Homeland Security: Human Resources Management
Released: 2004-02-20T00:00:00

P.L. 107-296, Homeland Security Act of 2002

Establishment of Human Resources Management System(4)

Title VIII, Subtitle E, Â§841 of P.L. 107-296 amends Title 5 United States Code by adding anew Chapter 97 -- Department of Homeland Security to Part III, Subpart I. The new Â§9701(a)provides that notwithstanding any other provision of Part III, the Secretary of Homeland Securitymay, in regulations prescribed jointly with the Office of Personnel Management (OPM) Director,establish, and from time to time adjust, an HRM system for some or all of the organizational unitsof the Department of Homeland Security.

Requirements for the HRM System. The HRMsystem must be flexible and contemporary. It cannot waive, modify, or otherwise affect:

the public employment principles of merit and fitness at 5 U.S.C. Â§2301,including the principles of hiring based on merit, fair treatment without regard to political affiliationor other non-merit considerations, equal pay for equal work, and protection of employees againstreprisal for whistleblowing;

any provision of 5 U.S.C. Â§2302 relating to prohibited personnelpractices;

any provision of law referred to in 5 U.S.C. Â§2302(b)(1)(8)(9); or any provisionof law implementing any provision of law referred to in 5 U.S.C. Â§2302(b)(1)(8)(9) by providing forequal employment opportunity through affirmative action; or providing any right or remedy availableto any employee or applicant for employment in the civil service;

Subparts A (General Provisions), B (Employment and Retention), E(Attendance and Leave), G (Insurance and Annuities), and H (Access to Criminal History RecordInformation) of Part III of Title 5 United States Code ; and Chapters 41 (Training), 45 (IncentiveAwards), 47 (Personnel Research Programs and Demonstration Projects), 55 (Pay Administration),57 (Travel, Transportation, and Subsistence), 59 (Allowances), 72 (Antidiscrimination, Right toPetition Congress), 73 (Suitability, Security, and Conduct), and 79 (Services to Employees) of Title5; or

any rule or regulation prescribed under any provision of law referred to in anyof the statements in bullets immediately above.

The use of a category rating system for evaluating applicants for positions in the competitiveservice is permitted under the new system.

Limitations Relating to Pay. Nothing in Â§9701constitutes authority to:

modify the pay of any employee who serves in an Executive Schedule positionor a position for which the rate of basic pay is fixed in statute by reference to the ExecutiveSchedule;

fix pay for any employee or position at an annual rate greater than themaximum amount of cash compensation allowable under 5 U.S.C. Â§5307 in a year;or

exempt any employee from the application of 5 U.S.C.Â§5307.

Provisions Relating to Appellate Procedures. Itis the sense of the Congress that employees of the Department of Homeland Security are entitled tofair treatment in any appeals that they bring in decisions relating to their employment. In prescribingregulations for any such appeals procedures, the Secretary of Homeland Security and the Directorof the Office of Personnel Management (OPM) should ensure that employees of the department areafforded the protections of due process and, toward that end, should be required to consult with theMerit Systems Protection Board before issuing any such regulations.

Any regulations which relate to any matters within the purview of chapter 77 (on appeals)must be issued only after consultation with the Merit Systems Protection Board and must ensure theavailability of procedures which must be consistent with requirements of due process and provide,to the maximum extent practicable, for the expeditious handling of any matters involving theDepartment of Homeland Security. Any regulations must modify procedures under chapter 77 onlyinsofar as such modifications are designed to further the fair, efficient, and expeditious resolutionof matters involving the employees of the Department of Homeland Security.

Sunset Provision. Effective five years after theconclusion of the transition period defined under Â§1501 of the act, all authority to issue regulationsunder the section (including regulations which would modify, supersede, or terminate any regulationspreviously issued under the section) must cease to be available.

Effect on Personnel. Except as otherwiseprovided in the Homeland Security Act of 2002, the transfer, under this Act, of full-time personnel(except special government employees) and part-time personnel holding permanent positions mustnot cause any such employee to be separated or reduced in grade or compensation for one year (untilMarch 1, 2004) after the date of transfer to the Department of Homeland Security. Any person who,on the day preceding their date of transfer to the new department, held a position compensated onthe Executive Schedule, and who, without a break in service, is appointed in the Department ofHomeland Security to a position having duties comparable to the duties performed immediatelypreceding such appointment must continue to be compensated in the new position at not less thanthe rate provided for the previous position, for the duration of the person's service in the newposition. Any exercise of authority under the new Chapter 97, including under any systemestablished under the chapter, must be in conformance with the requirements of this subsection.

Sense of the Congress. In authorizing theestablishment of an HRM system for the new department, Congress stated that --

[I]t is extremely important that employees of theDepartment be allowed to participate in a meaningful way in the creation of any human resourcesmanagement system affecting them;

[S]uch employees have the most direct knowledge ofthe demands of their jobs and have a direct interest in ensuring that their human resourcesmanagement system is conducive to achieving optimal operationalefficiencies;

[T]he 21st century human resources management systemenvisioned for the Department should be one that benefits from the input of its employees;and

[T]his collaborative effort will help secure ourhomeland.

Federal Workforce Improvement(5)

Title XIII of P.L. 107-296 authorizes the establishment of Chief Human Capital Officer(CHCO) positions in federal executive branch agencies and reforms relating to federal human capitalmanagement. Discussion of these provisions follows.

Agency Chief Human Capital Officers. TitleXIII, Subtitle A, Â§1301 of P.L. 107-296 provides that the title may be cited as the Chief HumanCapital Officers Act of 2002. Section 1302 of the law amends Part II of Title 5 United States Code by adding a new Chapter 14 -- Agency Chief Human Capital Officers. The new Â§1401 provides thatthe agency head must appoint or designate a CHCO who must advise and assist the agency head andother agency officials in carrying out the agency's responsibilities for selecting, developing, training,and managing a high-quality, productive workforce in accordance with merit system principles;implement the rules and regulations of the President and OPM and the laws governing the civilservice within the agency; and carry out such functions as his or her primary duty.

The agencies covered by the CHCO provision are the Departments of Agriculture,Commerce, Defense, Education, Energy, Health and Human Services, Housing and UrbanDevelopment, the Interior, Justice, Labor, State, Transportation, the Treasury, Veterans Affairs, theEnvironmental Protection Agency, and the National Aeronautics and Space Administration. Otheragencies covered are the Agency for International Development, the Federal EmergencyManagement Agency, the General Services Administration, the National Science Foundation, theNuclear Regulatory Commission, the Office of Personnel Management, the Small BusinessAdministration, and the Social Security Administration.

Under the new Â§1402, CHCOs have six functions, including (1) setting the workforcedevelopment strategy of the agency; (2) assessing workforce characteristics and future needs basedon the agency's mission and strategic plan; (3) aligning the agency's human resources policies andprograms with organization mission, strategic goals, and performance outcomes; (4) developing andadvocating a culture of continuous learning to attract and retain employees with superior abilities;(5) identifying best practices and benchmarking studies; and (6) applying methods for measuringintellectual capital and identifying links of that capital to organizational performance and growth. CHCOs must have access to all records, reports, audits, reviews, documents, papers,recommendations, or other materials that are the property of the agency or are available to theagency; and relate to programs and operations with respect to which the CHCO has responsibilities. The CHCO may request such information or assistance as may be necessary for carrying out theduties and responsibilities provided by Chapter 14 from any federal, state, or local governmentalentity.

Section 1303 of the law establishes a CHCO Council consisting of the OPM director whoacts as chairperson; the OMB deputy director of management who acts as vice chairperson; andCHCOs of executive departments and any other members designated by the OPM director. Thecouncil must meet periodically to advise and coordinate the activities of the member agencies onsuch matters as modernization of human resources systems, improved quality of human resourcesinformation, and legislation affecting human resources operations and organizations. The CHCOCouncil must ensure that representatives of federal employee labor organizations are present at aminimum of one meeting of the council each year. The representatives are not members of thecouncil. Each year the CHCO Council must submit a report to Congress on its activities.

Section 1304 of the law amends 5 U.S.C. Â§1103 by adding a subsection (c) which providesthat OPM must design a set of systems, including appropriate metrics, for assessing the managementof human capital by federal agencies. The systems must be defined in OPM regulations and includestandards for (A) aligning agency human capital strategies with their missions, goals, andorganizational objectives and integrating those strategies into agency budget and strategic plans; (B)closing skill gaps in mission critical occupations; (C) ensuring continuity of effective leadershipthrough implementation of recruitment, development, and succession plans; (D) sustaining a culturethat cultivates and develops a high performing workforce; (E) developing and implementing aknowledge management strategy supported by appropriate investment in training and technology;and (F) holding managers and human resources officers accountable for efficient and effectivehuman resources management in support of agency missions in accordance with merit systemprinciples.

The CHCO provisions became effective 180 days after the act's enactment (May 24, 2003)under Â§1305 of the law. On May 24, 2003, OPM Director Kay Coles James announced the namesof the CHCOs. (6) TheCHCO Council conducted its first meeting on June 11, 2003, and partly focused on encouragingfederal agencies to use the personnel flexibilities that have already been authorized. The July 2003meeting included discussions on career development in the federal government. Other issuesexpected to be addressed by the CHCOs are recruitment and retention and continuity of operationsduring an emergency.

Reforms Relating to Federal Human Capital Management

Subtitle B of Title XIII of P.L. 107-296 provides for reforms relating to federal human capitalmanagement as the following discusses. (7)

Inclusion of Agency Human Capital Strategic Planning inPerformance Plans and Program Performance Reports. Section 1311 of the lawamends 31 U.S.C. Â§1115(a)(3) to read: "provide a description of how the performance goals andobjectives are to be achieved, including the operation processes, training, skills and technology, andthe human, capital, information, and other resources and strategies required to meet thoseperformance goals and objectives." With respect to each agency with a Chief Human Capital Officer(CHCO), the CHCO must prepare that portion of the annual performance plan described under 31U.S.C. Â§1115(a)(3). (8) Thesection also amends 31 U.S.C. Â§1116(d) by adding a new paragraph (5) (old (5) redesignated) torequire agencies to include a review of the performance goals and evaluation of the performance planrelative to the agency's strategic human capital management in program performance reports.

Reform of the Competitive Service HiringProcess. Section 1312 of the law amends 5 U.S.C. Â§3304(a) by adding a newparagraph (3) providing authority for agencies to appoint, without regard to 5 U.S.C. Â§3309 throughÂ§3318, candidates directly to positions for which public notice has been given and OPM hasdetermined that there exists a severe shortage of candidates or there is a critical hiring need. OPMregulations must prescribe criteria for identifying such positions and may delegate authority to makedeterminations under such criteria.

Section 1312 also adds a new Â§3319 -- Alternative Ranking and Selection Procedures to Title5 United States Code . OPM, or an agency which has been delegated examining authority, mayestablish category rating systems for evaluating applicants for positions in the competitive service. Applicants may be evaluated under two or more quality categories based on merit, consistent withOPM regulations, rather than be assigned individual numerical ratings. (9) Within each quality category,applicants who are eligible for veterans' preference must be listed ahead of applicants who are noteligible for preference. Except for applicants for scientific and professional positions at GS-9(equivalent or higher), each applicant who is a disabled veteran with a compensableservice-connected disability of 10% or more must be listed in the highest quality category. (10)

An appointing official may select any applicant in the highest quality category, or, if fewerthan three candidates have been assigned to the highest quality category, in a merged categoryconsisting of the highest and the second highest quality categories. The appointing official may notpass over a preference eligible in the same category from which selection is made, unless therequirements of 5 U.S.C. Â§3317(b) or Â§3318(b), as applicable, are satisfied. (11)

Each agency that establishes a category rating system must submit in each of the three yearsfollowing that establishment, a report to Congress on the system that must include information onthe number of employees hired under the system; the system's impact on the hiring of veterans andminorities, including those who are American Indian or Alaska Natives, Asian, Black or AfricanAmerican, and native Hawaiian or other Pacific Islanders; and the way in which managers weretrained in the administration of the system. (12)

OPM could prescribe regulations to carry out the provisions. (13)

Student Volunteer Transit Subsidy. Section 1314of the law amends 5 U.S.C. Â§7905(a)(1) to provide that a student who provides voluntary servicesis eligible for a transit subsidy.

Subtitle D of Title XIII of P.L. 107-296 amends current law provisions on academic training.

Academic Training. Section 1331 of the lawamends 5 U.S.C. Â§4107. The section, renamed "Academic degree training," provides that an agencymay select and assign an employee to academic degree training and may pay or reimburse the costsof the training from appropriated or other available funds. The training must contribute significantlyto meeting an identified agency training need, to resolving an identified agency staffing problem, orto accomplishing goals in the agency's strategic plan; be part of a planned, systematic, andcoordinated agency employee development program linked to accomplishing the agency's strategicgoals; and be accredited and provided by a college or university that is accredited by a nationallyrecognized body. (14)

In exercising the authority, an agency must, consistent with the merit system principles at 5U.S.C. Â§2301(b)(2) and (7), consider the need to maintain a balanced workforce in which women,members of racial and ethnic minority groups, and persons with disabilities are appropriatelyrepresented in government service and provide employees effective education and training toimprove organizational and individual performance. The agency also must assure that the trainingis not for the sole purpose of providing an employee with an opportunity to obtain an academicdegree or to qualify for appointment to a particular position for which the degree is a basicrequirement; and assure that no authority is exercised on behalf of any employee occupying orseeking to qualify for a noncareer appointment in the Senior Executive Service; or appointment toany position that is excepted from the competitive service because of its confidentialpolicy-determining, policy-making, or policy-advocating character. The agency must, to the greatestextent practicable, facilitate the use of online degree training. (15)

P.L. 107-296 also includes provisions on voluntary separation incentive payments(commonly referred to as buyouts) at Â§1313, to repeal the requirement that members of the SeniorExecutive Service be recertified at Â§1321, and to amend the 5 U.S.C. Â§5307 limitation on totalcompensation for employees in certain positions from Executive Schedule level I ($175,700 in 2004)to the Vice President's annual salary ($203,000 in 2004) at Â§1322.

OPM published regulations to implement the human capital management reforms in the June13, 2003, Federal Register . (16)

Subtitle H, Â§881 of P.L. 107-296 mandates that the Secretary of Homeland Security, inconsultation with the OPM Director, review the pay and benefit plans of each agency whosefunctions are transferred to the new department. Within 90 days after the Act's enactment (Sunday,February 23, 2003), the secretary must submit a plan to the President of the Senate and the Speakerof the House of Representatives and the appropriate committees and subcommittees of Congress forensuring, to the maximum extent practicable, the elimination of disparities in pay and benefitsthroughout the department, especially among law enforcement personnel, that are inconsistent withthe merit system principles set forth at 5 U.S.C. Â§2301. The report, which consists of two tablestransmitted with a cover letter, was submitted to Congress on March 5, 2003. According toSecretary of Homeland Security Tom Ridge, DHS plans

to address the issue of pay disparities within the newhuman resources system design. This report accordingly focuses on identifying differences in payand benefits among employees transferring to DHS without reaching specific conclusions aboutwhether those differences constitute unwarranted disparities or making specific recommendationsregarding how those differences might be eliminated. Those findings and recommendations will beincluded in our HRM systems proposal which will be submitted to you later this year [now expectedin spring 2004]. (17)

Testifying before the House Committee on Government Reform's Subcommittees on CivilService and Agency Organization and Criminal Justice, Drug Policy, and Human Resources July 23,2003, hearing on federal law enforcement personnel, Kay Frances Dolan, director of humanresources policy at DHS, stated that addressing the issue of disparities in pay and benefits among lawenforcement personnel is "[o]ne of the most significant challenges" the department faces. Differences in policies on overtime pay, commuting time pay, Sunday pay, night pay, holidaypremium pay, premium pay caps, and creditable pay for retirement purposes are exacerbated by theeffort to integrate various agencies into DHS, she said. (18)

Implementation of the Law

The Bush Administration published a Reorganization Plan for the department on November25, 2002. (19) HomelandSecurity Director Tom Ridge, nominated by President Bush to head the department, conducted atown hall meeting with future employees of the department on December 17, 2002. (20)

The Senate Committee on Governmental Affairs conducted a confirmation hearing for Mr.Ridge on January 17, 2003. During the hearing, Mr. Ridge said that he would "solicit the advicefrom men and women who work in the new department ... about how to improve day-to-dayoperations that they have been involved in for years, if not decades" and "pledged to create amerit-based personnel system." (21) The Senate confirmed him as the Secretary of HomelandSecurity on January 22, 2003 (22) and he was sworn into office by President Bush on January 24,2003.

Some 22 agencies employing some 160,000 on-board employees were transferred to the newhomeland security department on March 1, 2003. (23) The Budget of the United States for FY2005 states that thedepartment has 183,000 employees in 2004. (24)

In December 2002, OPM, in conjunction with the Department of Homeland Security,established several working groups to begin developing a personnel system for the department. Theworking groups focused on the issues of performance appraisals, job classifications, pay, labormanagement, and discipline and employee appeals. OPM initially stated that it hoped to have a draftproposal of the new system ready by June 1, 2003, (25) but Government Executive reported on March 18, 2003 that anOPM official stated that this deadline would not be met. (26) According to the report:

Until recently, the department didn't have officials inplace to make key decisions to get the design process rolling, Jeffrey Sumberg, OPM's principalpolicy adviser on labor relations said ... [He] said that [OPM director] James and Homeland Securityofficials would meet with federal union leaders to agree on a process for setting up the new system. Once they agree on the process, actual planning will begin. (27)

Government Executive reported that department officials and union leaders agreed on thenumbers of personnel to be involved with and the basic timeline for the design of the new personnelsystem. (28)

On April 1, 2003, Secretary of Homeland Security Tom Ridge and OPM Director Kay ColesJames announced that they were launching the process for designing a new human resourcesmanagement system for the Department of Homeland Security. According to the press release onthe announcement, "The goal is to create a 21st century personnel system that is flexible andcontemporary while preserving basic civil service principles and the merit system." (29) Creating the system willinvolve this process:

A Senior Review Committee will develop personnelsystem options to be considered by the Secretary and the Director and their senior staff. Thecommittee will include, among others, the Under Secretary for Management, Department programleaders, officials from OPM, and major union leaders. A small number of academics and policyexperts will serve as ex officio members who will advise the committee on specific issues. (30)

A Design Team will be tasked with conducting researchand outreach to provide a full range of options for the Senior Review Committee to consider. Theteam will include DHS program managers from all directorates and disciplines, union and employeerepresentatives and human resource specialists from DHS and OPM. Expert consultants from theprivate sector will also support the team. (31)

In announcing the launching of the design process for the new personnel system, UnderSecretary for Management Janet Hale said that "We want this process to be very inclusive, and wewill seek out and listen to DHS employees and managers, and experts both inside and outside ofGovernment." (32)

The initial meetings of the design team began on April 1, 2003. The team "will deliver a fullrange of options to the Senior Review Committee." (33) Field meetings were conducted by the design team in severalcities including El Paso, Atlanta, Miami, Norfolk, Detroit, New York City, Seattle, Los Angeles,Washington, DC, and Baltimore, locales with the largest concentrations of DHS employees. Testimony was received from more than 2,000 DHS employees, including 44 employee focus groupsand 10 manager focus groups. (34) The field meetings concluded in late June 2003. On July 25,2003, the design team reported to the Senior Review Committee on those field meetings. Pay,performance management, and labor-management relations were among the issues discussed. StevenCohen, senior adviser for homeland security at OPM, was quoted at the time by Federal Times aboutthe design process: "It really is wide open.... There's nothing that's off the table." (35) The meeting also wasintended to "outline the research strategy, present guiding principles for the design, and provideguidance to the Design Team." (36)

On October 3, 2003, the design team presented its final report with 52 options for the newhuman resources management system to the Senior Review Committee. (37) None of the optionsrepresented the consensus of the design team and none covered the Senior Executive Service (SES). Modifications to Title 5 United States Code pay and performance management provisions for theSES will be addressed through a separate process. The options were grouped into two categories --Pay, Performance Management and Classification, and Labor Relations, Adverse Actions, andAppeals. Among the options in the first category were those to continue or amend the currentGeneral Schedule pay system; establish a compensation system based on pay bands; create a systembased on longevity, competency, and performance; and continue or amend the existing performancemanagement system. Options under the second category included continuing the current laborrelations procedures, providing for national level bargaining, continuing or amending the currentadverse actions and appeals procedures, creating an Ombudsman Office, and establishing proceduresfor alternative dispute resolution.

According to the Foreword that accompanied the options list, the options were developed

based on the assumption that DHS employees coveredby the pay, performance, classification, labor relations, adverse actions, and appeals chapters of title5, United States Code, will remain covered by those provisions unless and until DHS and OPMjointly exercise their authority to waive those title 5 provisions and establish alternative rules. Thejoint DHS/OPM authority to establish new systems for DHS generally does not reach to provisionsof law outside title 5 ... In some cases, however, laws authorizing separate pay and classificationsystems for DHS employees not covered by title 5 provide considerable administrative discretion formodification of those systems. (38)

The Senior Review Committee examined and deliberated the options at a public meetingconducted October 20 through 22, 2003. A summary of the proceedings of the meeting was postedon OPM's website on December 5, 2003. (39) The summary document states that "a great deal of consensus"formed around six core design and process principles. These principles are that the new HRMsystem (1) must be mission centered, and its design must facilitate performance; (2) must be fair,transparent, and credible; (3) must establish broad general principles that could be tailored to specificparts of DHS; (4) must be developed collaboratively with involvement by employees and theirunions; (5) will take time and require substantial investment; and (6) will require employeedevelopment and training. (40) The committee presented the design team options and theproceedings of its meeting to the Secretary and the Director in late autumn 2003.

On February 20, 2004, DHS and OPM jointly issued proposed regulations for the DHS HRMsystem which were published in the Federal Register . (41) The proposed regulations cover job evaluation, pay and payadministration, performance management, labor-management relations, adverse actions, and appeals. The regulations are open for comment for 30 days. Comments must be received on or before March22, 2004, and may be made via the Internet or by U.S. mail.

The proposed regulations include the following details.

The new personnel system will cover about 110,000 of DHS' 180,000 employees (about70,000 DHS employees will not be covered by the system). Among the employees who will not becovered by the new system are military personnel, screeners with the Transportation SecurityAdministration, individuals in Executive Schedule and Presidentially appointed with Senateconfirmation positions, administrative law judges, and employees of the Office of Inspector General. Blue-collar workers under the Federal Wage System and members of the Senior Executive Servicewill keep their current pay and classification systems, but will be covered by all other applicableprovisions of the new personnel system. The system will be implemented in phases. Some 8,000employees (primarily from DHS headquarters and nonmilitary members of the Coast Guard) will becovered beginning in fall 2004 and the remainder of employees will be covered beginning in fall2005.

The proposed regulations make no changes to the Civil Service merit system principles andprohibited personnel practices. They also do not change current policies on retirement, health or lifeinsurance, or leave entitlements. Current overtime pay policies will not be changed at this time, butovertime policies will continue to be reviewed. DHS officials stated that jobs will not be eliminatedwith transition to the new system.

For job evaluation, the proposed regulations would organize the department's jobs into 10-15clusters by major occupational groups, such as law enforcement, administration, and intelligence. With regard to the pay structure, the current 15 grades of the General Schedule pay system wouldbe abolished and within-grade pay increases based on time in a pay grade would no longer beprovided. Instead, within each occupational cluster, open pay bands with no steps would beestablished. Each pay band would have typically four levels - entry level, full performance, seniorexpert, and first level supervisor. Salaries within the pay bands would be set based on local labormarket rates. Employees would progress through a pay band based on performance or enhanced skilllevel. Promotion to another pay band would be achieved through skill assessment and/orcompetition.

As for the pay adjustments, for each occupational cluster, there would be an annual payadjustment based on labor market conditions, the department's mission, availability of funds, and thelevel of pay adjustments received by federal employees in other agencies. There also would be alocality pay adjustment based on an assessment of pay rates for similar private sector jobs in thesame geographic area. A "fully successful" or better performance rating would be required to receivethese pay adjustments. In addition, employees who meet organizational expectations would receivea performance-based pay increase; higher increases would go to outstanding performers. Gainsharing, special act awards, and other performance bonuses also could be paid. Exact payoutsfor pay adjustments and awards will depend on funding for DHS. The formula to awardperformance-based pay adjustments has not yet been defined.

Employees would not lose any salary as they move into the new system. Some employeesmay receive a pay raise to compensate them for the time that they have accumulated toward awithin-grade pay adjustment.

With regard to performance management, the proposed regulations would tie employeeperformance appraisal to the DHS mission and to specific performance standards based on jobassignments. There would be three or four rating levels: "unacceptable," "fully successful," and atleast one level above "fully successful." The performance management system would not havequotas or a forced distribution of performance ratings. Managers and supervisors will be trained toappraise employee performance. A Performance Review Board will oversee the performancemanagement system. Performance ratings could be grieved and unacceptable performance ratingsthat result in adverse actions may be appealed.

The House Subcommittee on Civil Service and Agency Reorganization and the SenateSubcommittee on Financial Management, the Budget, and International Security have scheduled aFebruary 25, 2004, joint hearing on the proposed HRM system.

The Budget of the United States for FY2005 proposes funding of $133.5 million toimplement the new HRM system at DHS. The proposed funding includes $112.5 million to developand implement performance-based pay and to train personnel, and $21 million to create theinformation technology framework for the new system. (42)

A website, available to the public, has been established for the department. (43) To keep employeesinformed about the creation of the department, an internal website also has been established.

According to the agency, it has "entered into Memoranda of Agreements (MOAs) with otherfederal Departments to ensure that all management, administrative and other support functions forthe incoming organizational elements continue after March 1 and until DHS establishes thenecessary infrastructure to perform these functions." (44)

On May 5, 2003, President Bush announced his intention to appoint Ronald James as theChief Human Capital Officer (CHCO) for the Department of Homeland Security. P.L. 107-296 created the CHCO position as a presidential appointment not requiring confirmation. The CHCOreports to the Secretary of Homeland Security, or to another department official as the secretary maydirect. He ensures that all employees of the department are informed of their rights and remediesunder 5 U.S.C. Chapters 12 (Merit Systems Protection Board, Office of Special Counsel, andEmployee Right of Action) and 23 (Merit System Principles) by participating in the certificationprogram of the Office of Special Counsel, achieving certification from the OSC of the department'scompliance with 5 U.S.C. 2302(c); and informing Congress of such certification not later than 24months after the enactment of the Homeland Security Act of 2002 (November 25, 2004). (45)

Laura Callahan, who had been appointed as deputy chief information officer (CIO) at DHSon April 1, 2003, was placed on paid administrative leave by the department on June 5, 2003, afterher academic credentials were questioned by several Members of Congress. Her resume apparentlylisted a bachelor's degree, a master's degree, and a doctoral degree (computer information systems)from Hamilton University in Evanston, Wyoming. The university is apparently not licensed by thestate of Wyoming or accredited by the U.S. Department of Education. (46) The deputy CIO positionat DHS was posted on the USAJOBS website on July 7, 2003. (47)

During an April 29, 2003 House Subcommittee on Civil Service and Agency Organizationhearing and a May 6, 2003 House Committee on Government Reform hearing, both on proposedpersonnel flexibilities for the Department of Defense, several Members of Congress stated that theyhad, thus far, learned few details about the establishment of the new human resources managementsystem at the Department of Homeland Security. A hearing on human capital management at DHSconducted on October 29, 2003 by the House Civil Service and Agency Organization Subcommitteeheard testimony from the Chief Human Capital Officer at DHS, the co-chair of the Senior ReviewCommittee and OPM Senior Advisor for Homeland Security, and union representatives. The DHSand OPM testimonies again provided few details about the new HRM system and instead focusedon the design team's collaborative process.

On July 31, 2002, the Partnership for Public Service issued a preliminary report whichrecommended that the Department of Homeland Security adopt pay banding and critical payauthorities, category ranking systems for hiring, and voluntary separation incentive payments. (48) A January 2003 report bythe Brookings Institution noted the "vast array of largely incompatible management systems,including at least 80 different personnel systems mixed in and among the agencies" being transferredto the new department. (49)

An August 25, 2003, special report prepared by the Transactional Records AccessClearinghouse, a data gathering, data research, and data distribution organization associated withSyracuse University, examined staffing at DHS. Among the report's findings are the following.

There were 160,201 employees on the DHS payroll as of March 2003. Oneout of every 12 workers in the federal government works for DHS.

An internal OPM report documented employees transferring to DHS asincluding Transportation Security Administration (66,998), Immigration and Naturalization Service(35,761), Customs Service (21,601), Federal Emergency Management Agency (8,292), U.S. CoastGuard (6,171 civilians), Secret Service (5,929), Office of the Secretary of Health and HumanServices (5,826), Import and entry inspection functions of the Animal Plant and Health InspectionService (2,160), and Federal Protective Service (1,175). Employees also were transferred from morethan 12 smaller federal offices.

"Other than the move to DHS, re-organization within the agencies so farappears to be modest or non-existent."

Government records list more than 300 different occupational specialitieswithin DHS. Eight out of 10 full-time employees are classified under these titles: safety technicians,plant protection and quarantine, general inspection investigation and compliance, complianceinspection and support, criminal investigating, immigration inspection, customs inspection, andborder patrol agents. The report characterizes these occupations as "various kinds of 'watchers' orinvestigators."

Four out of every 10 full-time DHS employees are airport screeners who areclassified as safety technicians. The agency employs 8,997 full-time employees as criminalinvestigators and 641 as intelligence officers. It also employs a wide range of full- and part-timesupport staff, including 324 funeral directors, 128 pharmacists, 55 general anthropologists, 41fingerprint specialists, and 30 chaplains.

For full-time employees, administrative law judges earn the most ($135,994per year). Criminal investigators earn an average of $68,673. The average salary for airportscreeners is $29,195. (50)

After researching mergers in the public sector, Peter Frumpkin, an Associate Professor ofPublic Policy at Harvard University, identified various implementation and follow up steps in hisAugust 2003 report entitled Making Public Sector Mergers Work: Lessons Learned . Among theseare the following.

Implementing the Merger: Make sure that whoeveris making executive decisions with regard to the merger understands all the cultural issues involved. Communicate openly with constituency groups and other public sector agencies. Find clear benefitsfor employees and publicize them. Build something new, rather than adding two systemstogether.

Following Up on the Merger: Keep the focus on thecustomer. Prepare for potentially high transaction costs due to the merger. Be sensitive to lingeringeffects of physical and cultural consolidation. Reform or standardize performance measurementmethods. Always be ready to adjust. (51)

Mr. Frumpkin states that communication, quick implementation, creating a new culture, andadjusting over time are critical areas to be considered in implementing mergers in the public sector. With regard to changing an organization's culture, he writes that:

Breaking free from existing routines, traditions, andcustoms does not mean obliterating everything and starting anew. Instead, it requires the selectiveadoption of those cultural artifacts that are positive and the elimination of those that arecounterproductive. What emerges is a new organizational culture that is fresh and welcoming toall. (52)

The General Accounting Office (GAO) evaluated the process being used to design the newhuman resources management system at the DHS and reported in September 2003 that it is"collaborative and facilitates participation of employees." (53) GAO recommended that "once the [DHS] strategic plan iscompleted the Secretary of DHS and the Director of OPM ensure that the options selected for thenew human capital system support and facilitate the accomplishment of the department's strategicgoals and objectives." The DHS Secretary is advised to "ensure the message communicated acrossDHS components is consistent, and [to] maximize opportunities for two-way communication andemployee involvement through the completion of the design process, the release of the systemoptions, and implementation, with special emphasis placed on seeking feedback and buy-in offront-line employees in the field." (54)

Human Resources Management at Selected Agencies Transferred to DHS

An issue that might be considered as the new personnel system is implemented is the kindof automated human resources and payroll systems the various agencies proposed for transfer to thenew department currently have and how those systems might be merged if a consolidation of HRMservices were to occur.

Prior to the March 1, 2003, transfer of employees to DHS, human resources management(HRM) offices were providing a full range of services at six of the eight large agencies beingtransferred to the new department. The Transportation Administration Service Center (TASC) ofthe Department of Transportation provided human resource services to the Transportation SecurityAdministration (TSA) on a fee-for-service basis. Federal Protective Services had a personnelrepresentative in the central office in Washington, DC, and in each of its 11 regional offices. HRMoffices and the number of their employees included:

Animal and Plant Health Inspection Service (APHIS) -- 180 employees locatedin Washington, DC; Riverdale, MD; and Minneapolis, MN;

Federal Emergency Management Agency (FEMA) -- 93employees;

TSA -- 15 employees, but anticipate having 45 to 50employees;

Coast Guard -- 400 employees at headquarters and 2,600 to 2,700 employeesworking in the field at seven training centers, a pay center, and the personnel and recruitingcommands;

Customs Service -- 268 full-time permanent employees;

INS -- approximately 552 full-time permanent and temporary employees inWashington, DC; and approximately 200 employees located in Burlington, VT; Dallas, TX; andLaguna Niguel, CA; and

Secret Service -- 407 employees (the office is allocated 471positions).

All the HRM offices, except TSA, reported that they provided various personnel services thatgenerally included staffing, position classification, payroll preparation, employee relations, laborrelations, processing of personnel actions, benefits (retirement, health insurance, life insurance)counseling, and development of policies on various personnel issues. (55)

In his testimony before the Senate Committee on Governmental Affairs and the HouseCommittee on Government Reform on June 20, 2002, then-Governor Ridge stated: "In order torespond to rapidly changing conditions, the Secretary [of homeland security] would need to havegreat latitude in re-deploying resources, both human and financial. The Secretary should have broadreorganizational authority in order to enhance operational effectiveness, as needed." (56) A consolidated humanresources management office to serve some of the agencies transferred to a new department would,perhaps, be an example of such a redeployment. If so, there would be the potential that not allcurrent HRM employees would be needed to perform personnel services under the new system. Details about possible retraining or reassignments of personnel have not been provided.