Mr. Chairman and Members of the Committee: I am pleased to be here today to assist the Committee in its consideration of the proposed Veterans Employment Opportunities Act of 1997, S. 1021, which is to amend title 5 of the United States Code to provide that consideration may not be denied to veterans who are eligible for preference when applying for certain positions in federal service and for other purposes. By law, federal agencies are to provide preferential hiring consideration to veterans and others as a measure of national gratitude and compensation for their military service. As agreed, my comments today are primarily based on our body of work since 1990 on veterans’ hiring preference and work we did on reductions-in-force (RIF) at selected military installations and at the U.S. Geological Survey (USGS) that occurred in 1991 and 1995, respectively.As requested, we also are providing certain statistics on the percentage of preference-eligible veterans among new federal career employees and in the existing federal workforce from 1990 through 1997. The information we present today, although relevant to consideration of S. 1021, does not reflect a current, complete analysis of whether veterans’ preference requirements are achieving their intended purposes. We are not taking a position on the proposed legislation. preference-eligible veterans than those without the names of preference-eligible veterans at the top. In three RIFs conducted at military installations in fiscal year 1991, our review showed that those without veterans’ preference were much more likely to have lost their jobs than were preference-eligible veterans. Similarly, during an October 1995 RIF at the USGS, those employees without veterans’ preference were much more likely to have lost their jobs than employees with such preference. From 1990 through 1997, preference-eligible veterans represented a significantly higher percentage of the federal workforce than did veterans overall in the total civilian workforce. As figure 1 illustrates, preference-eligible veterans represent a gently declining portion of the federal workforce, and veterans also represent a declining portion of the total civilian workforce. However, in each year from 1990 through 1997, the percentage of preference-eligible veterans in the federal workforce was about twice as high as that of veterans in the civilian workforce. Statement The Public Service: Veterans’ Preference in Hiring and Reductions-in-Force Note 1: Civilian workforce data are as of December 30 of each year; federal workforce data are as of September 30 of each year. Note 2: Civilian workforce data are for men and women age 20 years and over. Figure 2 shows that preference-eligible veterans increased as a portion of those attaining new career appointments in the federal government between 1990 and 1997. However, their portion of such appointments held virtually steady for fiscal years 1993 through 1997. Veterans’ preference is applied when agencies use competitive hiring authority to fill positions, as is generally the case for employees who attain career appointments in the federal government. The increase in the portion of new career appointments over this period who were preference eligible was most significant between fiscal years 1992 and 1993. work experience, and/or the passing of a written examination. The preference points they receive result in veterans being placed higher on federal hiring lists, giving veterans an advantage over other job applicants. In the last several years, we have not done work on agencies’ adherence to veterans’ preference during the hiring process. However, in nearly all cases we reviewed in the early 1990s, agencies followed basic veterans’ preference requirements leading up to the actual selection decision. At that point, hiring officials returned unused hiring certificates that were headed by the names of preference-eligible veterans more often than they did those headed by the names of individuals lacking such preference. When agencies want to fill positions, several hiring alternatives are available. Agencies can promote, transfer, or reassign a current federal employee; reinstate a former federal employee who has career status; make a new appointment from a hiring list, or hiring certificate (i.e., use competitive authority); or use noncompetitive appointment authorities. Of these hiring alternatives, veterans’ preference applies only to competitive hiring. When agencies hire individuals from outside the federal government through competitive means, they can use the following methods: certificates from OPM or either of two authorities delegated from OPM (i.e., delegated examining authority or direct hire authority). Under the first method, OPM receives and examines applications for federal employment, which can include reviewing a written test and/or reviewing qualifications, and determines whether an applicant is qualified for a specific occupation or related occupations. If an applicant is rated as qualified, then the applicant is assigned a score that is used to place the individual in rank order on a federal employment register. As part of this ordering process, OPM is responsible for ensuring that veterans receive all preference points that are due them. When OPM receives and examines applications from veterans, it is to (1) verify veterans’ preference points that are claimed by applicants, (2) add the preference points to the veterans’ scores, and (3) rank all applicants by score. Qualified veterans with service-related disabilities are to be placed at the top of hiring lists, or certificates. Agency hiring officials can then request a certificate from OPM containing the top-rated candidates from the register. Agencies are generally required to select from among the top three available candidates on a certificate. However, they cannot select a nonveteran if a higher placed preference-eligible veteran is available on the list unless the selecting official obtains approval for passing over the higher ranked veteran. Justifications for passing over a higher ranked preference-eligible veteran must be based on qualifications or suitability. Only OPM is authorized to grant such approvals. Under the second method, rather than use certificates developed by OPM, agencies may receive delegated examining authority from OPM to prepare their own certificates. Under such authority, agencies are to follow the same scoring, ranking, and selection rules that OPM follows. In addition, when shortages of qualified candidates exist, OPM provides agencies with direct hire authority, which permits agencies to directly receive applications, examine applicants, and make selections. Effective January 9, 1992, OPM directed agencies to apply regular scoring and ranking procedures, including application of veterans’ preference, whenever more than three candidates apply for a job or whenever both veterans and nonveterans are available. Until that date, direct hire authority, which accounted for almost one-third of all competitive hiring in fiscal year 1990, did not always provide for qualified veterans to receive preference. candidates was also correct. Veterans were properly placed on all but 1 of the 1,136 certificates that we reviewed from OPM and executive agencies. Although veterans may receive additional points because of their military service and be highly placed on certificates, they are not assured of selection for jobs. Under existing civil service laws and regulations, hiring officials have the option of using a variety of methods to identify and recruit potential candidates for a position. These officials may also leave a position vacant rather than fill it with a candidate who is qualified for the position but with whom they are not satisfied. Therefore, certificates of eligible job candidates may be requested but not used if federal managers are dissatisfied with the choices presented to them. In our 1992 report on federal hiring, we reported that 57 percent of all certificates were returned unused. We found that a greater chance existed that hiring officials would return certificates unused to OPM or the personnel office of their agencies when the name of a preference-eligible veteran was at the top of the hiring list. We reported that of the 1,136 certificates of eligible job candidates we reviewed, about 71 percent of certificates had been returned unused if they were headed by a veteran. About 51 percent of certificates were returned unused if they were headed by a nonveteran. One explanation for this difference is that managers in executive agencies may have less flexibility in selecting from a certificate if the name of a veteran is at the top. For example, if a certificate lists nonveterans in the top three positions, a manager can select any of the three. However, if a certificate is headed by a preference-eligible veteran and nonveterans are in the next two positions, the manager generally has no choice but to select the veteran or return the certificate unused, unless the manager receives approval from OPM to pass over the veteran. certificate, OPM did not enforce this requirement. When agencies did provide reasons for not selecting a candidate, OPM did not collect data on or analyze those reasons to determine their legitimacy, the possibility of antiveteran bias, or whether certificates met managers’ needs. In our 1992 report on federal hiring, we recommended that the Director of OPM establish a tracking system to monitor the use of federal hiring certificates. We also recommended that the Director use the data gathered by this system to analyze veteran hiring patterns. By February 1994, according to OPM, OPM developed a tracking system for evaluating unused certificates and automated portions of it. We have not reviewed this tracking system. When agencies reduce their workforces through RIFs, veterans also have certain retention rights that are derived from the 1944 Veterans’ Preference Act. We have reviewed RIFs at three military installations and at one division within the USGS in sufficient detail to have statistics on how preference-eligible veterans fared in the RIF process. In each of these RIFs, preference-eligible veterans were more likely to have retained their jobs than were employees lacking veterans’ preference. Under OPM regulations, RIFs are accomplished in two phases. First, management determines the number and types of positions that are to be abolished and the “competitive areas” affected by the decision. Second, management identifies the employees within a competitive area and their relative status in the competition for retention. Employees’ retention status and assignment rights to other positions are essentially determined by their tenure, veterans’ preference, and length of service, with additional years of service credit provided based on how well they did on their performance ratings.