Human Capital: HHS and EPA Can Improve Practices Under Special Hiring Authorities
Published: 2012-07-09T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: HHS and EPA have been using special hiring authority provided under 42 U.S.C. §§209(f) and (g)referred to in this report generally as Title 42 or specifically as section 209(f) or section 209(g)to appoint individuals to fill mission critical positions in science and medicine and, in many cases, pay them above salary limits usually applicable to federal government employees. GAO was asked to assess the extent to which HHS and EPA have (1) used authority under sections 209(f) and (g) to appoint and compensate employees since 2006, and (2) followed applicable agency policy, guidance, and internal controls for appointments and compensation. GAO analyzed agency Title 42 data, interviewed agency officials, and conducted file reviews.
section_title: What GAO Found
paragraphs: The Department of Health and Human Services (HHS) use of special hiring authorities under 42 U.S.C. §§ 209(f) and (g) has increased in recent years. Nearly all HHS Title 42 employees work in one of three HHS operating divisions: the National Institutes of Health (NIH), the Food and Drug Administration (FDA), and the Centers for Disease Control and Prevention (CDC). Title 42 employees at HHS serve in a variety of areas, including scientific and medical research support and in senior, director-level leadership positions. At NIH, one-quarter of all employees, and 44 percent of its researchers and clinical practitioners, were Title 42 appointees. HHS reported that Title 42 enables the agency to quickly fill knowledge gaps so medical research can progress and to respond to medical emergencies. HHS further reported Title 42 provides the compensation flexibility to compete with the private sector. In 2010, 1,461 HHS Title 42 employees earned salaries over Executive Level IV ($155,500 in 2010). HHS does not have reliable data to manage and provide oversight of its use of Title 42 because the section authority used to hire Title 42 employees is not consistently recorded into personnel systems. Moreover, HHS did not consistently adhere to certain sections of its 209(f) policy. For example, the policy states that 209(f) appointments may only be made after non-Title 42 authorities have failed to yield a qualified candidate, but GAO found few instances where such efforts were documented. HHS has recently issued updated 209(f) policy that addresses most of these issues. HHS is developing agencywide policy for appointing and compensating fellows under 209(g), but it is not clear the policy will address important issues such as documenting the basis for compensation. Since 2006, the Environmental Protection Agency (EPA) has used section 209(g) to appoint 17 employees. Title 42 employees lead scientific research initiatives and some manage or direct a division or office. According to EPA officials, Title 42 provides the flexibility to be competitive in recruiting top experts who are also sought by private industry, academia, and others. Also, Title 42 provides the appointment flexibility needed to align experts with specific skills to changing scientific priorities. Fifteen of EPAs 17 Title 42 employees earned salaries over Executive Level IV in 2010. EPA appointment and compensation practices were generally consistent with its guidance; however, EPA does not have postappointment procedures in place to ensure Title 42 employees meet ethics requirements to which they have previously agreed.
section_title: What GAO Recommends
paragraphs: GAO recommends HHS (1) ensuresection authority209(f) or 209(g)be consistently entered in appropriatepersonnel systems, (2) systematically document how policy requirements were fulfilled when hiring or converting 209(f) employees, and (3) ensure agencywide 209(g) policy currently in development provides guidance for documenting the basis for employee compensation. GAO recommends EPA develop and document a systematic approach for ensuring Title 42 employees are compliant with ethics requirements after appointment. HHS agreed with GAOs recommendations, while EPA disagreed, citing certain actions already taken. GAO acknowledges EPAs plans to address these issues, but maintains the recommendation is needed to ensure implementation.

section_title: Letter
paragraphs: The Department of Health and Human Services (HHS) and the  Environmental Protection Agency (EPA) are among the agencies that  have cited difficulties in recruiting and retaining individuals in medicine,  science, engineering, and other related fields in support of their missions.  One reason for these difficulties, according to agency officials, is salaries  available under typical federal government hiring authorities are  sometimes not competitive with those in the private sector for individuals  in these highly specialized and competitive fields. Since 2001, we have  designated strategic human capital management a government-wide  high-risk area in part because of the need to address current and  emerging critical skills gaps that are undermining agencies’ abilities to  meet their missions.
Effective use of various human capital flexibilities is one way agencies  can improve their efforts to recruit, hire, and manage their workforces.  Such flexibilities, provided under 42 U.S.C. §§209(f) and 209(g)—referred  to in this report generally as Title 42 or specifically as sections 209(f) or  (g)—are available only to HHS and EPA. Section 209(f) authorizes the  employment of special consultants to assist and advise in the operation of  the Public Health Service (PHS), while section 209(g) authorizes  fellowships in the PHS for scientists who may be assigned to studies and  investigations for the term of their fellowships. HHS has used sections  209(f) and (g) and EPA has used section 209(g) to appoint individuals  from the private sector and academia as well as to convert federal  government employees under other pay systems—such as the General  Schedule—to Title 42.
In implementing Title 42, the agencies have set higher pay limits than   Per HHS  those provided under typical civil service hiring authorities. policy, the annual base salary for many appointments under Title 42 at  HHS cannot exceed $250,000 per calendar year, with total compensation  not to exceed $275,000 unless approved by the Secretary.effort to this audit, we are issuing a legal opinion on whether there are  any statutory caps on pay for consultants and fellows appointed under  sections 209(f) and (g). Similarly, EPA policy caps annual base salary for  Title 42 employees at $250,000, with total compensation that may not  exceed $275,000. According to HHS and EPA officials, the pay setting  flexibility is needed to compete with the private sector and academia to  recruit and retain critical personnel. Because agencies exercise broad  discretion in their use of Title 42 authority, it is important that they have  robust policies and internal control mechanisms in place to implement  and monitor use of the authority. To obtain a better understanding of the  appointment and compensation practices under sections 209(f) and  209(g), you asked us to assess the extent to which HHS and EPA (1)  have used authority under sections 209(f) and (g) to appoint and set pay   In a related  for employees since January 2006, and (2) have followed applicable  agency policy, guidance, and internal controls for appointments and  compensation.
To assess the extent to which HHS and EPA have used authority under  sections 209(f) and (g) to appoint and set pay for employees, we obtained  agency personnel data that we analyzed to describe: (1) appointment and  compensation trends at HHS and EPA since 2006, including the number  of Title 42 employees; (2) the types of occupations and positions held by  Title 42 employees; (3) compensation rates, including the number of Title  42 employees earning more than certain federal salary levels; (4) the  number of Title 42 employees receiving nonsalary payments; and (5) the  number of civil servants that have been converted to Title 42  appointments and the compensation changes associated with those  conversions. We conducted a variety of data tests and interviews with  agency officials to correct and refine HHS Title 42 data and were able to  develop a data set that was reliable for our purposes. For EPA, we  performed data testing, interviewed agency officials, and compared data  to information found in official agency documents and determined that  EPA’s data were reliable for our purposes. To determine the extent to  which HHS and EPA have followed applicable policy, guidance, and  internal controls, we reviewed the policies and guidance at HHS and EPA  to understand the conditions under which Title 42 employees are to be  recruited, appointed, compensated, and managed. We conducted 63  case file reviews at HHS and 10 at EPA to document appointment and  compensation practices and compared those practices to agency policies  and guidance. Those cases were chosen based on a random selection of  cases that had characteristics related to various areas of HHS’s and  EPA’s Title 42 policy and guidance. We determined the number of case  file reviews was sufficient to identify incidences where practices were or  were not consistent with policies and guidance, but our findings are not  generalizable to the entire population of Title 42 employees at HHS or  EPA. See appendix I for a more detailed discussion of our objectives,  scope, and methodology.
We conducted this performance audit from May 2011 through July 2012  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The authority to appoint and set pay for special consultants and fellows  was provided as part of the Public Health Service Act in 1944. Section  209(f) authorizes the employment of special consultants to assist and  advise in the operation of the PHS. The PHS is comprised of most  operating divisions within HHS—including the National Institutes of Health  (NIH), the Food and Drug Administration (FDA), and the Centers for  Disease Control and Prevention (CDC)—as well as some staff divisions  within the Office of the Secretary. See figure 1 for HHS’s organizational  structure, including those operating divisions and main staff divisions  considered to be within the PHS. Section 209(g) authorizes fellowships in  the PHS for individual scientists who may be assigned for studies and  investigations either in the United States or abroad. Sections 209(f) and  (g) both authorize the establishment of regulations to further implement  these authorities. HHS Office of the Secretary develops agencywide  policy and guidance and operating divisions may set additional or  supplemental policy as necessary. In 2005, Congress provided EPA with  the authority to use section 209 to make a limited number of  appointments in its Office of Research and Development (ORD).Congress initially granted this authority to EPA for fiscal years 2006  through 2011, but Congress amended the authority twice and currently  EPA is permitted to employ up to 30 persons at any one time through  fiscal year 2015. EPA issued regulations in 2006 implementing this  authority, which closely follow HHS regulations.
HHS regulations for section 209(f) provide that special consultants may  only be appointed when the PHS cannot obtain services through regular  civil service appointments or under the compensation provisions of the  Classification Act of 1949. The regulations further provide that rates of  compensation for special consultants are to be set in accordance with  criteria established by the Surgeon General. The Surgeon General is part  of the Office of the Assistant Secretary for Health. HHS has used this  authority, for example, to appoint doctors and others with expertise in  specialty fields to initiate or provide assistance in conducting medical  research and set pay for those individuals at rates above those allowed  under other federal government pay systems.
HHS regulations covering section 209(g) provide that fellowships may be  provided to secure the services of talented scientists for limited duration    (up to 5 years) for health-related research, studies, and investigations. The regulations further provide that the Secretary may authorize  procedures to extend the term of fellowships, may authorize stipends for  the fellows, and is responsible for establishing appointment procedures  beyond those set forth in the regulations.
Some Title 42 employees earn pay within or exceeding pay levels found  in the Executive Schedule. The Executive Schedule is a five-level, basic  pay schedule applicable to the highest-ranking executive appointments in  the federal government. Executive Schedule pay rates range from  Executive Level V ($145,700 since 2010) to Executive Level I ($199,700  since 2010).
Only HHS and EPA are authorized to use Title 42 hiring authority. By  contrast, regular hiring authorities such as those under title 5 of the U.S.  Code—commonly referred to as Title 5—may be used by any federal  agency. Pursuant to HHS and EPA policy, employees at HHS and EPA  originally hired under Title 5 or other authorities may be converted to Title  42 in some circumstances. Under these policies, employees hired under  Title 42 are eligible for performance bonuses, incentives, and other  nonsalary payments made available to federal employees compensated  under Title 5.
Title 42 employees most frequently work within one of three operating  divisions:
NIH is the nation’s medical research agency and is comprised of the  Office of the Director and 27 institutes and centers, including the  National Cancer Institute; National Institute on Aging; National Heart,  Lung, and Blood Institute; and the National Center for Complementary  and Alternative Medicine. Each institute and center has its own  specific research agenda, often focused on a particular disease or  body system. As the central office at NIH, the Office of the Director  establishes NIH-specific policy and oversees the institutes and  centers to ensure they operate in accordance with said policy. While  most of its budget goes to extramural research personnel at more  than 3,000 universities and research institutions, NIH also has  intramural research laboratories on the NIH main campus in  Bethesda, Maryland. The main campus is also home to the NIH  Clinical Center, which is the largest hospital in the world totally  dedicated to clinical research.
FDA is responsible for, among other things, protecting the public  health by assuring the safety, efficacy, and security of human and  veterinary drugs, biological products, medical devices, the nation’s  food supply, cosmetics, and products that emit radiation. FDA is also  responsible for regulating tobacco products.
CDC conducts activities such as identifying and defining preventable  health problems and maintaining active surveillance of diseases;  serving as the PHS lead agency in developing and implementing  operational programs relating to environmental health problems; and  operational research aimed at developing and testing effective  disease prevention, control, and health promotion programs.
EPA uses section 209(g) as the basis for hiring some scientists within  ORD, the scientific research arm of EPA. ORD’s work at EPA laboratory  and research centers provide the science and technology to identify  environmental hazards, assess risks to public health and ecosystems,  and determine how best to control or prevent pollution. According to EPA  documents and officials, EPA uses Title 42 to secure the services of  experienced and talented scientists for renewable appointments where,  because of the nature of the work and expertise needed, regular hiring  authorities are impractical. EPA has not made appointments using section  209(f).
section_title: HHS Has Increased Its Use of Title 42, but More Reliable Data Could Improve HHS’s Oversight
paragraphs: During 2010, HHS had 6,697 employees who were appointed under  sections 209(f) or (g). All but 27 of these employees served at NIH,  FDA, or CDC, while the remaining employees served in the Office of the  Secretary or within other operating divisions, as shown in figure 2.
The number of employees appointed under sections 209(f) and (g)  increased overall at HHS by 25 percent from 2006 through 2010, as  shown in table 1. Since 2006, the number of Title 42 employees grew by  15 percent at NIH, by 54 percent at FDA, and by 81 percent at CDC,  while declining by 48 percent at the Office of the Secretary and all other  operating divisions.
The increased use of Title 42 authority came during a period when HHS  made recruiting and retaining mission-critical elements of its workforce a  priority. HHS’s 2007-2012 Strategic Plan included strategic objectives: (1)  recruiting, developing, and retaining a competent health care workforce,  and (2) strengthening the pool of qualified health and behavioral science  researchers. HHS officials generally attributed the increases in Title 42  employees to the agency’s response to urgent public health matters and  effects of the economic downturn on the private sector and academia,  which, according to officials, made the agency more attractive to  prospective or on-board employees. Specifically, according to HHS:
The 15 percent increase from 2006 through 2010 at NIH can be  attributed, in part, to the effects of the economic downturn on the  biomedical research labor market. Officials told us that as extramural  research funding available in the private sector and academia is  shrinking, NIH is able to use Title 42 to more successfully recruit and  retain biomedical investigators and clinical specialists.
The spike in Title 42 appointments at FDA in 2008 and 2009 is a  result of the Food and Drug Administration Amendments Act of 2007  and the Food Protection Plan, FDA’s strategy for protecting the  nation’s food supply. Additionally, in 2008 FDA launched its first  class of Commissioner’s Fellows (hired under section 209 (g) for up to  a two year period) beginning with 50 fellows, another class of 50 in  2009, and a third class of 45 in 2010.
At CDC, increased use of Title 42 was attributed to the urgency of  certain programs such as the overseas Global AIDS Program and  those under the Office of Public Health Preparedness and Response.  For these programs, officials told us they needed employees with  specialized scientific skills or training and experience and would not  have been able to obtain them without Title 42.
As discussed later, we were unable to determine which section  authority—sections 209(f) or (g)—was used more often because HHS  section authority data was not reliable for this purpose.
As shown in table 2, NIH relies on Title 42 authority for a greater  percentage of its total workforce than does FDA and CDC. In 2010, 25  percent of all NIH employees were Title 42 employees, while 10 percent  of CDC employees and 6 percent of FDA employees were Title 42. NIH  relied on Title 42 authority for a substantial portion—44 percent—of its  total research and clinical practitioner workforce.
Title 42 employees at HHS serve in a variety of functional areas, including  scientific and medical research support and in senior, director-level  leadership positions. Base salary ranges for Title 42 employees varied by  operating division and occupation. In 2010, almost 60 percent of Title 42  employees at NIH served in one of five general occupations: staff  scientist, research fellow, senior investigator, clinical research nurse, and  clinical fellow. Table 3 describes some of the general responsibilities and  duties, educational characteristics, and salary data for these occupations  at NIH.
At FDA and CDC, the most common occupation of Title 42 employees is  a fellow. In 2010, 340 (39 percent) of FDA’s Title 42 employees were staff  fellows. These positions are for promising research and regulatory review  scientists. In general, staff fellows at FDA conduct or support research,  provide technical direction and supervision to other researchers, publish  scientific articles, and review contract and grant proposals designed to  support their research projects. Staff fellows must have a doctoral degree  in bio-medical, behavioral, or related science and, according to FDA  policy, total compensation may not exceed certain pay limits ($155,500 in  2010) unless the Director of Human Resources and Management and  Services grants an exception. FDA staff fellows’ base salary range in  2010 is approximately $42,000 to $224,000, with an average base salary  of about $96,000 and a median salary of about $92,000. Three of 340  staff fellows at FDA earned more than $155,500 in 2010.
Of CDC’s Title 42 employees in 2010, 687 (74 percent) were senior  service fellows or associate service fellows appointed to study areas such  as basic and applied research in medical, physical, biological,  mathematical, social, biometric, epidemiological, behavioral, computer  sciences, and other fields directly related to the mission of CDC. Senior  service fellows must have a doctoral degree and associate service fellows  must have a master’s degree. Senior service fellows had a base salary  range in 2010 of approximately $49,000 to $155,500, with an average  base salary of about $103,000 and a median salary of about $100,000.  Associate service fellows had a base salary range of approximately  $44,000 to $93,000, with an average base salary of about $69,000 and a  median salary of about $71,000.
subsections: section_title: Some Title 42 Employees Are Paid Above Executive Salary Levels
paragraphs: The average base salary for all HHS Title 42 employees in 2010 was  about $116,000 and the median salary was about $101,000. More than  one-fifth of all Title 42 employees at HHS, however, earned a base salary  above Executive Level IV ($155,500 in 2010). Congress regularly refers  to executive salary levels in order to express minimum or maximum levels  of pay authorized for positions in the federal government. For example,  Congress has imposed a cap of Executive Level IV on salary (i.e., basic  pay) rates where pay is fixed by administrative action under 5 U.S.C. §  5373. In a related effort to this audit, we are issuing a legal opinion on  whether there are any statutory caps on pay for consultants and fellows  appointed under 42 U.S.C. §§ 209(f) or (g), including whether the cap  under section 5373 applies. Table 4 shows the number of Title 42  employees whose base salary is within or above the various Executive  Salary Levels in 2010.
HHS has converted a number of employees from positions under the  General Schedule or other pay systems to positions under Title 42. Of the  1,183 new Title 42 appointees in 2010, 45 of them—or about 4 percent— were current HHS employees that were converted to Title 42 positions.  Thirty of these conversions occurred at NIH. We also found that  employees converted to Title 42 from other pay systems generally earned  higher compensation than in their previous position. Employees  converted in 2010 earned, on average, $34,000 more in base salary than  earned in their previous position. However, many did not receive the  same amount of nonsalary payments (including retention incentives)  received while employed under the General Schedule or other pay  system. Therefore, the average increase in total compensation (base  salary and incentive or other nonsalary payments) was about $14,000 in  2010.
Under HHS policy, Title 42 employees are eligible to receive performance  bonuses; recruitment, retention, and relocation incentives; and other  nonsalary payments that are available to other HHS employees. In  2010, HHS issued nonsalary payments to 6,336 of its 6,697 Title 42  employees. Seventy-one percent of Title 42 employees earned ratings- based individual cash awards. Less than 1 percent (60) of Title 42  employees received nonsalary payments in the form of recruitment,  retention, or relocation incentives.
According to senior officials at HHS’s human resource office and NIH,  Title 42 authority provides two primary benefits—appointment agility and  compensation flexibility. These officials said appointment agility enables  the agency to hire scientists, doctors, and other consultants to quickly fill  knowledge, skill, and ability gaps so that medical research can move  forward and to respond to medical emergencies. For example, according  to HHS officials, the agency used Title 42 authority to quickly hire experts  needed to develop a vaccine in response to the H1N1 flu pandemic of  2009. Appointment agility is also important because many research  projects, particularly those at NIH, are not meant to be long-term and Title  42 appointments can align with project time frames better than hiring full- time permanent staff under regular hiring authorities. In some cases, the  temporary appointment of a researcher with highly-specialized skills to  assist with a limited-scope, limited-duration study may be more  appropriate than a permanent position.
According to officials, compensation flexibility helps HHS compete with  the private sector and academia to hire and retain highly qualified  employees with rare and critical skill sets, such as neuroscientists,  applied researchers in dietary intakes, and engineers that can operate  particle accelerators. HHS human resource officials stated the salaries  HHS can offer to its top researchers are often not commensurate with  private sector salaries. However, they said the higher compensation limits  under Title 42 combined with other benefits—such as name recognition  and access to advanced research equipment and technology not often  available in the private sector or academia—can help offset  compensation disparities and make HHS attractive to researchers,  doctors, and scientists.
section_title: HHS Does Not Have Reliable Data on the Use of Its Title 42 Authority
paragraphs: Because HHS does not consistently electronically record the authority  under which many of its Title 42 employees were appointed, the number  of employees hired under either section 209(f) or (g) could not be  determined. When an employee is hired under Title 42 authority, HHS  human resource officials create a personnel record in its central  personnel transaction system, the Enterprise Human Resources and  Payroll (EHRP) system. A required field in the personnel record exists to  select a code from a drop-down menu designating the general authority  under which the individual was hired, such as Title 42 or Title 5 authority.  The personnel record also contains an open-ended text field to manually  enter a specific section authority such as sections 209(f) or (g), applicable  to Title 42 authority. Our analysis of HHS data found thousands of cases  where the section authority applicable to Title 42 was not recorded in  EHRP. We also found that when the section authority field was used,  there were more than 400 different types of entries made in the EHRP  records.
According to HHS officials, there are some data elements in the EHRP  system—including the section authority under Title 42—that are  unreliable. The majority of the unreliable data elements are those from  nonrequired data entry fields. Whereas required fields must be completed  before a personnel action is saved in the system, Title 42 section  authority is a free-form, open-ended field and there is no system control in  place to ensure the field is recorded or recorded accurately prior to saving  the personnel action. Our case reviews found the section authority for  appointment—such as sections 209(f) or 209(g)—was always  documented on hard copy personnel action forms, but in many cases was  not recorded in personnel records in the EHRP system.
We have previously reported that effective workforce planning and  management require that human capital staff and other managers base  their workforce analyses and decisions on complete and accurate  personnel data. The lack of reliable information in this area may  preclude HHS, Congress, and other organizations from providing effective  oversight of the Title 42 program and evaluating its effectiveness. For  example, the lack of section authority data in EHRP has made it difficult  for HHS to provide accurate headcounts of employees hired under  sections 209(f) or (g) and resulted in HHS overstating the number and  operating division of its employees hired under these sections to  oversight bodies, including Congress, and in response to this audit. We  identified more than 600 instances where HHS erroneously included  employees in its data submission to us that were not appointed under  sections 209(f) or (g). Some erroneous cases included individuals we  later found were hired under appointing authorities other than sections  209(f) or (g), including appointing authorities under 42 U.S.C. §§ 247b-8  and 210(g). One result of including these cases in error was HHS  reported it had made appointments under 209(f) or (g) at the Centers for  Medicare and Medicaid Services, which would be prohibited by law. Our  analysis found these appointments were made under different authorities.
HHS officials acknowledged there were potentially many cases included  that were not employees hired under sections 209(f) or (g) as it was  sometimes difficult to discern from available data whether employees  were hired under sections 209(f) or (g), rather than other authorities under  Title 42. According to human resource officials, when attempting to report  on the agency’s Title 42 employees, they chose to include questionable  cases rather than risk an undercount.
section_title: HHS Did Not Consistently Adhere to Sections of Its Title 42 Policy and Lacks Guidance for Some Authority Provisions
subsections: section_title: Section 209(f) Hiring and Conversions
paragraphs: HHS did not consistently adhere to certain sections of its policy for hiring  and converting employees under section 209(f). We conducted 28 case  file reviews of appointments made under existing section 209(f) policy to  determine the extent to which HHS practices were consistent with its  policy.employees, the case file reviews indicate that HHS appointment practices  are consistent with some aspects of its section 209(f) policy. For example,  all appointees met education requirements for the type of scientific  position being filled. While not an explicit requirement of the policy, HHS  consistently documented the basis for compensation and any recruitment  or retention incentives provided to section 209(f) employees. In some  cases, however, HHS did not consistently adhere to its requirements, as  shown in table 5.
While not generalizable across the population of Title 42  incumbent is directly involved in or manages scientific research or  activities, and administrative positions that require the incumbent to  have scientific credentials.
Requires that the same recruitment plan be used for both Title 5 and  Title 42 to demonstrate that other available personnel systems failed  to yield qualified candidates. Further, the policy also explains the  process and documentation requirements necessary to demonstrate  that other available personnel systems, including Title 5, the Senior  Biomedical Research Service, and PHS Commissioned Corps, have  failed to yield qualified candidates.  Identifies specific positions and/or categories of positions at NIH that  may be filled through section 209(f) without “exhausting” other  recruitment mechanisms or authorities.
section_title: Section 209(g): Appointing and Compensating Fellows
paragraphs: HHS has no agencywide implementing policy for appointing and  compensating employees hired as fellows under section 209(g), including  details about what documents are needed to support the basis for  appointments and compensation. We have previously reported that  agencies should have clearly defined, well-documented, transparent, and  consistently applied criteria for appointing and compensating personnel.
In lieu of guidance from HHS, the individual operating divisions  established their own policies and guidance for appointing and  compensating fellows under 209(g), each with different levels of detail,  compensation limits, and documentation requirements. NIH has  instructions for appointing fellows as well as guidance for the use of  recruitment and retention incentives. FDA’s Service Fellowship Plan  provides appointment and compensation setting procedures for section  209(g) fellows and caps total compensation at Executive Level IV, with  some exceptions above that cap available for consideration. CDC’s policy  for its 209(g) Fellowship Program provides provisions for all fellows and  general compensation guidance. Top pay for a fellow is set at the  equivalent of the Grade 15, Step 10 pay level.
The lack of an HHS-wide policy poses the risk that compensation  decisions for section 209(g) fellows at HHS may not be made consistently  across operating divisions. Although some guidance exists at the  operating division level for setting compensation targets, in 11 of the 20  case studies we conducted of section 209(g) fellows, we found either no  or insufficient documentation to support the basis for compensation.  Without an agencywide policy, an agency cannot be assured that it is  allocating its resources most appropriately. According to senior human  resource officials at HHS, an agencywide policy is needed and the  agency is developing a policy for appointment and compensating fellows  under 209(g). However, it is not clear that the policy will address  important issues such as documenting the basis for compensation. The  section 209(g) policy was still in development as of May 2012.
section_title: EPA Employs a Limited Number of Title 42 Fellows, Primarily in Leadership Roles
paragraphs: Congress provided EPA with the authority to use 42 U.S.C. § 209 to  employ up to 30 persons at any one time through fiscal year 2015. EPA  has appointed 17 fellows in ORD from 2006 to 2011 under section 209(g).  Of the 17 fellows appointed under Title 42, 12 were hired from outside  EPA, while the remaining 5 converted from other positions within EPA.  Of the 17 appointments, 14 were selected through advertised  competition. To date, all 17 fellows remain with EPA and appointments for  the three fellows hired in 2006 have been renewed for another 5-year  term.or conversion.
See figure 3 for the cumulative onboard Title 42 staff, by new hire  integrated systems toxicology research program, was previously an  Associate Dean at a university where the individual led similar  research efforts, and leads an ORD division with more than 80 staff.
Another leads a research program by developing biological measures  to assess the impact of environmental exposure on human health and  serves as Director for the Environmental Public Health Division.
The lead scientist for bioinformatics within the National Center for  Computational Toxicology (NCCT) is a Title 42 fellow, responsible for  conducting data analysis and developing solutions for data  management, and serving as senior advisor to the center’s director.
According to EPA officials, Title 42 provides two important tools EPA  needs to achieve its mission. First, EPA reported that Title 42 provides  the flexibility to be competitive in recruiting top experts who are also  sought after by other federal agencies, private industry, and academia.  Prior to using Title 42, EPA had difficulty recruiting and retaining scientists  in certain highly specialized disciplines under regular hiring authorities.  We reported in 2001 that EPA faced significant challenges in recruiting  and maintaining a workforce with mission-critical skills in key technical  areas such as environmental protection, environmental engineering,  toxicology, and ecology. EPA officials told us Title 42 has helped the  agency recruit individuals in cases where, because of the specialization of  expertise needed, authority to set pay over the limits of other hiring  authorities was needed to be competitive in the labor market. As such,  the minimum base salary for Title 42 employees at EPA is equal to the  highest base pay level for employees paid under the General Schedule,  and the maximum base salary is $250,000.
EPA officials also stated Title 42 provides the appointment flexibility  needed to align experts with specific skills to changing scientific priorities.  One specific program where EPA cited the importance of using Title 42 in  that way was in the development of the NCCT. There are four Title 42  fellows at NCCT, including its director. The fellows assist in the  development of NCCT initiatives, such as the Computational Toxicology  Research Program, a program that is developing alternatives to traditional  animal testing. A 2010 review by the National Academy of Sciences  National Research Council reported “the use of Title 42 appointments to  develop NCCT is an excellent example of how such appointments can be  used to build new capacity and advance the state of science.” EPA  officials stated it is not the agency’s intention to hire a fellow long-term  under Title 42, but rather employ the individual as long as a priority  remains high. For the three fellows hired in 2006, EPA renewed the terms  for another 5-year appointment.
Annual salaries range from approximately $153,000 to $216,000, with an  average salary of about $176,000 and a median salary of about  $171,000. As shown in table 6, 15 of the 17 EPA fellows had salaries  exceeding Executive Level IV.
Of the 12 new hires from outside EPA, 8 earned more in annual pay than  earned in the position previously held, 3 earned less than in their previous  position, and 1 appointee’s salary did not change. Salary changes from  previous positions ranged from a decrease of $85,000 to an increase of  $40,000, not including recruiting incentives. Eight of the 12 new hires  received recruitment incentives ranging from $10,000 to $50,000. EPA  documents indicate that the recruitment incentives were offered to  compete with private industry and to aid in career transition. All five  employees converted from other positions within EPA received a salary  increase, ranging from $6,000 to $15,000. None of the converted  employees received incentive payments.
Converted employees generally assumed additional responsibilities as a  Title 42 employee. Our case studies included four of the five EPA  employees who converted to Title 42. Of the four appointees who came  from within EPA, one was promoted from the lead oil research program  scientist to the director of the land remediation and pollution division, one  moved from being an associate director to a division director within the  same national center, one was promoted from a branch chief to a division  director, and one remained a director.
In December 2010, EPA began a pilot of using market salary data to  estimate salaries of what Title 42 candidates could earn in positions  outside of government given their education, experience, professional  standing, and other factors. EPA used the market salary data to inform  salary negotiations for the five fellows appointed since the implementation  of the pilot. According to EPA officials, the market salary pilot concludes  in December 2012 and its effect will be analyzed at that time.
section_title: EPA Appointment and Compensation Practices Were Generally Consistent with Its Guidance, but EPA Could Improve Resolution of Potential Conflicts of Interest
paragraphs: In appointing Title 42 fellows, EPA generally followed appointment  guidance described in its Title 42 Operations Manual. The manual  provides guidance for managers, supervisors, and human resources  specialists implementing Title 42. In all 10 case files we reviewed,  documents provided by EPA show Title 42 practices were generally  consistent with its guidance and requirements. Table 7 shows some  selected Title 42 appointment requirements and observations from our  case reviews.
We conducted 10 case file reviews of EPA Title 42 employees and in 2  cases we discovered issues related to EPA’s procedures for mitigating  potential financial conflicts of interest. EPA’s Title 42 employees are  subject to the same laws and regulations that govern the ethical conduct  of other federal employees. For example, covered Title 42 employees are  required to submit a public financial disclosure report (SF-278) as part of  the appointment process and annually thereafter. Title 42 employees are  also covered under the criminal conflict of interest law, 18 U.S.C. § 208.  Section 208 prohibits a federal employee from participating personally  and substantially in a particular matter in which he or she has a personal  financial interest. The statute is intended to prevent an employee from  allowing personal interests to affect his or her official actions and to  protect governmental processes from actual or apparent conflicts of  interest. The application of the statute can be waived so that an employee  need not divest his or her financial interest or recuse themselves from the  particular matter, where the nature and size of the financial interest and  the nature of the matter in which the employee would participate are  unlikely to affect an employee’s official actions.
EPA’s Title 42 guidance includes pre-employment ethics clearance  procedures for identifying and mitigating potential conflicts of interest prior  to appointment. As part of the procedures, an ethics official in EPA’s  Office of General Counsel (OGC/Ethics) works with the candidate to  ensure that all required information is reported on the disclosure form and  to develop an ethics agreement, as necessary, to mitigate or resolve any  identified potential conflicts. A job offer may only be extended after  OGC/Ethics signs the public financial disclosure report. Although EPA has preappointment ethics clearance procedures as noted above, it does  not have postappointment procedures in place to ensure Title 42  employees meet ethics requirements to which they have previously  agreed. In two cases we reviewed, employees had potential conflict of  interest situations arise after appointment resulting, in part, from the  agency’s failure to ensure Title 42 employees followed agreed upon  ethics requirements.
In one case, EPA general counsel determined stock owned by the  candidate could be a potential conflict of interest and directed the  candidate to either recuse himself from certain duties or divest himself  of the stock as a condition of employment. The candidate agreed to  divest of the stock and was subsequently hired. A year later, during  the routine review of the employee’s annual financial disclosure form,  EPA discovered that the employee still owned the stock. The  employee was ordered to divest of the stock and this time immediately  complied. EPA also reviewed the projects for which the employee was  involved while still owning the stock and determined that the  employee had not participated in any particular matter which would  have constituted a conflict of interest. According to EPA, there was  confusion concerning who, if anyone, was tasked to ensure the  divestiture occurred.  In another case, based on the review of the candidate’s public  financial disclosure form, EPA and the candidate entered into an  ethics agreement, which documented ethical constraints that would  apply to the candidate and to caution the candidate about certain  assets held. The agreement listed entities in which the individual held  stock and advised that, as required by 18 U.S.C. § 208, the individual  should not participate in any particular matter that affected any of the  listed entities unless the individual first obtained a written waiver from  EPA/OGC or the value of the asset was low enough to qualify under a  regulatory de minimis exemption. Despite these efforts, a year later,  while responding to the employee’s request for additional time to file  the annual public financial disclosure form, EPA discovered that the  employee was participating in a matter while holding stock in a  company (a listed entity in the ethics agreement) that EPA/OGC  initially believed could be affected by this matter. Concluding that the  employee’s participation was a conflict of interest, EPA/OGC directed  the employee, who had been working on the matter for approximately  3 days, to immediately stop working on the matter. The employee  immediately complied and sold the stock holding in question in order  to resume working on the matter. OGC/Ethics made no inquiry into  the specific activities the employee engaged in during those 3 days.  Almost 2 years later, OGC/Ethics officials now conclude that this  company was not sufficiently affected by the matter to present a  violation of 18 U.S.C. § 208 in light of facts that subsequently  emerged.
EPA officials acknowledge that beyond these two cases, its efforts to  identify and mitigate potential conflicts of interest after appointment can  be improved and have taken steps to improve ethics oversight. For  example, in order to increase overall awareness of ethics responsibilities,  EPA reported it provided additional training to a senior ethics official and  now copies Deputy Ethics Officials – officials responsible for assisting  employees in being compliant with ethics requirements – when cautionary  memoranda are issued. EPA also told us it has plans to develop  mandatory training sessions for ethics officials in its field laboratories and  centers and implement a process where employees hired under the Title  42 and other authorities send EPA OGC confirmation of such actions as  stock divestitures or signed recusals. As details and implementation  timelines for these plans were not available at the time of our review, it is  not clear that these plans fully consider and address ethics issues that  arise after appointment and ensure previously agreed upon ethics  requirements are followed, as was the issue in the two cases above.
section_title: Conclusions
paragraphs: HHS and EPA have used Title 42 to recruit and retain highly skilled, in- demand personnel to government service. Although HHS relies on Title  42 to fill some of its most critical scientific and medical research positions,  the lack of complete data and guidance may limit the agency’s ability to  strategically manage the use of the authority. HHS erroneously reported  appointments made under sections 209(f) and (g) that would have been  prohibited by law, indicating the agency’s data management practices  may preclude effective oversight of the program and workforce planning.  Effective oversight is particularly important in light of HHS’s increasing  use of Title 42 and the number of employees earning salaries higher than  most federal employees. Inconsistencies between HHS’s policies and  practices related to section 209(f) may result in that authority being used  in ways for which it was not intended. Recent changes to 209(f) policy  issued by HHS should help the agency more consistently follow  requirements. As appointments have been made under 209(g) without  documentation showing the basis for compensation, relying on 209(g)  guidance issued only at the operating division level may not be sufficient  to ensure appointments and compensation under this authority are  appropriate and consistent. HHS has acknowledged the need for  agencywide 209(g) guidance, but has not determined if it will include  requiring documentation showing the basis for compensation. EPA  generally followed its Title 42 policies and has incorporated some  modifications to improve its appointment and compensation practices;  however, EPA’s current ethics guidance does not sufficiently ensure Title  42 employees meet ethics requirements after appointment. EPA  acknowledged it could improve its postappointment ethics oversight and  reported it has plans to ensure that Title 42 employees send OGC  confirmation of stock divestitures and other ethics requirements.  However, at the time of our review, EPA had not provided us with  implementation plans or timeframes. Although its plans appear to be  prudent steps for addressing the specific issues that arose in the cases  we reported, it will be important for EPA to implement them as soon as  possible to mitigate the risk of future potential conflict of interest issues.
section_title: Recommendations for Executive Action
paragraphs: To help ensure HHS has the data and guidance necessary to effectively  oversee and manage its Title 42 authority, we recommend that the  Secretary of HHS take the following three actions:
Ensure section authority—sections 209(f) or (g)—be consistently  entered in appropriate automated personnel systems, such as making  section authority a required, drop-down field in its personnel system  where this information is initially entered.
As part of its effort to implement new section 209(f) guidance,  systematically document how policy requirements were fulfilled when  hiring or converting 209(f) employees. This could include such items  as:  −  −  the basis for which the position is considered scientific,  recruitment and retention efforts made under other hiring  authorities before using Title 42,  −  a conversion’s recognition as a national or international expert in  −  a conversion’s original scientific or scholarly contributions of major  significance in the field,  −  a conversion’s leadership in the field equivalent to a full-tenured  professor in academia, and  −  a conversion’s special knowledge and skills of benefit to the  agency.
As part of its ongoing effort to develop agencywide policy for  appointing and compensating employees hired under section 209(g),  ensure the policy requires and provides guidance for documenting the  basis for employee compensation.
To help improve enforcement of ethics requirements, we recommend the  Administrator of the EPA direct the Designated Agency Ethics Official:
As part of its efforts to improve postappointment ethics oversight,  develop and document a systematic approach for ensuring Title 42  employees are compliant with ethics requirements after appointment.  Implement, as part of this approach, reported plans to require Title 42  employees to provide proof of compliance with ethics agreements to a  designated ethics official within a reasonable timeframe after  appointment.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided the Secretary of Health and Human Services and the  Administrator of the EPA an opportunity to comment on a draft of this  report. The HHS Assistant Secretary for Legislation and EPA’s Acting  Assistant Administrator for Research and Development provided written  responses and technical comments, which we incorporated as  appropriate. The agencies’ comments appear in appendix II and III.
In a June 7, 2012, letter responding to a draft of this report, HHS agreed  with each of the three recommendations. HHS’s ongoing and proposed  actions noted in the response address our concerns and are likely to  improve the agency’s management and oversight of its Title 42 authority.
HHS agreed with our first recommendation to ensure section authority is  consistently entered in appropriate automated personnel systems.  Specifically, HHS stated that as it moves forward with the implementation  of a new enterprise human resources system, it will explore the possibility  of using a drop-down field to enter Title 42 section authority. HHS stated  that its Office of Human Resources will continue to work with the  Operating Divisions and Staff Divisions to ensure that Title 42 personnel  actions are processed in a consistent and accurate manner.
HHS also agreed with our two recommendations addressing Title 42  policies. HHS stated that, in part due to our findings, it updated its section  209(f) policy to address our concern that HHS document how policy  requirements were fulfilled when hiring or converting section 209(f)  employees. In addition, HHS agreed with our recommendation to develop  agencywide policy for appointing and compensating employees hired  under section 209(g) authority. HHS stated that the section 209(g) policy  will be implemented in the near future.
In a June 6, 2012, letter responding to our draft, EPA disagreed with the  recommendation directed to EPA and our discussion of the second ethics  case. Specifically, EPA requested that we update our discussion to note  that the individual had not yet visited a site related to work on the matter.  EPA stated that since the individual had not yet visited the site, EPA is  not aware of any evidence that the employee personally and substantially  participated in the matter.
We do not believe a change in the discussion of this ethics matter is  warranted. GAO made no independent conclusions as to whether the  individual’s participation during the brief period of time we note  constituted personal and substantial participation in the matter and  whether this was a conflict of interest in violation of 18 U.S.C. § 208.  Rather, our discussion of this case, including whether the individual’s  participation was a conflict of interest, was based exclusively on and  attributed to conclusions made by EPA/OGC, both at the time of the event  and in subsequent interviews conducted for this engagement.
Specifically, documentary evidence at the time of our review supports the  fact that EPA’s concern was the individual’s participation in the matter in  general, and that EPA’s concern was not influenced by the fact that the  individual was not yet on site. As we reported, EPA/OGC directed the  individual to stop working on the matter when it found he owned stock in a  company that could be affected by the matter he was working on (the  individual immediately stopped working on the matter and sold the stock  in order to resume working on this matter.)
EPA disagreed with our statement that it is not clear that EPA plans to  develop an approach to address ethics issues that arise after  appointment and ensure previously agreed upon ethics requirements are  followed. In its comments, EPA noted that on February 17, 2012, it sent  us a letter documenting the steps it has taken and plans to take to  address postappointment ethics issues and ensure previously agreed  upon ethics requirements are followed. Specifically in its February letter,  EPA reported it recently implemented a process in which they now copy  Deputy Ethics Officials when cautionary memoranda are issued to OGE  278 filers. EPA also reports it has plans to implement a process for public  filers, including employees hired under the Title 42 special hiring  authority, to ensure that they send OGC confirmation of stock  divestitures, for example, or signed recusals.
We agree that providing cautionary memoranda to the officials  responsible for assisting the employee in remaining compliant with ethics  requirements is a step that could improve EPA’s postappointment ethics  oversight and added this example to the report accordingly. However,  because EPA did not provide a firm date or timelines for implementing its  reported plan to ensure employees send OGC confirmation of stock  divestitures or signed recusals, we did not revise the finding.
EPA disagreed with the recommendation that it develop and document a  systematic approach for ensuring Title 42 employees are compliant with  ethics requirements after appointment and consider adding steps to the  ethics clearance process that require Title 42 employees to provide proof  of compliance with ethics agreements. EPA asked that we remove the  recommendation or revise it to acknowledge the plans mentioned above  and that EPA continues working towards implementation.
We acknowledge EPA is considering a plan to require proof of  compliance with ethics agreements and, because we believe this is a  prudent and needed step for improved ethics oversight, have revised the  recommendation to reflect EPA’s plans. As the two ethics issues we  reported occurred over two years ago and EPA has acknowledged  improvements in its postappointment ethics oversight are needed, such  plans should be implemented as soon as possible. We maintain that the  recommendation is still necessary to ensure EPA develops detailed plans  and begins moving toward implementation as soon as possible to mitigate  the risk of additional potential conflict of interest issues.
As agreed with your offices, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to the  appropriate congressional committees. We are also sending copies to the  Secretary of Health and Human Services and the Administrator of the  Environmental Protection Agency. In addition, the report is available at no  charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-2757 or goldenoffr@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This report examines the extent to which the Department of Health and  Human Services (HHS) and the Environmental Protection Agency (EPA)  have (1) used authority under 42 U.S.C. §§ 209(f) and (g) to appoint and  set pay for employees since January 2006, and (2) followed applicable  agency policy, guidance, and internal controls for Title 42 appointments  and compensation.
To address the first objective, we obtained and analyzed personnel data  from HHS and EPA to describe Title 42 appointment and compensation  trends at HHS and EPA since 2006, including the number of Title 42  employees; the types of occupations and positions held by Title 42  employees; compensation rates, including the number of Title 42  employees earning more than certain federal salary levels; the number of  nonsalary payments (e.g., performance bonuses and retention incentives)  provided to Title 42 employees and their purpose; and the number of civil  servants that have been converted to Title 42 appointments and  compensation changes associated with those conversions. We  determined 2006 was the most appropriate beginning year for our  analysis because, according to HHS human resource officials, personnel  data prior to 2006 was likely not sufficiently reliable for our analysis. Also,  EPA began using Title 42 in 2006. HHS data presented in this report is  2006 through the end of 2010, the last year of complete data available;  and at EPA, 2006 through the end of 2011.
We conducted a variety of data tests and interviews with agency officials  to correct and refine HHS Title 42 data and were able to develop a data  set that was sufficiently reliable for our purposes. We could not, however,  report on the number of HHS Title 42 employees hired under a particular  section authority—sections 209(f) or (g)—because section authority is not  consistently recorded by HHS. For EPA, we performed data testing and  interviewed agency officials to identify any data gaps or inconsistencies  with compensation data provided and compared EPA data to information  found in official agency documents. We determined that EPA’s data were  sufficiently reliable for the purposes of our report.
To assess the extent to which HHS and EPA have followed applicable  policy, guidance, and internal controls, we reviewed the policies and  guidance at HHS and EPA in order to understand the conditions under  which Title 42 appointees are to be recruited, appointed, compensated,  and managed. We determined case file reviews would be the most  appropriate approach to obtain the information needed to (1) compare  practices with policy and guidance, and (2) provide illustrations and  context for data analysis results. We conducted a total of 63 case file  reviews out of 1,502 HHS cases within selected strata in two phases. In  the first phase, we conducted 23 case file reviews to address data  reliability concerns. The number of case file reviews in this phase was  proportional to the frequency with which we identified and observed cases  with data characteristics that deviated from our understanding of the  purpose and use of sections 209(f) and (g). In the second phase, we  conducted 40 case file reviews based on a random selection of cases that  had characteristics related to various areas of HHS Title 42 policy and  guidance.
For the HHS case file selection, cases were grouped into strata based on  certain characteristics—such as hired under section 209(f), hired under  section 209(g), newly hired in 2010, converted in 2010, or with aspects of  data inconsistent with our understanding of Title 42’s purpose—and  randomly selected from within those strata. For EPA, we selected 10 of  the 17 Title 42 employees for case file reviews based on a cross section  of (1) labs and centers within EPA to understand if Title 42 was  implemented uniformly across the agency; (2) Title 42 candidate sources  such as the private sector, academia, and conversions to determine if  differences existed in recruitment and pay setting; (3) length of service as  a Title 42 employee to understand the effect of recent appointment and  compensation guidance; and (4) compensation characteristics. We  developed a data collection instrument for both HHS and EPA file reviews  to capture information that was uniform and comparable.
At the conclusion of each phase of our case file reviews, we analyzed the  results and recorded our observations and listed the next steps—such as  interviews with agency officials and further data analysis—needed to  obtain further context for our observations. The results from the case file  reviews and subsequent activities enabled us to understand the results of  our data analyses and provided the basis for findings. We determined the  number of case file reviews was sufficient to identify incidences where  practices were or were not consistent with policies and guidance, but our  findings are not generalizable to the entire population of sections 209(f)  and (g) employees at HHS or EPA.
We conducted this performance audit from May 2011 through July 2012  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix II: Comments from the Department of Health and Human Services
section_title: Appendix III: Comments from the Environmental Protection Agency
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Trina Lewis, Assistant Director;  Shea Bader; Carl Barden; Laurel Beedon; Andrew Ching; Sara Daleski;  Jeffrey DeMarco; Karin Fangman; Ellen Grady; James Lager; Cynthia  Saunders; Jeff Schmerling; and Gregory Wilmoth made major  contributions to this report.