The U.S. General Accounting Office exists to support the Congress in meeting its constitutional responsibilities and to help improve the performance and assure the accountability of the federal government for the benefit of the American people. Given GAO’s role as a key provider of information and analyses to the Congress, maintaining the right mix of technical knowledge and subject matter expertise as well as general analytical skills is vital to achieving the agency’s mission. GAO spends about 80 percent of its resources on its people. And yet, like other federal agencies, GAO has faced significant human capital challenges—challenges that if not effectively addressed, could impair the timeliness and quality of its work for its congressional clients and the American people they represent. A number of these challenges were created by the significant reduction in the size of GAO undertaken in the mid-1990s. Specifically, from 1992 through 1997, GAO underwent budgetary cuts totaling 33 percent in constant fiscal 1992 dollars. To achieve those budgetary reductions while meeting other agency needs, GAO reduced the number of its employees 39 percent through extensive field office closings and targeted reductions in headquarters staff. To conform to the reduced budgetary ceiling, GAO then instituted a virtual hiring freeze at the entry level, cut training for all staff, suspended agencywide incentive programs, and at times used mid-level promotions as a retention strategy. Because of the reduction in hiring, the average age of the agency’s workforce increased, and the retirement eligibility of staff accelerated. GAO’s analyses showed that by the end of fiscal 2004, about 34 percent of all GAO employees would be eligible to retire. For upper-level staff, the proportion eligible to retire was even larger— 48 percent of all band III management-level employees and 55 percent of all Senior Executive Service members. Thus, as at many federal agencies, GAO’s human capital profile reflected a workforce that was smaller, closer to retirement, and at increasingly higher-grade levels. In addition to the succession-related concerns raised by such a profile, GAO also faced a range of skills gaps. As major policy issues have become more complex and as technology has radically altered the way the federal government conducts business, the types of skills and knowledge needed by GAO staff have been evolving, and the need for sophisticated technical skills has been increasing. Early in his tenure, Comptroller General David Walker recognized that GAO’s human capital profile and selected skills gaps presented serious challenges to GAO’s future ability to serve the Congress. Comptroller General Walker also sought to have GAO become a model federal agency and a world-class professional services organization that focuses on delivering positive results for the Congress and the country. The agency’s ability to operate in an efficient, effective, and economical manner and meet the ever-changing and increasingly complex needs of the Congress could be seriously compromised if GAO’s human capital challenges were not effectively addressed. As a first step in addressing these concerns, GAO used its internal administrative authority to implement measures to improve the alignment of its human capital with the agency’s overall strategic goals and objectives as contained in GAO’s Strategic Plan. Subsequent to developing its first strategic plan, GAO undertook a number of major human capital initiatives, including an agencywide realignment and reorganization, an overall human capital self-assessment, the revitalization of its recruiting and college relations programs, an agencywide knowledge and skills inventory, the development of competency-based performance appraisal systems, the establishment of an Employee Advisory Council, the enhancement of GAO’s employee benefit programs, a comprehensive employee feedback survey, a workforce-planning process, and the establishment of a professional development program for entry-level analysts. In addition to these initiatives, GAO’s leadership recognized that additional steps to reshape the agency’s workforce were necessary and that preexisting personnel authorities did not allow the agency to address these challenges effectively. Therefore, GAO sought legislation establishing narrowly tailored flexibilities that would help to reshape the agency’s workforce and recruit and retain staff with needed technical skills. Based on a sound business case, Public Law 106-303—known as the GAO Personnel Flexibilities Act—became law in October 2000. The act authorized the Comptroller General to implement the following personnel flexibilities: 1. Offer voluntary early retirement to realign the workforce to meet budgetary constraints or mission needs; correct skill imbalances; or reduce high-grade, managerial, or supervisory positions. 2. Offer separation incentive payments to realign the workforce to meet budgetary constraints or mission needs; correct skill imbalances; or reduce high-grade, supervisory, or managerial positions. 3. Establish modified regulations for the separation of employees during a reduction or other adjustment in force. 4. Establish senior-level scientific, technical, and professional positions and provide those positions with the same pay and benefits applicable to the Senior Executive Service while remaining within GAO’s current allocation of super-grade positions. After the Congress passed the act in 2000 and the President signed it into law, GAO began the process of developing regulations to implement the four authorities it established. Because stakeholder involvement is a critical component of successful human capital management, particularly when initiatives are being introduced, GAO established a standard practice to ensure employee involvement in significant agency initiatives. GAO’s standard practice involves the initial discussion and presentation of draft proposals to members of GAO’s Employee Advisory Council—a panel of employees representing a variety of employee constituent groups—and also to the agency’s senior executives. The Comptroller General was personally involved in the vast majority of those exchanges, which afforded an opportunity for the direct communication of employees’ and managers’ reactions. After the views of employees and managers were considered, further changes were made, if needed, before the draft proposal was issued to all employees for their review and consideration. Materials were posted on GAO’s intranet home page, and employees were notified by E-mail that proposals were available for their review, comments, and suggestions for a period of 30 days. The documents were posted in a user-friendly format that allowed employees to access the documents and provide comments directly on any or all of the provisions. Generally, the regulations were accompanied by “Frequently Asked Questions,” which elaborated on and explained the details of the provisions. The agency received 60 comments on the voluntary early retirement order, 33 on the workforce restructuring order, and 12 on the senior-level order. These comments were collected, reviewed, and carefully considered by GAO’s Executive Committee prior to finalizing the regulations. The approaches that GAO took in implementing these four flexibilities as well as the results that the agency has achieved are described in the following four sections. At the time the GAO Personnel Flexibilities Act was passed, GAO’s workforce was sparse at the entry level and plentiful at the midlevel. The agency was concerned about its ability to support the Congress with experienced and knowledgeable staff, given the significant percentage of the agency’s senior managers and analysts reaching retirement eligibility and the relatively small number of entry-level employees who were in training to replace more senior staff. The use of the voluntary early retirement authority provided in section 1 of the act is one of the tools that the agency has used to confront this serious issue—one that is facing much of the federal community. The act allows the Comptroller General to offer voluntary early retirement to up to 10 percent of the workforce when necessary or appropriate to realign the workforce to address budgetary or mission constraints; correct skill imbalances; or reduce high-grade, supervisory, or managerial positions. This flexibility represents a proactive use of early retirement to shape the workforce to prevent or ameliorate future problems. GAO Order 2831.1, Voluntary Early Retirement, containing the agency’s final regulations, was issued in April 2001 and is included in appendix I. Under the regulations, each time the Comptroller General approves a voluntary early retirement opportunity, he establishes the categories of employees who are eligible to apply. These categories are based on the need to ensure that those employees who are eligible to request voluntary early retirement are those whose separations are consistent with one or more of the three reasons for which the Comptroller General may authorize early retirements. Pursuant to GAO’s regulations, these categories are defined in terms of one or more of the following criteria: organizational unit or subunit, occupational series, grade or band level, skill or knowledge requirements, performance appraisal average, geographic location, or other similar factors that the Comptroller General deems necessary and appropriate. Since it is essential that GAO retain employees with critical skills as well as its highest performers, certain categories of employees have been ineligible under the criteria. Some examples of ineligible categories are employees receiving retention allowances because of their unusually high or unique qualifications; economists, because of the difficulty that the agency has experienced in recruiting them; and staff in the information technology area. In addition, employees with performance appraisal averages above a specified level have not been eligible under the criteria. To give the fullest consideration to all interested employees, however, any employee may apply for consideration when an early retirement opportunity is announced, even if he or she does not meet the stated criteria. The Comptroller General may authorize early retirements for these applicants on the basis of the facts and circumstances of each case. The Comptroller General or his Executive Committee designee(s) considers each applicant and makes final decisions on the basis of the institutional needs of GAO. Only employees whose release is consistent with the law and GAO’s objective in allowing early retirement are authorized to retire early. In some cases, this has meant that employees’ requests must be denied. GAO held its first voluntary early retirement opportunity in July 2001. Employees who were approved for early retirement were required to separate in the first quarter of fiscal 2002.