Federal Workforce: Opportunities Exist to Improve Data on Selected Groups of Special Government Employees
Released: 2016-08-15T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: The SGE category was created by Congress in 1962 to make certain ethics rules less restrictive than for other federal employees to overcome obstacles in hiring outside experts and other temporary employees for occasional service. SGEs are employees appointed to serve for not more than 130 days during any one year period.

GAO was asked to examine agencies' use of SGEs not serving on federal boards. This report: (1) describes what is known about the total number of SGEs not serving on federal boards; (2) assesses the extent to which OGE, OPM, and selected agencies identify, collect, and report data; (3) assesses how selected agencies appoint, use, and track SGEs; and (4) examines how OGE oversees and ensures compliance with ethics requirements.

GAO analyzed OGE, OPM, and agency data; reviewed agency documentation; and interviewed agency officials. GAO selected five agencies—the Departments of Health and Human Services, Justice, State, Nuclear Regulatory Commission and National Science Foundation—based in part, on the number of SGEs and ratio of SGEs not serving on federal boards to total employees.

section_title: What GAO Found
paragraphs: Federal agencies made limited use of special government employees (SGE) not serving on federal boards. As of December 2014, approximately 3 percent of SGEs (1,138 of 40,424) were working as experts or consultants and not serving on federal boards, according to the Office of Government Ethics (OGE). Over a 10-year period (2005 to 2014), GAO found that agencies used an annual average of approximately 2,000 SGEs, with a peak of about 3,100 in 2009 and a low of about 500 in 2013.

Agencies are responsible for reporting on SGEs not serving on federal boards to OGE. The Office of Personnel Management (OPM) requires agencies to identify SGEs on an individual's personnel action. OGE's data reflected what agencies reported on SGEs not serving on federal boards. Three of the five agencies GAO reviewed had challenges reporting reliable data on SGEs not serving on federal boards. The Department of Health and Human Services (HHS) had difficulty distinguishing between SGEs not serving on federal boards and those who were, and HHS did not explain data discrepancies. GAO found instances of misidentified SGEs not serving on federal boards at the Nuclear Regulatory Commission (NRC) and the Department of State (State), but the agencies provided corrected data. Weak internal coordination and misunderstanding about the SGE designation contributed to the identification challenges. Stronger data would better position agencies to report on SGEs and provide the required ethics training. Moreover, accurate and complete data are important to allow OGE and Congress to provide informed oversight of agencies.

Three of the five selected agencies primarily used expert and consultant hiring authorities to appoint SGEs not serving on federal boards. The other two agencies generally used their agency-specific authorities. The agencies used these employees in specialized areas (see figure). Four of five agencies said supervisors are generally responsible for tracking SGEs' days of service. One agency permits SGEs to track their own days.

OGE has not found any issues specific to SGEs not serving on federal boards. GAO's analysis of 23 OGE reviews at Chief Financial Officers Act agencies and the Consumer Financial Protection Board for fiscal years 1998 to 2014 showed no issues specific to SGEs not serving on federal boards. Further, OGE had no outstanding recommendations related to SGEs at the selected agencies.

section_title: What GAO Recommends
paragraphs: GAO recommends HHS take steps to improve the reliability of data on SGEs not serving on federal boards and OGE should determine whether other agencies are experiencing data challenges similar to HHS, State, and NRC and take appropriate action. HHS concurred. OGE partially concurred. GAO maintains that OGE should undertake the actions as discussed further in the report.

section_title: Letter
paragraphs: Congress established the Special Government Employees (SGE)  category in 1962 to overcome obstacles in hiring outside consultants,  experts, and other temporary employees by making certain ethics rules  for these employees less restrictive than for regular federal government  employees. SGEs are employees who are retained, designated,  appointed, or employed to perform temporary duties, with or without  compensation, for not more than 130 days during a 1-year period. SGEs  may serve the government in a variety of ways, including working  individually on discrete projects, or as members of federal advisory  committees. At the end of 2014, all categories of SGEs made up  approximately 1 percent, or 40,424, of the federal government’s 4.2  million civilian and military personnel.

Questions have been raised about the number of SGEs employed by  federal agencies and how agencies use SGEs. For example, frequently,  SGEs have substantial outside activities and financial interests that may  raise difficult ethics questions.

You asked us to review agencies’ use and oversight of SGEs in the  federal workforce for SGEs not serving on federal advisory or other  committees, commissions, or boards at the 24 agencies covered under  the Chief Financial Officers (CFO) Act of 1990, as amended, and the  Consumer Financial Protection Bureau (CFPB). This review (1)  describes what is known about the total number of SGEs not serving on  federal boards in the executive branch, as well as  CFPB; (2) assesses  the extent to which the Office of Government Ethics (OGE), the Office of  Personnel Management (OPM), and selected agencies identified,  collected, and reported data on SGEs not serving on federal boards; (3)  assesses how selected agencies appoint, utilize, and track SGEs not  serving on federal boards, and describes the relevant hiring authorities  and ethics requirements; and (4) examines how, if at all, OGE oversees  and ensures compliance with ethics requirements for SGEs, including  the proper identification of individuals as SGEs, consistent with 18  U.S.C. § 202(a).

To address these objectives, we reviewed the federal statutes,  regulations, and guidance that address SGEs and the ethics restrictions  applicable to SGEs. To help address our second and third objectives, we  selected five case study agencies: Department of Health and Human  Services (HHS), Department of Justice (DOJ), Department of State  (State), National Science Foundation (NSF), and Nuclear Regulatory  Commission (NRC). We based our selection on criteria such as the  number of SGEs, the size of the agency, OGE ethics program review  results, and the ratio of SGEs not serving on federal boards compared to  the agency’s 2-year on-board average of all employees, among other  criteria. We analyzed OGE’s, OPM’s, and selected agencies’ data on the  number of SGEs at CFO Act agencies and CFPB between fiscal and  calendar years 2005 and 2014. We compared OGE data on the total  number of SGEs not serving on federal boards with selected agency data  for the most recent years available—2012 and 2013. We examined  OGE’s process for reviewing agency data.

We also compared selected agency data on individual SGEs not serving  on federal boards with OPM data for 2005 to 2014. We found the data  from OGE and four selected agencies (DOJ, State, NRC, and NSF)  sufficiently reliable to report annual totals of SGEs. For two agencies, we  found several instances of misidentified SGEs and, after discussion with  the agencies, they provided corrected data. We found that one of the  selected agencies, HHS, provided unreliable effective dates for SGEs not  serving on federal boards. We found that the OPM data did not have  complete information that would allow us to report on annual totals of  SGEs not serving on federal boards in the executive branch agencies.

To assess how selected agencies appoint, utilize, and oversee SGEs, we  examined agency documentation and interviewed agency officials on the  (1) process for designating and hiring SGEs not serving on federal  boards; (2) hiring authorities used; (3) internal coordination among hiring,  ethics, and general counsel offices; (4) types of roles and responsibilities  SGEs performed; and (5) agency tracking of whether SGEs’ stay within  the 130-day service estimate. To examine how, if at all, OGE oversees  and ensures compliance with ethics requirements for SGEs, we examined  selected agency documentation and interviewed officials on OGE ethics  program reviews and open recommendations. We also examined  statutory and regulatory provisions covering OGE’s roles and  responsibilities. For more information on our objectives, scope, and  methodology, see appendix I.

We conducted this performance audit in Washington, D.C., from January  2015 through July 2016 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
subsections: section_title: SGEs Serve Temporarily and Have Fewer Ethics Restrictions Than Other Employees
paragraphs: A SGE is an employee expected to perform temporary duties for no more  than 130 days during a 1-year period. An individual hired under a  temporary appointment can be designated a SGE where the employing  agency makes a good-faith estimate that the individual is not expected to  serve more than 130 days in the succeeding 1-year period. Under the  executive branch’s longstanding interpretation, while SGEs are expected  to serve no more than 130 days in a 1-year period, if an individual was  designated a SGE but unexpectedly exceeds the 130 days of service,  that person is still considered a SGE for the current year. However, OGE  advises that if the SGE is to serve beyond the 1-year period, the agency  will need to make a new estimate for the following year, and the prior  year’s experience will have a bearing on whether the agency reasonably  can conclude that the employee is likely to serve no more than 130 days  in the next year (see appendix II for a legislative history of the  establishment of the SGE status).

SGEs are covered by most ethics rules, but the application of some of  those rules to SGEs is less restrictive than for other employees and  permits them to engage in more outside activities (see appendix III for a  comparative overview of select ethics rules for SGEs and other  employees). Employees of the executive branch are covered under  numerous prohibitions and requirements set forth under statute (criminal  and noncriminal), executive order, and regulation. The criminal statutes  establishing the foundation for acceptable conduct while serving the  public include the bribery and illegal gratuities prohibitions (18 U.S.C. §  201) and the criminal conflict of interest prohibitions (principally 18 U.S.C.  §§ 203, 205, 207, 208, and 209).

SGEs are covered by most, but not all, of these criminal statutes and in  some instances are afforded distinct treatment from other employees.  Like other employees, SGEs are subject to prohibitions on bribery and  illegal gratuities, and prohibited from participating in matters that directly  affect their own financial interests (or the financial interests of individuals  or entities attributed to the employee). SGEs are generally not afforded  special treatment under the various post-employment bans on the  activities of former employees. However, SGEs are subject to  substantially narrower restrictions than other employees on their outside  representational activities (including the receipt of compensation related  to such activities).

As illustrated in figure 1 below, SGEs are not covered under the ban on  outside supplementation of government salaries. More specifically, a  regular employee cannot receive compensation from anyone (other than  the government) for performing government service. SGEs are subject to  the standards of conduct regulations, which implement the principles of  ethical conduct established under Executive Order No. 12674, and  prohibits SGEs from, among other things, receiving compensation for  teaching, speaking, and writing that is undertaken as part of the  employee’s official duties. While the treatment of SGEs is generally the  same as for other employees under these standards of conduct, there are  exceptions.

Apart from the government-wide ethics requirements, some agencies  have developed supplemental agency-specific ethics requirements  covering their employees, including SGEs. Four of the five selected  agencies for this review have supplemental regulations covering ethics  restrictions. For example, NRC has a list of prohibited securities that  certain covered employees, including SGEs, cannot own, including stock,  bonds, or other security interests in certain companies.

section_title: Roles of OGE, OPM, and Agency Offices in SGE Oversight, Designation, and Hiring
paragraphs: OGE provides overall leadership and oversight of the executive branch  ethics program designed to prevent and resolve conflicts of interest with  all employees, including SGEs. OGE established the standards of  conduct regulations—covering issues such as gifts, conflicting financial  interests, impartiality, seeking employment, misuse of position, and  outside activities—which address not only actual conflicts of interest but  also activities that give rise to the appearance of such conflicts. In  addition, OGE issued regulations addressing the management of agency  ethics programs, including procedures related to reviewing public and  confidential financial disclosure. It also provides ethics training to  agency officials.

OGE officials said there is no standardized way for agencies to approach  the SGE designation process. However, OGE stated that pursuant to the  executive branch’s longstanding interpretation of 18 U.S.C. § 202, a  proper designation requires a prospective good faith determination at the  time of an appointment that the individual is not expected to perform  services for more than 130 days of the succeeding 1-year period. OGE  believes that a prospective determination is important so that employees  are on notice with respect to the ethics laws and rules that will apply to  them.

To help carry out its oversight role, OGE collects data on agency ethics  programs. Executive branch agencies are required to submit an annual  report to OGE concerning certain aspects of their ethics programs. OGE  provides an annual questionnaire to each executive branch agency to  assist agencies in fulfilling this requirement. The annual questionnaire  covers a range of issues, including the agency’s ethics program structure  and staffing, as well as ethics education and training policies. According  to agency officials, OGE also uses the annual questionnaire to gain  knowledge about individual programs as well the overall program and to  make informed decisions about agency resource allocations and  priorities.

OPM provides guidance to agencies on government-wide hiring  authorities to ensure that agencies properly utilize these authorities, such  as the expert and consultant appointment authority, which may be used to  on-board employees ultimately categorized as SGEs (see appendix IV for  examples of government-wide hiring authorities used by selected  agencies to hire SGEs). OPM requires all federal agencies to identify that  an employee is a SGE on the government records documenting an  individual’s personnel action—Standard Form 50. Agencies also can  identify an employee as a SGE by using a specific remark code—E21 on  the personnel action form. OPM collects data on federal employees,  including SGEs, from agencies that submit personnel data through the  Enterprise Human Resources Integration (EHRI) Statistical Data Mart.

Some, but not all, of the information on the personnel action form is  collected in OPM’s EHRI. The use of the specific remarks code for SGE is  not mandatory for agencies.

At individual agencies, multiple offices may play a role in on-boarding and  designating SGEs. Those offices may include the hiring or appointing  office, the human capital office, the ethics office, and the office of general  counsel. Generally, the hiring office takes the lead role in identifying the  skill set and length of service needs. The agency’s human capital office  advises on the appropriate use of hiring authorities, processes the  personnel action to on-board the SGE, and enters the personnel action  information into the personnel database. Agencies are required to identify  the SGE designation on the personnel action Standard Form 50. The  agency’s ethics office is responsible for training employees, including  SGEs, on their ethics requirements so that they are able to identify  potential problems and seek the advice and counsel of ethics officials,  when appropriate. Ethics offices may also provide technical assistance to  the hiring office by advising on how to make a good faith service days  estimate for the purposes of making a SGE designation, and evaluating  whether the individual has potential conflicts of interest. At agencies  where the ethics functions are not within the general counsel’s office, then  the agency’s general counsel’s office may also have a role in helping to  ensure that ethics statutes and regulations are applied appropriately to a  SGE.

section_title: Agencies’ Use of SGEs Not Serving on Federal Boards Is Limited
paragraphs: OGE data show SGEs not serving on federal boards make up a small  portion of total SGEs in the executive branch. According to OGE data,  federal agencies reported 40,424 total SGEs in the executive branch as  of December 31, 2014. As of that date, about 3 percent of those SGEs  (1,138 of 40,424) were not serving on federal boards and employed as  experts or consultants. At the end of 2013, that figure was about 1  percent (515 of 41,335). Over a 10-year period (from 2005 to 2014), we  found that agencies generally reported more limited use in 2014 than  in 2005, and used an annual average of approximately 2,000 SGEs not  serving on federal boards, with a peak of about 3,100 in 2009 and a low  of about 500 in 2013.

As shown in figure 2, OGE data show the numbers of SGEs not serving  on federal boards in the executive branch varied over the 10-year period.  According to OGE, agencies’ use of SGEs not serving on federal boards  varies depending on their need for particular expertise at any given time.

As shown in figure 3, most SGEs not serving on federal boards were  employed at the 24 CFO Act agencies and the CFPB—about 94 percent  (484 of 515) at the end of 2013 and about 99 percent (1,276 of 1,288) at  the end of 2012. In 2012 and 2013, the selected agencies comprised 63  percent (805 of 1,288) and 29 percent (149 of 515) of SGEs in the  executive branch, respectively (see appendix V for a complete breakout  of SGEs not serving on federal boards at each of the 24 CFO Act  agencies and CFPB).

Since 2012, OGE officials reported the agency has taken a number of  steps to improve individual agency’s reporting on SGEs. For example, in  2014, OGE began posting agencies’ responses, unedited, and some of  the results from its annual questionnaire on its website. OGE officials  believe publicizing agency responses will increase reporting  accountability. Also, in 2014, OGE officials convened focus groups with  executive branch ethics officials to identify any challenges with  understanding ethics reporting requirements, including for SGEs, in the  annual questionnaire. In 2015, OGE officials added a skip-ahead feature  to its annual questionnaire to help streamline agencies’ responses. This  feature helps to prevent agencies from responding to questions that are  not germane to their agency. OGE also directed executive branch  agencies to centralize their annual reporting strategy by requiring that all  submissions be sent to OGE directly from the CFO Act department, rather  than from component agencies. Through these and other efforts, OGE  officials said their goals are to expand the reach of ethics guidance for  federal employees, and to increase both the consistency and the  accuracy of ethics training across the executive branch. Officials at all five  of the selected agencies we spoke with told us that OGE’s oversight and  guidance was effective, and that they felt comfortable contacting OGE if  they had a SGE or ethics-related question.

section_title: Four of Five Selected Agencies Had Reliable Data on SGEs Not Serving on Federal Boards While HHS Had Challenges Reporting Reliable Data
subsections: section_title: OGE Data Reflected Agency Reporting
paragraphs: Agencies are responsible for identifying SGEs and reporting these data to  OGE (through its annual questionnaire) and OPM (through information on  personnel actions in EHRI).

Generally, OGE’s data reflected what agencies reported on SGEs not  serving on federal boards. As part of our assessment of the reliability of  OGE data on these SGEs not serving on federal boards, we compared  OGE data with data from the selected agencies for 2012 and 2013—the  most recent data available. In 2012, we found that the five selected  agencies had data that closely matched OGE data. In 2013, we found  data for three of the five selected agencies closely matched (see figure  4). We attribute most of the difference between OGE and NSF data in  2013 to differences in the reporting time frame (fiscal year versus  calendar year). At HHS, we found a significant difference between OGE  data and agency data. HHS told us it had 609 SGEs not serving on  federal boards in 2013, but reported 4 to OGE. When we asked about the  discrepancy, HHS said 609 was correct, but could not explain the  discrepancy.

OGE has a process for reviewing agency submissions, but it does not  verify the data for every agency. During the review of the responses to its  Annual Agency Ethics Program Questionnaire, OGE officials follow up  with agencies for an explanation in instances where agencies reported  data that represented a 20 percent increase or decrease compared to the  prior year’s submission. OGE officials conducted follow-up efforts with  agencies when a submission showed a difference between the number of  employees required to receive ethics training and the number of  employees that received training, or the number of financial disclosure  reports filed. OGE also conducts spot checks of some of the agencies’  responses to determine the level of variance from year to year, according  to agency officials.

Based on our assessment, OPM does not have complete data on SGEs  not serving on federal boards in its EHRI database. We compared OPM  data on individual SGEs with agency data for 2005 to 2014. Our  comparison of selected agency data to OPM’s EHRI database revealed  close matches in two of the five selected agencies. NSF and DOJ data  mostly matched OPM’s EHRI database over the 10-year period of fiscal  years 2005 to 2014. We experienced some challenges in attempting to  match OPM’s data on individual SGEs for the other three selected  agencies (State, HHS, and NRC). For example, HHS officials provided  inaccurate dates for when SGEs were hired. We found the OPM data had  incomplete information on individual SGEs for the 10-year period. OPM  officials said it is very difficult to reliably identify a complete list of SGEs in  their database since agencies do not consistently identify SGEs in  personnel data collected by OPM in the EHRI database. According to  OPM, there is no policy or legal requirement for the agency to capture  SGE data in its EHRI database.

section_title: Weak Coordination and Misunderstandings Can Contribute to Challenges in Identifying SGEs for Reporting Purposes
paragraphs: Four of the five selected agencies had data reliable enough for the  purposes of reporting annual totals. Still, three of the selected agencies in  our review—HHS, State, and NRC—encountered challenges in  identifying SGEs not serving on federal boards due to weak coordination  and misunderstandings about SGE designations. At HHS, we found that  staff in the agency’s human capital office did not coordinate with its ethics  office before providing the agency’s SGE totals, which contributed to  challenges in identifying and reporting on their SGEs.

After submitting an initial list of SGEs, State and NRC required additional  meetings to clarify our request for their SGE totals. At State, human  resources and ethics officials disagreed about which individuals should be  identified as SGEs not serving on federal boards for SGEs hired prior to  2008. Both agencies ultimately provided corrected data.

All the selected agencies generally had a designation and on-boarding  process that involved some degree of coordination between a hiring  office, a human capital office, and an ethics or general counsel office (or  both) before on-boarding a SGE. Some of the selected agencies operate  in a more structured and formal way than others. State recently instituted  a formal coordination process and, in April 2014, issued written guidance  and procedures on the process, including explicit instructions for  coordinating among the hiring office, the human capital office, and the  ethics office.

Conversely, HHS had a less structured coordination process for  identifying SGEs not serving on federal boards. HHS experienced  difficulty identifying employees categorized as SGEs not serving on  federal boards, in part, because the departmental human capital office is  not consistently coordinating with human capital offices in its components  or with the Office of the General Counsel, Ethics Division to ensure that  SGEs not serving on federal boards are appropriately identified. In  addition, HHS’s human capital officials misunderstood the SGE  designation and, at times during our audit, could not distinguish between  SGEs not serving on federal boards and SGEs who serve on federal  advisory boards, committees, or commissions. For example, the HHS  human capital office provided data that showed 500 to 600 SGEs not  serving on federal boards at one of its components, the Food and Drug  Administration (FDA), every year between fiscal years 2005 and 2014.

However, FDA human capital officials disagreed and said they were only  aware of one SGE not serving on federal boards at FDA for that period. A  FDA human capital official told us that most of the SGEs at FDA are  serving on advisory boards or are committee members. The FDA human  capital official said it generally only has a few experts or consultants, and  those individuals may be hired on indefinite appointments or not to  exceed 5-year appointments.

When asked about the reason for the discrepancy, HHS provided no  explanation. According to the HHS Office of General Counsel Ethics staff,  the office relies on data provided by components and staff offices, and  takes no additional steps to verify data for the annual OGE ethics survey.

In Internal Control Standards for the Federal Government, we have  previously reported that information should be recorded and  communicated in a form that enables entities to carry out their internal  control and other responsibilities. HHS’s Human Resource Manual  instructions on the appointment of experts and consultants contains  guidance on identification of expert and consultants, for instance, but no  guidance on appropriately identifying an expert or consultant as a SGE  not serving on federal boards. Additionally, the instructions do not include  any mention of the circumstances under which experts and consultants  may be considered a SGE or when coordination among the hiring, human  capital, or ethics offices is appropriate. Without clarifying guidance on  identifying SGEs not serving on federal boards, HHS cannot be assured  that the agency is reporting reliable data to OGE and OPM.

We did not review whether these issues are occurring at other executive  branch agencies. However, issues such as these reduce the reliability of  the government’s data on SGEs. By strengthening data, agencies will be  better positioned to identify SGEs not serving on federal boards, perform  the appropriate ethics review for their SGEs not serving on federal  boards, and provide the appropriate ethics training. Moreover, accurate  and complete data are important to allow OGE and Congress to provide  informed oversight of agencies using SGEs not serving on federal boards.

section_title: Selected Agencies Appointed SGEs Primarily Using Expert and Consultant Hiring Authority and Utilized Them in Specialized Areas
subsections: section_title: Most Selected Agencies Use the Expert and Consultant Hiring Authority and Have Guidance or Require Documentation for the Designation Process
paragraphs: Three of the five selected agencies hired most of their SGEs not serving  on federal boards under the government-wide expert and consultant  hiring authority, 5 U.S.C. § 3109. Section 3109 permits agencies to  appoint experts or consultants without regard to the competitive service  hiring rules. Additional government-wide temporary hiring authorities were  used, but to a lesser degree. State officials, for example, said the agency  also uses government-wide temporary hiring authorities under which  retired former Foreign Service or civil service retirees, among others,  would be eligible for noncompetitive appointment for on-boarding SGEs.  Two of the five agencies, NSF and NRC, more often used their own  agency-specific hiring authorities when on-boarding SGEs. NSF officials  use an agency-specific hiring authority under the National Science  Foundation Act of 1950, as amended, to on-board most of their SGEs.  Similarly, NRC officials said they primarily use their hiring authority under  section 161d of the Atomic Energy Act of 1954, as amended, to hire  SGEs (see appendix IV for more information on hiring authorities used by  the selected agencies, including government-wide and agency-specific  authorities).

Four of the five selected agencies had written policies specifically for  SGEs or experts and consultants, while one—DOJ—did not. As  mentioned earlier, in 2014, State issued written guidance and procedures  on the on-boarding and designation process for SGEs not serving on  boards. The written guidance included critical questions for managers to  consider when determining SGE status, the primary hiring authorities to  use, roles and responsibilities for the appropriate offices, and instructions  for documenting appointments. The guidance is explicit about preparing  the personnel action and including the use of the appropriate OPM  remark code indicating the individual is a SGE. For example, the contents  of State’s SGE on-boarding package include  electronically completed OGE 278 or OGE 450 in the agency’s Financial Disclosure Management system; conflict of interest clearance request checklist from State’s Legal Office of Ethics and Financial Disclosure; individual’s position description; hiring manager’s certification that it is not anticipated that the employee’s duties will require more than 130 days of service; individual’s acknowledgement of ethics guidance review by signing and dating the last page of the seven page document on Government Ethics Guidance; individual’s resume; and in certain cases, a signed Ethics Agreement, if required by State’s Legal Office of Ethics and Financial Disclosure.

Specifically, State’s human capital staff circulates a SGE ethics clearance  and request package to the hiring bureau’s human capital as well as to  the ethics office, housed in State’s office of general counsel. HHS, NSF,  and NRC had written guidance on human capital policies and procedures  for experts and consultants that agency officials said was applicable to  SGEs not serving on federal boards. DOJ’s Departmental Ethics office  had no written guidance on human resources policies specifically for  SGEs not serving on federal boards.

Three of the five selected agencies (NRC, NSF, and State) required  documentation for the SGE on-boarding. For example, at NRC, the hiring  office must submit a justification for on-boarding an expert/consultant that  is a SGE not serving on federal boards. The justification required an  explanation of why the expertise is needed, what projects the expert will  work on, and why the expertise is not already available in house. NRC  also has a checklist for the steps that should be followed by the  appropriate offices that play a role in on-boarding a SGE. Conversely,  NSF has requirements for documenting expert/consultants in its internal  guidance, but nothing specific for SGEs is required on the personnel  manual.

In addition to SGEs that are individuals hired from outside (including  those reemployed retired federal employees who are SGEs), three of our  selected agencies identified examples of an employee who became a  SGE after a conversion (or change) in the individual’s appointment.   Selected agencies said such conversions are infrequent. Generally, a  conversion is a change of appointment (under either the same or a  different appointment authority) in the same agency without a break in  service. Conversions are appointment actions taken according to the  rules related to the appointment into which the conversion results.  Appointment rules would prescribe, among other things, the process  required for making the appointment, eligibility, and qualification  requirements. For example, a conversion action into an expert position  under section 3109 would have to comply with the requirements under  that authority, including that the expert position requires the services of a  specialist with skills superior to those of others in the same activity, and  that the individual to be appointed is regarded as an authority or  practitioner of unusual competence and skill in a professional, scientific,  technical, or other activity. These conversions included:

DOJ officials reported that a senior noncareer employee, who wished to return to academia, resigned and the following day was appointed to an intermittent consultant position. The consultant appointment was not to exceed 5 months and therefore since the employee would be in a temporary appointment that would not exceed 130 days, the employee was a SGE. Agency officials explained that the conversion was justified because there were a number of pending matters for which the office had a continuing need for the employee’s expertise, which they viewed as essential for program stability.

NRC officials reported two instances when regular employees became SGEs through conversion actions. In both instances, retired NRC employees had been reemployed as regular (non-SGE) employees. Subsequently, both employees’ appointments were converted to consultant appointments (in conformance with NRC’s guidance on consultants), resulting in the employees becoming SGEs. NRC said the conversions resulted from changes to the work assignments and responsibilities of both individuals.

State officials reported that a senior presidential appointee, who  intended to retire, was appointed to an expert/consultant position,  resulting in the employee becoming a SGE. The department justified  the appointment because the employee had deep expertise on foreign  policy issues (he had served in the Foreign Service for decades) and  the appointment would enable the department to call upon him from  time to time to provide expert advice to the foreign affairs community.

section_title: SGEs Work in Highly Specialized Areas and Supervisors Generally Track Days
paragraphs: The selected agencies used SGEs not serving on federal boards for their  expertise in a variety of policy areas: science, health care, foreign affairs,  legal, and inspections, as shown in figure 5.

Officials from the selected agencies said SGEs not serving on federal  boards are typically used for short-term needs and often in response to  unforeseen events such as natural disasters, terrorist attacks, a  resignation, or an increase of work on issues requiring specific scientific  expertise. Some SGEs were hired to fill administrative positions, as well;  for example, NRC hired a budget specialist and NSF employed a SGE  with expertise in organizational equal employment issues.

Selected agency officials told us that their SGEs provide services in a  variety of ways, including the following:

At NSF, SGEs provided scientific expertise on specific initiatives,  conducting evaluations and advising on NSF programs, including  international programs, and providing oversight of cross-directorate  programs. NSF SGEs may also advise and assist in the development  of short- and long-range plans, and assist in establishing goals and  objectives for research programs.

At DOJ, SGEs served on the September 11th Victim Compensation  Fund initiative. For example, DOJ SGEs included the Special Master  who presided over the Compensation Fund proceedings and staff who  supported the Special Master. Other SGEs at DOJ provided quick  turnaround assistance to the agency in preparing for congressional  testimonies or other very narrowly tailored needs.

At HHS, SGEs often served as intermittent employees who worked for  the National Disaster Medical System (NDMS). For example, many  NDMS SGEs provided support to the Federal Emergency  Management Agency after a disaster. HHS also used SGEs not  serving on a federal board to 1) advise and consult on acquiring  materials for its medical library to administer health coaching  programs, 2) develop and implement a health coaching program, and  3) advise on a strategy to achieve accreditation for one of its  operating divisions.

At NRC, SGEs often served in areas such as engineering, scientific,  and other technical (professional) occupational series. NRC SGEs  roles and responsibilities included providing services related to  security administration, human factors, budget analysis, technical  writing and editing, and visual information.

At State, SGEs most often served as Foreign Affairs officers, senior  advisors, management analysts, and physical scientists. For example,  State officials highlighted initiatives and issues that require quick  action in hiring appropriate experts, such as a public outreach position  for the Arab community.

Officials from four of the selected agencies told us that supervisors are  generally responsible for tracking whether the SGE stays within the 130- day service estimate. DOJ officials permit their SGEs to track their own  days of service. State officials reported that they have examples of SGEs  exceeding the 130-days in 1 year and human resources reevaluating their  status for the next year. NSF has built a feature into its personnel system  that alerts the supervisor and human resources office when a SGE is  approaching the end of expected days of service for the agency.

section_title: OGE Reviews Have Found No Issues for SGEs Not Serving on Federal Boards
paragraphs: OGE reviews of executive branch agencies’ ethics programs have found  few issues specific to SGEs and none for SGEs not serving on federal  boards. We issued two SGE-related reports since 2004 where we discuss  guidance and policies available to agencies and potential conflicts of  interest of individuals who serve on advisory committees and boards.  Our analysis of 23 OGE reviews conducted at the CFO Act and  Consumer Financial Protection Bureau for fiscal years 2005 to 2014  showed no issues specific to SGEs not serving on federal boards.  According to OGE and officials at our selected agencies, at the time of  our review, there were no outstanding OGE recommendations at the five  agencies.

OGE primarily conducts two types of ethics program reviews: plenary  reviews and inspections. During a plenary review, OGE generally  examines all elements of an agency’s ethics program, including its  structure and general administration; public and confidential financial disclosure process; ethics training, advice, and counseling program; enforcement of ethics-related statutes and regulations, including  supplemental standards of conduct regulations; and administration of its ethics program as it applies specifically to  advisory committees and SGEs.

As part of the plenary reviews, OGE evaluates whether an agency made  an affirmative determination as to whether or not a member of an  advisory committee is a SGE rather than a representative. OGE officials  said this helps ensure that those advisory committee members who will  be expected to provide advice to the government (rather than on behalf of  a group or industry the member represents) are designated as SGEs and  therefore appropriately covered by ethics and conflicts of interest  provisions. In 2015, OGE’s Program Review Branch examined all ethics  program review reports issued from January 1, 2009, through September  30, 2015, to determine how they addressed issues involving SGEs. The  examination covered 238 review reports and identified model practices  related to SGEs and recommendations, and suggestions regarding  management of SGEs during the specified period.

According to OGE officials, the majority of the recommendations OGE  makes about SGEs following plenary reviews are focused on the  determinations agencies made between designating an advisory  committee member as a representative or as a SGE. According to OGE  officials, an agency that fails to properly designate a member of an  advisory committee as a SGE, but rather designates the member as a  representative, poses a risk to the government because that member is  not subject to ethics and conflicts of interest provisions (including agency  reviews for conflicts of interest). Based on its reviews and the results from  its annual questionnaire, OGE officials said they believe agencies are  more routinely properly designating advisory committee members as  SGEs in recent years.

According to OGE, its inspections are a streamlined version of the  plenary review process. Inspections focus on the core elements of an  agency’s ethics program, which include overall program administration,  public and confidential financial disclosure systems, ethics training, and  ethics advice and counseling. Inspections do not focus specifically on  advisory committees or SGEs. However, if a concern specific to SGEs  was to be identified during the inspection, the issue would be addressed  and noted in the inspection report. Alternatively, according to OGE’s  procedures, if the issue was of sufficient magnitude, OGE would initiate a  more comprehensive plenary review of the agency’s ethics program.

OGE is responsible for ordering action it deems necessary to correct  deficiencies in agency ethics programs. If OGE orders corrective action  and the agency does not comply, OGE may notify the President and  Congress. Additionally, OGE is responsible for ordering action it deems  necessary with respect to individual employees and, to do so, is  authorized (among other things) to recommend that an agency  investigate possible violations of any rule, regulation, or Executive order  relating to conflicts of interest or standards of conduct. OGE officials  said that agency Inspectors General are better positioned to investigate  potential ethics or conflicts of interest violations by individual employees.  OGE does not review or intervene in ongoing agency investigations;  however, it may provide the agency with technical assistance if  requested.

section_title: Conclusions
paragraphs: Given the enormous complexity involved in delivering the wide array of  services the federal government provides to U.S. citizens daily, agencies  need the ability to obtain temporary outside skills, opinions, and expertise  for improvement of government services and operations. The SGE  category helps to ensure that the government can satisfy recruitment  needs while ensuring integrity of government service. While agencies are  overwhelmingly using SGEs for federal advisory committees and boards,  a very small number of SGEs not serving on federal boards is filling a  niche for short-term, unique, or unforeseen situations requiring specific  skillsets.

Agencies are responsible for reporting on SGEs not serving on federal  boards to OGE and OPM requires agencies to identify SGEs on an  individual’s personnel action. However, agencies may have reporting  challenges as a result of weak internal coordination among offices with a  role in designating and identifying SGEs not serving on boards and  misunderstandings about which individuals are in this category. Although  OGE has taken recent steps to improve agencies’ reporting, the reliability  of agencies’ data is dependent on how well they coordinate internally and  how well agencies understand the SGE designation. Given the  misunderstanding about SGEs that we found at selected agencies,  additional research may be needed to determine whether other agencies  are experiencing challenges similar to those we identified at selected  agencies. Stronger internal coordination among offices that maintain SGE  data would strengthen the SGE data that agencies report to OGE and  OPM. In particular, unless HHS takes steps to reconcile differences  between data held by components and its headquarters, and reconcile  differences in data held by its ethics office with data held by its human  capital office, the agency cannot be assured of the reliability of its data on  SGEs not serving on federal boards. By strengthening data, agencies will  be better positioned to report reliable data on SGEs not serving on federal  boards to OGE and OPM. Moreover, OGE and Congress may provide  better oversight of agencies using SGEs not serving on federal boards.

section_title: Recommendations for Executive Action
paragraphs: To help ensure HHS has reliable data on SGEs not serving on federal  boards, we recommend that the Secretary of HHS take steps to improve  the reliability of data on SGEs not serving on boards. For example, the  agency could reconcile human capital data with general counsel and  ethics office data, or issue clarifying guidance to human capital staff on  appropriately identifying SGEs in human capital databases.

To help ensure that agencies report consistent and reliable data, the  Director of OGE should determine (e.g., through a survey of Designated  Agency Ethics Officials and/or by analyzing agency data) whether other  executive branch agencies are experiencing data challenges similar to  HHS, State, and NRC. If they are, the Director should take steps to help  the agencies strengthen their data.

section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Directors of OGE, OPM, and  NRC; the Secretaries of HHS and State; the Senior Staff Associate of  NSF; and the Assistant Attorney General for Administration at DOJ for  review and comment. OGE and HHS provided us with written comments  (reproduced in appendixes VI and VII). In its written comments, HHS  concurred with our recommendations. In OGE’s written comments, it  partially concurred with our recommendation to determine whether other  executive branch agencies are experiencing data challenges similar to  HHS, State, and NRC. OGE said it concurs with the emphasis on  ensuring that agencies report consistent and reliable data and that it will  survey ethics officials or otherwise analyze agency data as  recommended. However, OGE stated it has no authority to direct human  resources offices to collect or share data or to otherwise coordinate with  agency ethics offices. We maintain that OGE has the inherent authority to  require agencies to ensure that their reported information is reliable. We  did not suggest that OGE direct agency human resources officials to take  specific steps regarding SGE data. Rather, we believe that through  collaborative actions between agency ethics and human resources  officials, agencies can ensure reported information on SGE is reliable.

Although none of the other agencies provided comments on the report’s  findings, conclusions, or recommendations, all of the agencies provided  technical comments that were incorporated, as appropriate.

As agreed with your office, 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 to the Director of the Office  of Government Ethics, the Director of the Office of Personnel  Management, as well as to the appropriate congressional committees and  other interested parties. In addition, the report will be 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) 512-6806 or jonesy@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 VIII.

section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: The objectives of this engagement were to review agencies’ use and  oversight of the special government employee (SGE) designation in the  federal workforce for SGEs not serving on federal boards at the 24  agencies covered under the Chief Financial Officers (CFO) Act of 1990,  as amended, and the Consumer Financial Protection Bureau (CFPB).    This report (1) describes what is known about the total number of SGEs  not serving on federal boards in the executive branch as well as at CFO  Act agencies and CFPB; (2) assesses the extent to which the Office of  Government Ethics (OGE), Office of Personnel Management (OPM), and  selected agencies identify and report data on SGEs not serving on   federal boards; (3) assesses how selected agencies appoint, utilize, and  oversee SGEs not serving on federal boards, and describes the relevant  hiring authorities and ethics requirements; and (4) examines how, if at all,  OGE oversees and ensures compliance with ethics requirements for  SGEs, including the proper identification of individuals as SGEs,  consistent with 18 U.S.C. § 202(a).

To address these objectives, we reviewed the federal statutes,  regulations, and agency guidance that address ethics requirements for  federal executive branch employees, including the proper designation of  SGEs and statutes and regulations related to hiring authorities that  agencies use to on-board SGEs, and we interviewed agency officials  responsible for ensuring compliance with ethics and hiring requirements  for SGEs.

We selected five agencies—the Department of Health and Human  Services (HHS), Department of Justice (Justice), Department of State  (State), National Science Foundation (NSF), and Nuclear Regulatory  Commission (NRC) —to provide case illustrations of agencies’ use of  SGEs not serving on federal boards. We selected the agencies based on  the following factors: (1) number of SGEs, (2) ratio of non-Federal  Advisory Committee Act (FACA) SGEs compared to the agency’s 2-year  on-board average of all employees over the period of fiscal years 2014 to  2015, (3) agency size, (4) OGE ethics program review results, and (5)  agency responses to OGE on the amount of time the agency indicated it  spends overseeing SGEs.

To describe what is known about the total number of SGEs not serving on  federal boards in executive branch agencies, as well as at CFO Act  agencies and CFPB, we examined agency use of SGEs reported by OGE  for calendar years 2005 through 2014. Each executive branch agency is  required to submit an annual report to OGE on the agency’s ethics  program including, among other things, data on agency use of SGEs. To  assist agencies in fulfilling this requirement, OGE provides an annual  questionnaire to each executive branch agency that covers the preceding  year. OGE’s data represent a point in time assessment—the last day of  the calendar year—and may not include individuals who were employed  during the year but were not employed on the last day of the calendar  year. We also reviewed documentation and interviewed OGE officials  about recent steps the agency took to improve OGE’s reporting on SGEs.

To assess the extent to which OGE, OPM, and selected agencies  identify, collect, and report data on SGEs not serving on federal boards,  we analyzed OGE’s, OPM’s, and selected agencies’ data related to the  number of SGEs not serving on federal boards at CFO Act agencies and  CFPB for fiscal years 2005 through 2014. We assessed the reliability of  OGE’s, OPM’s, and selected agencies’ data on SGEs not serving on  federal boards. We compared OGE’s data on the total number of SGEs  not serving on federal boards with selected agencies’ data for the most  recent years available—2012 and 2013. We also compared data on  individual SGEs not serving on federal boards from the five selected  agencies with records for SGEs for these agencies in OPM’s Enterprise  Human Resources Integration (EHRI) system using the effective date of  the SGE appointment and other variables, such as grade, step, and  gender, which is a method we have used in previous reports. Generally,  we found OGE’s and four of the selected agencies’ data sufficiently  reliable (State, NSF, NRC, and DOJ) to report annual totals of SGEs not  serving on federal boards. We also found that one of the selected  agencies, HHS, provided unreliable effective dates for SGEs not serving  on federal boards. Specifically, the SGE on-board dates provided by HHS  were invalid when compared to effective dates of personnel actions in  EHRI, which are reliable for this field. For two agencies, we found several  instances of misidentified SGEs not serving on federal boards, and after  discussion with the agencies, they provided corrected data. We found that  OPM data did not have complete information that would allow us to  identify SGEs not serving on federal boards.

To assess how selected agencies appoint, utilize, and oversee SGEs, we  examined agency documentation and interviewed agency officials on the  (1) process for designating and hiring SGEs not serving on federal  boards, (2) hiring authorities used, (3) types of roles and responsibilities  SGEs performed, and (4) agency tracking of whether SGEs stay within  the 130-day service estimate. We examined internal coordination on  SGEs not serving on federal boards among hiring, ethics, and general  counsel offices by interviewing agency officials at the department level  and component/sub-agency level, reviewing agency documentation, and  comparing human resource data maintained by department level human  resource offices with data maintained at the component or sub-agency  level on SGEs not serving on federal boards.

To examine how, if at all, OGE oversees and ensures compliance with  ethics requirements for SGEs, we examined statutes and regulations  covering OGE’s role and responsibilities. We examined 23 OGE reviews  of agency level ethics programs at 24 CFO Act agencies and the CFPB  for fiscal years 2005 to 2014 to determine whether OGE identified issues  relating to SGEs not serving on federal boards and whether OGE had any  related open recommendations. Since the Department of Defense did not  have a review during that period, we included reviews conducted at  component agencies (Army, Navy, and Air Force). We also examined  agency documentation such as the Summary Report: Special  Government Employees, October 2015, and interviewed officials on  OGE’s roles, responsibilities, and compliance activities.

We conducted this performance audit from April 2015 to July 2016, 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: Legislative History of the Special Government Employee Designation
paragraphs: Congress created the special government employee (SGE) category in  1962 when revising the criminal laws relating to bribery, graft, and conflict  of interest prohibitions. With regard to conflict of interest prohibitions, the  1962 law was intended, in part, to establish more appropriate prohibitions  for a category of employees consisting of consultants and other  temporary employees to facilitate the government’s recruitment of such  persons from outside the government.

The 1962 act was the culmination of years of study by groups inside and  outside of government concerning how best to assure high ethical  standards in the conduct of the federal government. Their work revealed,  in part, that the existing conflict of interest laws had an unnecessarily  harsh impact on temporary employees and made it harder for agencies to  obtain temporary service of persons with specialized knowledge and  skills, advisers who provide essential counsel, and highly skilled  technicians. During congressional testimony, examples were provided  concerning the impact the existing conflict of interest laws had on agency  recruitment. For example, an attorney declined a position on an advisory  committee concerning the civil service system because he was  concerned that to serve he would have to resign from his firm, which  represented individuals in their dealings with federal agencies (such as  the Internal Revenue Service). In another example, an individual who had  served full time in the Department of State but left was asked to return as  a part-time consultant to leverage the considerable knowledge he had  acquired while employed with the department overseas. He declined  because the application of the law would have exposed him to criminal  liability.

Prior to the act, most of the existing laws originated in the 19th Century,  at a time when persons outside the government rarely served as  consultants or advisers. Therefore, the laws were aimed at the activities  of regular full-time employees, rather than at a consultant or other  temporary employee whose main work was performed outside the  government. While Congress had recognized the adverse impact these  laws had on temporary employees and granted specific statutory  exemptions from time to time, this approach created an inconsistent  range of exemptions. To address this issue, Congress created a uniform  means of imposing special rules on all temporary employees expected to  serve within specified time limits. In doing so, Congress aimed to balance  efforts to ensure integrity of government service with recruitment needs.

section_title: Appendix III: Ethics Provisions Applicable to Non-Special Government Employees Compared to Special Government Employees Not Serving on Federal Advisory Committees or Other Boards
paragraphs: A special government employee (SGE) is an employee of the federal  government and therefore generally subject to ethics rules applicable to  employees. SGEs must be distinguished from individuals that work for the  federal government as independent contractors (rather than employees),  who would not be covered by federal employee ethics rules. While some  ethics rules apply differently to SGEs (or in fewer instances, do not apply  at all), most ethics provisions apply to SGEs.

The following is an overview of selected government-wide ethics  provisions for executive branch employees and how they apply to SGEs  that are not serving on Federal Advisory Committee Act (FACA)  committees. Under the heading “Non-SGEs” is a general description of  each provision. Under the heading “SGEs (Non-FACA)” is a general  description of modifications to SGE coverage (if any). This is not a  comprehensive listing of ethics provisions. Moreover, we have excluded  differences in coverage which are exclusively applicable to SGEs serving  on FACA committees as these SGEs are outside the scope of this report.

section_title: Appendix IV: Government-wide and Agency- Specific Hiring Authorities Used to On-Board Special Government Employees by Selected Agencies
paragraphs: Agencies in our review used a number of government-wide and agency- specific hiring authorities to on-board SGEs. The selected agencies  frequently designated as SGEs individuals who had been appointed to  serve as experts or consultants (under 5 U.S.C. § 3109, or a similar  agency-specific authority). Under the government-wide authority 5 U.S.C.  § 3109, agencies may appoint experts and consultants, as needed, for  temporary or intermittent work when authorized by an appropriation or  other statute. Tables 2 and 3 show government-wide and agency-specific  hiring authorities that our selected agencies reported using when hiring  SGEs.

section_title: Appendix V: Use Of Special Government Employees At Chief Financial Officer Act Agencies And The Consumer Financial Protection Bureau, 2012-2013

section_title: Appendix VI: Comments from the Department of Health and Human Services

section_title: Appendix VII: Comments from the Office of Government Ethics

section_title: Appendix VIII: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: Yvonne D. Jones, (202) 512-6806 or Jonesy@gao.gov.

section_title: Staff Acknowledgments
paragraphs: In addition to the individual name above, Signora J. May, Assistant  Director; Anthony Patterson, Analyst-in-Charge; Jessica Lewis, Sara  Daleski, Karin Fangman, Amanda Miller, Susan Sato, and Robert  Gebhart made major contributions to this report.


Question-summary annotations: questions: question: To what extent do SGEs serve on federal boards?
answer: As of December 2014, approximately 3 percent of SGEs (1,138 of 40,424) were working as experts or consultants and not serving on federal boards, according to the Office of Government Ethics (OGE).
child_questions: question: How has this situation developed from 2005 to 2014?
answer: Federal agencies made limited use of special government employees (SGE) not serving on federal boards. Over a 10-year period (2005 to 2014), GAO found that agencies used an annual average of approximately 2,000 SGEs, with a peak of about 3,100 in 2009 and a low of about 500 in 2013.

questions: question: How are SGEs not serving on federal boards typically appointed?
answer: Three of the five selected agencies primarily used expert and consultant hiring authorities to appoint SGEs not serving on federal boards. The other two agencies generally used their agency-specific authorities. The agencies used these employees in specialized areas (see figure).

question: How are SGE's days of service tracked?
answer: Four of five agencies said supervisors are generally responsible for tracking SGEs' days of service. One agency permits SGEs to track their own days.