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

Letter

Background

SGEs Serve Temporarily and Have Fewer Ethics Restrictions Than Other Employees

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.

Roles of OGE, OPM, and Agency Offices in SGE Oversight, Designation, and Hiring

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.

Agencies’ Use of SGEs Not Serving on Federal Boards Is Limited

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.

Four of Five Selected Agencies Had Reliable Data on SGEs Not Serving on Federal Boards While HHS Had Challenges Reporting Reliable Data

OGE Data Reflected Agency Reporting

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.

Weak Coordination and Misunderstandings Can Contribute to Challenges in Identifying SGEs for Reporting Purposes

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.

Selected Agencies Appointed SGEs Primarily Using Expert and Consultant Hiring Authority and Utilized Them in Specialized Areas

Most Selected Agencies Use the Expert and Consultant Hiring Authority and Have Guidance or Require Documentation for the Designation Process

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.

SGEs Work in Highly Specialized Areas and Supervisors Generally Track Days

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.

OGE Reviews Have Found No Issues for SGEs Not Serving on Federal Boards

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.

Conclusions

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.

Recommendations for Executive Action

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.

Agency Comments and Our Evaluation

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.

Appendix I: Objectives, Scope, and Methodology

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.

Appendix II: Legislative History of the Special Government Employee Designation

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.

Appendix III: Ethics Provisions Applicable to Non-Special Government Employees Compared to Special Government Employees Not Serving on Federal Advisory Committees or Other Boards

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.

Appendix IV: Government-wide and Agency- Specific Hiring Authorities Used to On-Board Special Government Employees by Selected Agencies

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.

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

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

Appendix VII: Comments from the Office of Government Ethics

Appendix VIII: GAO Contacts and Staff Acknowledgments

GAO Contact

Yvonne D. Jones, (202) 512-6806 or Jonesy@gao.gov.

Staff Acknowledgments

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.