to establish senior-level positions to meet critical  scientific, technical, or professional needs.
section_title: Employees’, Personnel Appeals Board’s, and Senior Executives’ Assessments
paragraphs: When the act was under consideration, some GAO employees expressed  their concerns about the legislation to their Congressional representatives.  To ensure the active consideration of employees’ views, the act requires  that this report include any assessments or recommendations of the GAO  Personnel Appeals Board and of any interested groups or associations  representing officers or employees of GAO. GAO also agreed to include in  this report information about any impact upon employees’ attitudes and  opinions, as measured by employee feedback survey responses.
In response to these requirements, GAO’s Human Capital Officer sent a  request soliciting recommendations for inclusion in this report to the  Executive Director of the Personnel Appeals Board. The agency also  alerted the members of GAO’s Employee Advisory Council by sending all  members a memorandum notifying them of this provision. The topic was  included on the agenda of the council’s quarterly meeting with the  Comptroller General in March, and all members of the Employee Advisory  Council were given a draft copy of the report for their review. GAO’s  managing directors were also given a draft of this report for review. In  addition, on May 21, 2003, a meeting of all GAO’s senior executives was  held. At this meeting the Comptroller General solicited the views of senior  staff on extending provisions of Public Law 106-303.
The Personnel Appeals Board did not submit a specific assessment of the  act’s implementation. However, in letter to GAO’s Human Capital Officer,  dated May 15, 2003, Beth Don, Executive Director of the Personnel  Appeals Board, stated that the board would be “willing to do a more  comprehensive report in a year or so, at which point we think there will be  more information available on the implementation and effectiveness of the  personnel flexibilities granted under the Act.” Importantly, Ms. Don  indicated that no cases had been filed with the Personnel Appeals Board  concerning the matters covered by the act. She also stated that the board  did not believe it was appropriate to comment, among other things, on the  substantive nature of the regulations promulgated by GAO, or the manner  in which the regulations were promulgated since the Board may be called  upon to adjudicate matters relating to the act and its implementation. The  Employee Advisory Council responded on May 13, 2002, that it did not  have any comments on the report at this time. Using electronic polling  technology that allows for confidential responses, GAO’s senior executives  were asked if the voluntary early retirement and voluntary separation  incentive authorities should be made permanent.  All but one of the 110  respondents agreed or strongly agreed that GAO should seek legislation to  make these provisions permanent.  One respondent was undecided.
As part of ongoing agency efforts to monitor progress in people measures,  GAO conducted employee feedback surveys in 1999 and 2002—before and  after the act’s passage. This survey asked employees for their agreement  or disagreement with a variety of statements relating to their work life but  was not designed to measure the impact of the act’s flexibilities on  employee satisfaction. The 2000 survey elicited an 89 percent response  rate, which was even better than the outstanding 87 percent achieved in  1999. On the basis of a comparison of responses to key questions in 2002  and 1999, employee satisfaction (as measured by the number of “strongly  agree”/“agree” responses) was up in 50 of the 52 categories. Negative  responses (as measured by the number of “strongly disagree”/“disagree”  responses) also declined in 50 of 52 categories.
GAO believes that the impact of the legislation on its employees has been  positive. Clearly, the employees who requested and were approved for  early retirement benefited from the act. Furthermore, the realignment of  resources resulting from these retirements has had a positive impact on  the remaining employees, as well. Ultimately, GAO’s efforts to improve the  strategic management of GAO’s human capital, of which the legislation is a  part, benefit all of GAO. Having the right people in the right places makes  it easier for all GAO employees to be successful in accomplishing their  part of the agency’s mission. In the final analysis, the agency’s efforts to  maximize its value allow us to better serve the Congress and the American  people.
section_title: Appendix I: GAO Order 2831.1
section_title: Appendix II: GAO Order 2351.1
section_title: Appendix III: GAO Order 2319.1