[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



 
   PUBLIC SERVICE FOR THE 21ST CENTURY: INNOVATIVE SOLUTIONS TO THE 
            FEDERAL GOVERNMENT'S TECHNOLOGY WORKFORCE CRISIS
=======================================================================


                                HEARING

                               before the

           SUBCOMMITTEE ON TECHNOLOGY AND PROCUREMENT POLICY

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 31, 2001

                               __________

                           Serial No. 107-91

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform









                          U.S. GOVERNMENT PRINTING OFFICE
81-423                             WASHINGTON : 2002
_____________________________________________________________________________
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                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       MAJOR R. OWENS, New York
ILEANA ROS-LEHTINEN, Florida         EDOLPHUS TOWNS, New York
JOHN M. McHUGH, New York             PAUL E. KANJORSKI, Pennsylvania
STEPHEN HORN, California             PATSY T. MINK, Hawaii
JOHN L. MICA, Florida                CAROLYN B. MALONEY, New York
THOMAS M. DAVIS, Virginia            ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
BOB BARR, Georgia                    ROD R. BLAGOJEVICH, Illinois
DAN MILLER, Florida                  DANNY K. DAVIS, Illinois
DOUG OSE, California                 JOHN F. TIERNEY, Massachusetts
RON LEWIS, Kentucky                  JIM TURNER, Texas
JO ANN DAVIS, Virginia               THOMAS H. ALLEN, Maine
TODD RUSSELL PLATTS, Pennsylvania    JANICE D. SCHAKOWSKY, Illinois
DAVE WELDON, Florida                 WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              ------ ------
C.L. ``BUTCH'' OTTER, Idaho                      ------
EDWARD L. SCHROCK, Virginia          BERNARD SANDERS, Vermont 
JOHN J. DUNCAN, Jr., Tennessee           (Independent)


                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
                     James C. Wilson, Chief Counsel
                     Robert A. Briggs, Chief Clerk
                 Phil Schiliro, Minority Staff Director

           Subcommittee on Technology and Procurement Policy

                  THOMAS M. DAVIS, Virginia, Chairman
JO ANN DAVIS, Virginia               JIM TURNER, Texas
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
DOUG OSE, California                 PATSY T. MINK, Hawaii
EDWARD L. SCHROCK, Virginia

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
                    Melissa Wojciak, Staff Director
              Victoria Proctor, Professional Staff Member
                          James DeChene, Clerk
          Mark Stephenson, Minority Professional Staff Member












                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 31, 2001....................................     1
Statement of:
    Kelman, Dr. Stephen, Albert J. Weatherhead III and Richard W. 
      Weatherhead professor of public policy, Harvard University, 
      John F. Kennedy School of Government; Martin Faga, CEO and 
      representative of the National Academy of Public 
      Administration [NAPA], the Mitre Corp.; Dr. Ernst Volgenau, 
      president and CEO, and representative of the Information 
      Technology Association of America [ITAA], SRA 
      International; and Steve Rohleder, managing partner, 
      Accenture..................................................    89
    Walker, David, Comptroller General, U.S. General Accounting 
      Office; Kay Coles James, Director, Office of Personnel 
      Management; and Stephen Perry, Administrator, U.S. General 
      Services Agency............................................    12
Letters, statements, etc., submitted for the record by:
    Davis, Hon. Thomas M. Davis, a Representative in Congress 
      from the State of Virginia, prepared statement of..........     5
    Faga, Martin, CEO and representative of the National Academy 
      of Public Administration [NAPA], the Mitre Corp., prepared 
      statement of...............................................   102
    James, Kay Coles, Director, Office of Personnel Management, 
      prepared statement of......................................    52
    Kelman, Dr. Stephen, Albert J. Weatherhead III and Richard W. 
      Weatherhead professor of public policy, Harvard University, 
      John F. Kennedy School of Government, prepared statement of    92
    Perry, Stephen, Administrator, U.S. General Services Agency, 
      prepared statement of......................................    64
    Rohleder, Steve, managing partner, Accenture, prepared 
      statement of...............................................   125
    Turner, Hon. Jim, a Representative in Congress from the State 
      of Texas, prepared statement of............................     9
    Volgenau, Dr. Ernst, president and CEO, and representative of 
      the Information Technology Association of America [ITAA], 
      SRA International, prepared statement of...................   119
    Walker, David, Comptroller General, U.S. General Accounting 
      Office, prepared statement of..............................    14















   PUBLIC SERVICE FOR THE 21ST CENTURY: INNOVATIVE SOLUTIONS TO THE 
            FEDERAL GOVERNMENT'S TECHNOLOGY WORKFORCE CRISIS

                              ----------                              


                         TUESDAY, JULY 31, 2001

                  House of Representatives,
 Subcommittee on Technology and Procurement Policy,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 2154, Rayburn House Office Building, Hon. Thomas M. Davis 
(chairman of the subcommittee) presiding.
    Present: Representatives Davis, Horn, and Turner.
    Staff present: Melissa Wojciak, staff director; Amy 
Heerink, chief counsel; George Rogers, counsel; Victoria 
Proctor, professional staff member; James DeChene, clerk; Mark 
Stephenson, minority professional staff member; and Jean Gosa, 
minority assistant clerk.
    Mr. Tom Davis of Virginia. Good morning. I would like to 
welcome everyone to today's oversight hearing on the 
information technology human capital management crisis facing 
the Federal Government. As many of you know, the GAO added 
human capital management for the Federal Government to its 
annual high risk list in January of this year. Governmentwide, 
we face significant human capital shortages that will only get 
worse as 35 percent of the Federal work force becomes eligible 
to retire in the next 5 years. The numbers are even more 
startling in highly specialized fields, where the government is 
recruiting in direct competition with the private sector. 
Nowhere is this more evident than with the technology work 
force. It is estimated that 50 percent of the government's 
technology work force will be eligible to retire by the year 
2006.
    Today's hearing will examine the problems the Federal 
Government faces in recruiting and retaining technology 
workers, as well as the challenges facing the government in 
competing against the private sector for this highly skilled 
highly sought after work force.
    Over the past decade, the Congress and the government have 
worked together to bring about significant management reforms. 
We have passed financial management reforms, information 
technology management reform, acquisition reform and government 
performance and results legislation. But unfortunately, no one 
has updated the laws and regulations governing the management 
of the government's single most valuable resource, its people. 
The private sector long ago made an end-to-end review of human 
resources management and learned a lesson our government has 
yet to recognize. A company's value is only as strong as the 
people that come through the door, and those people who come 
through the door every day bring knowledge, new ideas and 
innovation.
    A recent KPMG report on human capital management within the 
Federal sector noted that government is operating with 
personnel tools utilized and developed in the 1950's and 
1960's. The same study noted that industry undertook major 
human management reform in the 1980's, followed by ongoing 
updates that occur as often as three times a year.
    For the past decade, the government managed through minimum 
mandatory personnel ceilings and hiring freezes. Today we see 
the results in nearly every GAO report on a wide range of 
government programs. For instance, the Department of Defense 
lost so many of its civilian personnel, the Pentagon faces 
growing challenges in managing weapons acquisitions and 
logistics. This is coupled by the fact that 50 percent of the 
remaining DOD acquisition work force is eligible to retire by 
the year 2002.
    A July 2001 Department of Energy Inspector General report 
found that recruitment and retention of highly skilled 
technical personnel has fallen so far behind that the 
Department was failing to meet mission goals. Specifically, the 
work force at DOE has been downsized by 24 percent over a 3-
year period without any strategic planning by agency 
leadership. This led to a 2-year shutdown at Livermore's 
plutonium facility, as there were not enough Federal personnel 
in place to oversee daily operations.
    At NASA downsizing has left the space shuttle launch team 
short of qualified personnel to oversee shuttle safety and 
launch activities.
    Unfortunately, I could share with you many additional 
examples within Federal agencies. Today we must address this 
reality, both in the long- and short-term. First and foremost, 
we must move beyond black and white arguments for and against 
outsourcing as a part of a comprehensive human capital 
strategic planning initiative.
    I am encouraged that the Office of Management and Budget 
this year requested work force analysis reports from all 
executive agencies that include identifying future personnel 
needs, succession planning, and recruitment and retention 
strategies. I would like to request that the GAO review these 
reports that were due into OMB on June 29 to see if agencies 
are actually tackling this challenge.
    In addition, I am heartened that human capital is expected 
to be a part of every agency's performance plan. In the coming 
months I plan to work closely with the GAO, Federal employee 
groups, the private sector, and the administration to identify 
additional steps that must be taken to allow the government to 
address the human capital crisis.
    While it is my firm belief that the larger human capital 
management crisis will not be solved without the efforts of the 
Congress, the administration, Federal employees, and the 
private sector, we have to look to more immediate solutions to 
solve the work force shortages faced in highly skilled 
technical areas to ensure that government agencies are able to 
effectively and efficiently perform their missions while 
enhancing service delivery to the taxpayers.
    Today, e-government is a top priority for the Federal 
Government. The promise of e-government is revolutionary, but 
we face severe implementation challenges. As we heard at a 
hearing on acquisition reform before this subcommittee in May, 
too many of our complex IT procurements continue to fail, 
upwards of 40 percent. In addition, we have over 1,300 
different e-government initiatives under way. But we have no 
measurement of which projects are worthwhile or which should be 
expanded across agency or across government to truly make 
service more accessible.
    I am pleased the administration has just named an Associate 
Director of Information Technology within OMB and a new eGov 
council to review and assess IT spending. However, I believe we 
need individuals who can work daily on reviewing the status of 
IT modernizations or cross-agency initiatives to assist in the 
success of this new team. Unfortunately, the government can't 
attract mid-level IT managers who can perform these functions.
    That is why I have introduced legislation today to create a 
Digital TechCorps. I believe we can help government transform 
itself by creating a new vision of public service for the 
industry. According to the National Academy of Public 
Administration study on the Federal IT work force, the primary 
barriers to recruiting new IT workers are salary and length of 
time between job announcement and the actual hiring of an 
individual. Moreover, of the five categories identified by IT 
professionals when considering job opportunities, the Federal 
Government received a low score in all but one category. The 
creation of a tech corps would help eliminate those hurdles.
    First, my proposal sets up an exchange program that can 
begin as soon as an agency negotiates an exchange agreement 
with a private sector entity. Next the private sector 
individual will come into government at the GS-12 to 15 levels 
for a period of up to 2 years. But they will continue to 
receive pay and benefits from their private sector employer. In 
addition, the Federal Government's mid-level IT managers will 
have the opportunity to go to work in the private sector for up 
to 2 years, while retaining their government pay and benefits.
    This type of public-private exchange program will allow for 
greater knowledge and understanding between the public and 
private sectors. I believe it will foster greater innovation 
and partnership for government. I think it is a win-win 
scenario.
    The Federal Government sits on the brink of tremendous 
opportunity. We must utilize every opportunity available to us 
to achieve real transformation. This includes a comprehensive 
review of our human capital management. For too long the 
Federal Government has been considered the employer of last 
resort, this despite the tireless efforts of Federal employees 
who continue to be treated as costs to be cut rather than the 
greatest asset of every agency and bureau within the 
government.
    I look forward to discussing what creative solutions can be 
brought to bear against the looming crisis facing our 
government today. The subcommittee will hear testimony from 
David Walker, Comptroller General of the General Accounting 
Office, Kay Coles James, the new Director of the Office of 
Personnel Management, and Stephen Perry, the Administrator of 
the General Services Administration.
    On our second panel we will hear from Dr. Steve Kelman of 
the John F. Kennedy School of Government, Harvard University; 
Mr. Martin Faga, the CEO of Mitre Corp., representing the 
National Academy of Public Administration; and Dr. Ernst 
Volgenau, CEO of SRA International, representing the 
Information Technology Association of America; Mr. Steve 
Rohleder, the Managing Partner of Accenture.
    I now yield to Congressman Turner for his opening 
statement.
    [The prepared statement of Hon. Thomas M. Davis of Virginia 
follows:]


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[GRAPHIC] [TIFF OMITTED] 81423.002

[GRAPHIC] [TIFF OMITTED] 81423.003

    Mr. Turner. Thank you, Mr. Chairman. Today's hearing will 
focus on the challenges the government faces in attracting and 
retaining a skilled information technology work force, and on 
possible innovative approaches to addressing those challenges.
    This hearing is very timely. Despite the recent slowing 
growth of the U.S. economy, the unemployment rate still remains 
below 5 percent, and it has been there since 1997. We know that 
much of the employment growth that has occurred in this economy 
has been attributed to the growth of information technology, 
and the rise of the so-called dot.coms. The demand for highly 
skilled information technology workers has consequently grown 
at an unusually rapid pace, despite the recent downturn in our 
economy, and the resulting layoffs that we have seen.
    A recent study by the Information Technology Association of 
America found that U.S. companies will seek to fill 900,000 new 
IT positions in the near future, and 425,000 of those positions 
will go unfilled because of lack of applicants.
    The shortage of information technology workers is 
exacerbated in the Federal sector for a variety of reasons, the 
disparity in pay between the private sector and the government. 
Two years ago, the Commerce Department found that starting 
salaries for computer science graduates from the Federal 
Government averaged $10,000 to $15,000 less than the starting 
salaries paid in the private sector. The Office of Personnel 
Management has recently attempted to address this disparity, 
and I look forward to hearing from the directors this morning 
regarding progress that we have made.
    We also need to examine the important nonpay benefits, such 
as training for career advancement opportunities and family 
friendly benefits, flexible work schedules, and meaningful 
recognition for individual performance as a way to attract and 
retain individuals with information technology skills. With its 
generally recognized good benefits packages, this is an area 
the Federal Government may be able to use to help attract IT 
workers.
    I was pleased yesterday that this committee's bill 
regarding allowing Federal employees to keep their frequent 
flyer miles was passed on the floor of the House, a small step 
toward increasing attractiveness of Federal employment. I 
commend the chairman for the legislation that he has announced 
today on the Digital TechCorps. I think it is an innovative 
approach to business by creating an exchange program between 
the public and the private sectors for technology managers.
    Mr. Tom Davis of Virginia. I could hear you fine, just for 
the record.
    Mr. Turner. Particularly that last sentence. And I do, Mr. 
Chairman, look forward to working with you on this innovative 
idea.
    Thank you.
    [The prepared statement of Hon. Jim Turner follows:]
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    Mr. Tom Davis of Virginia. Thank you very much. Mr. Horn.
    Mr. Horn. Thank you, Mr. Chairman. This is one of the most 
leading issues that affects the executive branch, the 
legislative branch, government all over America. And I commend 
the Comptroller General, Mr. Walker, who has been on this for 
months, and that's human capital, not just building bridges and 
everything else. They're important, but if we don't educate our 
human capital the government will not have the talent it should 
have.
    The President of the United States should tell everyone of 
his political appointees that you spend a few days on a college 
campus, either the community colleges, the private colleges, 
the State universities, which are the ones that really turn out 
most of the individuals that go into the government. The 
Services have done well with upgrading their people, sending 
them off to universities for master's degrees, doctor's 
degrees, and that has happened.
    We also ought to think about the retirees that are gone in 
some areas, private, public, local, State, Federal, and these 
are very talented people. They still have a lot to give and we 
ought to work with those individuals, have retraining, have a 
chance to upgrade their skills and help us. And those of us in 
Congress who are elected, we ought to be out to the college 
campuses and doing what we know, that you never get as much 
responsibility in many of the service opportunities with 
millions of dollars of equipment, millions of dollars in human 
capital, and we ought to also start with the Department of 
Education to work with those that know how to educate people in 
IT and that they must do some work basically on the campuses in 
their area, and we ought to be there right with people from the 
executive branch and without that, and we ought to start in 
kindergarten on educating people. And I think it's a shame when 
we are importing people from abroad when these are $60,000 jobs 
you're talking in technology, and there ought to be a 
sequential education in terms of logic, computing, a liberal 
arts education, a number of things. And we ought to get to it 
right now.
    Thank you, Mr. Chairman.
    Mr. Tom Davis of Virginia. Thank you very much, Mr. Horn. 
I'll now call on our first panel of witnesses to testify. David 
Walker, the Comptroller General of the General Accounting 
Office; Kay Coles James, the Director of the Office of 
Personnel Management. This is your first time. Is it your first 
time up here, Kay?
    Ms. James. Absolutely, yes.
    Mr. Tom Davis of Virginia. Kay is a Fairfax County veteran, 
served on the school board when I was chairman of the county 
board. It's great to have you here. And Stephen Perry, the 
Administrator of the General Services Administration. If you 
would just please rise. It's the policy of this committee that 
all witnesses be sworn before they testify.
    [Witnesses sworn.]
    Mr. Tom Davis of Virginia. Thank you very much. You can be 
seated. We have read everybody's statement. What I'd like to do 
is try to sum up in 5 minutes. You'll have a light in front of 
you. It's green but after 4 minutes it turns orange and that 
gives you a minute to sum up, and then we'll go right to 
questions.
    Thank you very much. Mr. Walker, we'll start with you and 
move straight down.

 STATEMENTS OF DAVID WALKER, COMPTROLLER GENERAL, U.S. GENERAL 
    ACCOUNTING OFFICE; KAY COLES JAMES, DIRECTOR, OFFICE OF 
 PERSONNEL MANAGEMENT; AND STEPHEN PERRY, ADMINISTRATOR, U.S. 
                    GENERAL SERVICES AGENCY

    Mr. Walker. Thank you, Mr. Chairman. It's a pleasure to be 
here today to address the Federal Government's human capital or 
people challenges with a specific emphasis on the information 
technology and acquisitions work forces. I would ask that my 
entire statement be inserted into the record, Mr. Chairman, and 
I will move to summarize that statement at this time.
    GAO, as you know, designated human capital strategic 
planning, or I should say the lack thereof, as a high risk area 
in its January 2001 high risk update. This is due in part to 
the after effects of the downsizing of the Federal Government 
in the 1990's. Those after effects include a smaller 
government, but one that is out of shape with skills and 
balances in major success planning challenges. Many agencies 
and functions are at risk of not being able to effectively 
achieve their mission in the future as a result of these 
challenges. The acquisition and the IT work forces, based upon 
the preliminary work that we've done, appear to be at above 
average risks as compared to other Federal agencies and 
functions in the human capital area. Failure to effectively 
address these human capital challenges in a timely, reasonable 
and responsible manner will have serious adverse consequences.
    First, it will serve to reduce the economy efficiency and 
effectiveness along a broad range of governmental activities. 
Second, it will slow the effects of government's attempt to 
better connect itself with its citizens and to improve overall 
responsiveness. And in addition, it will end up serving to 
increase potential national security or personal privacy 
threats associated with rapidly evolving technologies and 
related trends.
    Human capital strategic management is not the only high 
risk area with people dimensions on GAO's latest high risk 
list. For example, we noted that the IRS, the FAA and the DOD's 
systems modernization efforts are also deemed to be high risk. 
Clearly the people aspect of these areas represent a major 
contributing factor to the high risk designation. In addition, 
DOD and NASA's contract management functions are also deemed to 
be high risk. Clearly, the people element associated with these 
functions are a major contributing factor as to why they're 
deemed to be high risk.
    Irrespective of whether certain governmental functions are 
performed or--pardon me. Even if certain governmental functions 
are performed by contractors, it is absolutely essential that 
the government retain an adequate number of skilled and 
knowledgeable professionals to be able to maintain--to be able 
to manage cost, quality and performance of said contractors. 
All too frequently this is not the case.
    In addition, DOD's weapons acquisitions programs and 
practices are also on our high risk list, in part because of 
the planned turnover of key program officials which serves to 
decrease the effectiveness and the accountability of these 
major development programs.
    And there are various Federal programs that are on our high 
risk list, of which the human capital dimension is a major 
contributing factor, including the Postal Service, the SSI 
program, the Medicare program and selected HUD programs.
    Many individuals have a role to play in effectively 
addressing these human capital challenges from the President, 
to OMB and OPM, to heads of different departments and agencies, 
to GAO, to the Congress to the press and many others.
    We believe at GAO that a three-step approach should be 
taken to address this challenge. First, every agency should do 
everything they can within the context of current law to 
address these issues. We believe that at least 80 percent of 
what needs to be done can be done in the context of current 
law.
    Second, selected legislative reforms that would provide 
management with some reasonable flexibility and enhance the 
appreciation that the government has for its employees should 
also be considered. The frequent flyer legislation that 
Congressman Turner mentioned is a small step, but it sends a 
big signal.
    In addition, we need to build the consensus for broader 
Civil Service reforms in the future, which reforms should be 
based primarily on placing additional emphasis on skills, 
knowledge and performance as a basis for hiring, promoting, 
rewarding and disciplining Federal employees, rather than the 
passage of time and the rate of inflation, which is all too 
frequently the case. GAO is attempting to lead by example in 
this area.
    Figure 3 on page 15 notes a number of administrative 
systems that we have already taken. Figure 4 on page 16 notes a 
number of legislative actions that we've also taken as well in 
order to try to help us serve the Congress and the American 
people. We also note on pages 18 and 19 of my statement other 
possible incremental legislative reforms, including the 
possibility of fellowship programs, which would be very similar 
in concept, Mr. Chairman, to the legislation that you 
introduced today.
    In summary, the government overall and the IT and 
acquisitions work force in particular, face an array of 
challenges. Government must begin to treat its people as an 
asset to be valued rather than a cost to be cut. In a 
knowledge-based economy of which people are the source of all 
knowledge, it is critical that the Federal Government have top 
quality professionals. The Federal Government represents 18 to 
20 percent of the U.S. economy. It is the only superpower on 
Earth. We cannot afford to have anything less than top flight 
professionals managing that type of enterprise. The stakes are 
simply too great to do otherwise.
    Government must focus more on results rather than process 
in discharging its responsibilities, and the key missing link 
in this regard is the lack of effective human capital 
management, both as it relates to administrative matters, as 
well as the need for legislative reforms in this area.
    We will at GAO, Mr. Chairman, look to work with the 
Congress in trying to help maximize the performance and assure 
the accountability of the government, both overall and in the 
area of human capital.
    Thank you very much.
    [The prepared statement of Mr. Walker follows:]
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    Mr. Tom Davis of Virginia. Thank you very much. Ms. James.
    Ms. James. Thank you, Mr. Chairman. I appreciate the 
opportunity to testify before you today, and in your invitation 
you indicated that there were four topics or questions that 
you'd like for me to address, and I will try to summarize each 
of them briefly. And also, for the record, I have a longer 
statement that I would like to submit.
    First, I was asked to address OMB's work force analysis 
order. As you know, the Office of Management and Budget 
recently asked all agencies to complete a comprehensive 
assessment of their current and future work force needs. I have 
not had the opportunity yet to review all of the agencies' 
submissions or to analyze them, but I do know that OPM worked 
very hard last year to bring attention to the importance of 
work force planning.
    Also, this year, we made a five-step work force planning 
model and an information Web site available for all agencies to 
use. OPM provided data and technical advice that helped 
agencies carry out their assessments.
    I share your concern about the impact of the technology 
worker shortage and the government's ability to deliver 
services to the public. Although we are still able to rise to 
extraordinary challenges like the Y2K crisis, the government, 
like virtually all our employers, is facing a shortage of 
qualified workers in the information technology field. It 
stands to reason that difficulty in maintaining a high quality 
IT work force would affect agency missions.
    We need creative strategies to address this challenge and 
we know, for instance, that even though pay is not always 
competitive with the private sector, it's not the only barrier 
to hiring and keeping a highly qualified IT work force. 
Outstanding technology workers also seek the chance to work on 
very challenging problems as well as training opportunities and 
work place flexibility. We at OPM are working with agencies to 
improve recruitment strategies and marketing of Federal IT 
employment opportunities.
    What are OPM's proposed solutions? We've been exploring 
both legislative and administrative remedies to these problems. 
We have been considering proposals to enhance recruitment and 
retention incentives for the Federal work force generally. For 
instance, we've been considering ways to make the current 
authorities for recruitment relocation and retention incentive 
payments more flexible and easier for agencies to use in a very 
targeted way.
    Meanwhile, we've already taken other concrete 
administrative systems to alleviate these recruitment and 
retention problems. First, we have established special salary 
rates for entry level and developmental level information 
technology employees under the general schedule. The new rates 
will be more competitive for recruiting the talent we so 
desperately need.
    Second, we have issued a new classification standard for IT 
specialist positions. The standard which our customers are 
using enthusiastically reflect new and emerging technologies 
and identifies 10 new specialty areas. We've designed the 
standard to be a flexible document that we can adapt as new 
specialties and technologies emerge.
    Third, we piloted a new approach to assessing 
qualifications for IT work. The new model is much more flexible 
than the old standard and will greatly assist managers in 
developing vacancy announcements and selection criteria for any 
IT position. The pilot project has the added advantage of 
allowing agencies to bring in applicants at whatever grade 
levels match their competencies, regardless of how much 
experience they have.
    Finally, you asked me about OPM's view on a government-
private sector employee exchange program for information 
technology workers. Like you, Mr. Chairman, I find the concept 
interesting and attractive. OPM has explored the idea in the 
past although not exclusively for the IT work force. I know 
that you just introduced a bill that would establish an 
exchange program for technology workers, and I look forward to 
reviewing your proposal.
    I understand that there are ethics implications to some 
specific approaches that need to be explored very carefully and 
thoroughly. We would defer to the Office of Government Ethics 
and the Department of Justice on those matters. At the same 
time, we are eager to work with interested parties to design an 
effective exchange program that would help strengthen not only 
our technology work force, but the Federal work force 
generally. Improving communication and cooperation between the 
Federal Government and the private sector can help identify 
new, more effective ways for government and industry to work 
together. I am particularly interested in ways in which an 
exchange program might create opportunities to improve customer 
service and business practices in the government.
    I look forward to working with you, Mr. Chairman, to 
explore ways to make this interesting concept workable. Thank 
you.
    [The prepared statement of Ms. James follows:]
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    Mr. Tom Davis of Virginia. Thank you very much. Mr. Perry.
    Mr. Perry. Chairman Davis, members of the subcommittee, I 
appreciate having the opportunity to appear before you today to 
talk about the challenges facing the government in recruiting 
and retaining information technology associates, and also to 
discuss the proposed legislation to establish an information 
technology executive exchange program. With your permission, 
I'd like to submit my formal testimony on this matter, the 
written testimony for the record.
    Mr. Tom Davis of Virginia. Without objection.
    Mr. Perry. It is certainly the case that IT skills are 
critical to the performance of every single Federal agency, and 
that certainly is true at GSA. In recent years at GSA we've 
undergone dramatic changes in the concept of our operations for 
purposes of improving our ability to meet our customer agency 
needs and thereby help them better serve the public and 
taxpayers. It certainly is the case that as we continue to 
adapt to the new way of doing business, this will have a 
continuing effect on the mix of skills and competency needed by 
GSA associates, and chief among them will be IT skills.
    My written testimony submitted for the record provides 
details with respect to some items that GSA has been involved 
in in recent times and what we plan to do, so I'll spend my 
allotted time rather focusing on the specific questions that 
was in the invitation letter regarding our IT work force.
    First, with respect to the question on GSA compliance with 
OPM's request for work force analysis, that analysis was 
submitted to OMB on July 6th. We believe that is a very helpful 
thing and an important part of our work force planning. The 
next step that we'll take in that process will be a 
comprehensive review of our existing work force and our future 
work force needs, and this will be done as a part of refining 
and clarifying our strategic plan. As part of this work, we 
will identify the skills and competencies that the GSA IT work 
force must have in order to achieve our performance goals. This 
strategic planning work is currently under way.
    Regarding the second question, we have reviewed the 
proposed Information Technology Executive Exchange Act of 2001, 
a legislative draft, and we support the concept, and we believe 
that this proposal offers a creative approach to providing the 
Federal Government with IT professionals from the private 
sector. The administration looks forward to working with 
Congress to craft the Work Force Exchange Program that achieves 
the desired goals on behalf of the government.
    The question regarding the impact of technology, as 
resulting from the work force shortage, I would say that while 
GSA has to this point been able to stay reasonably on track in 
terms of delivering programs and accomplishing our goals, the 
technology work force shortage certainly has created challenges 
for us in developing and managing our IT systems, challenges 
also in terms of carrying out any significant new initiatives 
and challenges in terms of finding the staff with the technical 
skills and competencies that we need for the future. As a 
result of this, we have hired contractors to assist us in the 
support and development of IT systems that we need to 
accomplish our service and our missions.
    You asked also about tools that I might be aware of from 
the private sector that may impact upon this issue of work 
force shortage and the issue of better work force planning at 
GSA. Certainly as you're aware, private sector companies in the 
United States have used approaches such as developing alliances 
with universities to attract students, providing internships as 
an approach, recruiting on a global basis, as opposed to a U.S. 
basis, use of H1B visas and, in fact, in cases outsourcing 
technology projects to be done by workers in other countries.
    Obviously, not all of these tools would be desirable from a 
public sector perspective. During the short term the public 
sector will continue to have difficulty competing with the 
private sector to attract and retain highly skilled IT workers. 
Consequently, we will need to aggressively apply the 
recruitment and retention tools that are discussed in my 
written statement. We will also need to develop additional 
creative solutions such as this information technology exchange 
program.
    Better work force planning will be accomplished at GSA by 
improving our human capital management process and integrating 
this into our performance management process as is necessary to 
build the organizational capability that we need to accomplish 
our mission and goals. In our strategic planning, which we at 
GSA are calling Creating a Successful Future at GSA, we have 
identified the need to do this as a part of an initiative to 
create a world class work force and a world class workplace. 
This process will buildupon the work that's already in place at 
GSA and it includes the following steps, which I would mention 
as being part of best practice, as David Walker has pointed out 
in many occasions on work force management.
    The first step is to have more clearly stated and 
documented goals with performance accountability measures; 
second; to define the organizational structure and the specific 
skills and competencies that we must have in each position 
within the organization in order to be able to achieve our 
goals; third, to conduct a comprehensive assessment of our 
existing organizational structure, our existing skills and 
competencies and thereby identify the gap between the desired 
organization and the existing organization that we need to 
achieve our goals, bridging this gap through succession 
planning, associate training, associate development, targeted 
recruitment and targeted retention initiatives. This process 
will be pursued consistent with the administration's 
competitive sourcing initiative.
    In closing, I want to reemphasize our agency's commitment 
to work with the subcommittee and other agencies to develop 
creative solutions to address the information technology work 
force shortage challenges that we face. We will work with you 
to identify and implement solutions that will be effective, and 
will enable us to help our customer agency better serve the 
public.
    Mr. Chairman, this concludes my formal oral statement. I'll 
be happy to answer questions you may have.
    [The prepared statement of Mr. Perry follows:]
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    Mr. Tom Davis of Virginia. Great. Thank you very much. 
We'll go right to questions. I'll start with Mr. Horn.
    Mr. Horn. Thank you very much, Mr. Chairman. The one 
question I want to raise is--and I'd like--it may be within 
your document here and I just haven't had a chance to get it. 
But Ms. James, I am curious about the incentives for 
management. And I do that based on an experience. Back 35 
years, members of the old Civil Service Commission were hired 
to start what is now the California State University System, 
the largest in the country. And we changed that when I got in 
there and in the 1970's and we got a management operation that 
would go from $10,000 to over $100,000 and it was all based on 
a contract and a number of things the manager is going to reach 
in, say, 6 months or 1 year. And we had an absolute turnaround. 
And they could have the contract, they could see what they had 
done, hadn't done, so forth.
    So I am curious since you--and I am delighted to see you as 
Director of the Office of Personnel Management. What's your 
thinking in that area to stimulate management?
    Ms. James. Thank you. I am sure that there's much more 
going on inside OPM right now than I am fully aware of, having 
been on the job for about 10 working days, so I can't give you 
a complete answer to that. I will tell you that I think that 
managers should be given all the appropriate tools in order to 
manage effectively, which means that they should have the 
flexibility that they need as a matter of principle to attract 
and recruit and retain.
    What that means in practice is that they have to have the 
training that's necessary and required, the flexibility, as I 
mentioned, that would give them the opportunity to manage their 
agencies in ways that would be productive. There's probably a 
lot more going on inside OPM that I am not prepared to share 
with you just yet. I do know that is a principle that we 
believe in very strongly.
    Mr. Horn. Well, I appreciate that.
    Mr. Perry, do you have any thoughts on this? You have a 
huge organization and a lot of talent there. What can we do to 
stimulate management?
    Mr. Perry. Well, among the things that in addition, along 
the lines of what Ms. James has said, I would just comment to 
the need for focus organizationally, and one of the things that 
brings about the focus is to more clearly define our goals and 
objectives. Every agency if asked would say, of course we have 
goals and objectives. But when pressed to say well, what are 
they, and how detailed are they, how specific are they, I think 
oftentimes we find that they are not as specific as they might 
be.
    To my mind, one of the things that managers can help 
themselves with is by making sure that their organization is 
more focused and then they spend their time obviously on 
working on having the associates of the organization be 
strongly aligned and committed to achieving those goals.
    Now, things that are done in terms of incentives, 
compensation and so forth are----
    Mr. Tom Davis of Virginia. Mr. Perry, could you pull that 
microphone a little closer?
    Mr. Perry. I am sorry.
    Things that are done in the area of compensation and 
incentives are very important, as studies have shown. At the 
same time this issue of having a positive, productive work 
force is also very energizing and challenging to managers. So I 
think that's an aspect that I would add to what Ms. James had 
to say.
    Mr. Horn. Comptroller General, you have a different type of 
personnel system.
    Mr. Walker. We do----
    Mr. Horn. Yes.
    Mr. Walker [continuing]. Mr. Horn. But let me comment first 
on your question. I think one of the things that has to happen 
in government is that we have to be able to take the strategic 
plans which are required by GPRA. We need to make them more 
than an annual paperwork exercise. They need to become the 
framework for how these do business every day. We need to 
define key performance indicators. We need to link 
institutional and individual performance measurement reward 
systems to those key performance indicators to achieve desired 
outcomes, and we need to reward people more based upon their 
skills, knowledge and performance in achieving those outcomes.
    We're a long way from that today in the government as a 
whole. Fortunately, we're a lot closer at GAO. We're a lot 
closer at GAO because, A, of all the things that we've done 
administratively in order to put us in a position to be able to 
do that. And second, as you noted, we do have some additional 
legislative flexibilities available to us that other agencies 
do not. However, I think other agencies that don't even have 
these flexibilities can go a long way toward achieving this 
linkage within the context of current law if they just get on 
with it.
    Ms. James. Mr. Chairman, there's one thing that I would add 
to that, and that is that in--one of the things that I think is 
so vitally important is to, in those linkages, link not only 
mission goals and objectives in terms of bottom line, but to 
make sure that our managers today understand that the human 
capital issue is a strategic issue that should be an important 
part of the agency's mission and objective. Many times we have 
to fight to make that a priority for our managers without them 
understanding that it does have a very important bottom line 
function in their ability to achieve their mission. And so I 
think we have to link that to performance as well.
    Mr. Horn. Mr. Walker.
    Mr. Walker. One quick followup on that. I totally agree, 
and one of the things that we've tried to do at GAO is that 
we've tried to have a so-called balanced scorecard approach 
from a philosophical standpoint. What we are looking to try to 
achieve and how we evaluate people is, No. 1, results, desired 
outcomes. So results are No. 1.
    No. 2, client feedback. What do our clients say about what 
type of job we're doing? And third, employee feedback. What do 
our employees say about how we're treating them?
    I think those three factors are very important and they can 
take you a long way.
    Mr. Horn. Thank you. Thank you. Oh, Mr. Perry, you have----
    Mr. Perry. If I just may add a small detail. Often the 
question comes up, what best management practices could we 
apply to government operations in order to improve our 
performance? And I think again I would just emphasize what Mr. 
Walker has said. What GPRA embodies is the answer to that 
question. The issue then is how rigorously will we apply it, 
and it's a matter of execution. I don't think we need to search 
much further for the best management practice. I think it is 
well-outlined there. It's a matter now of rigorously executing 
that directive.
    Mr. Horn. Thank you. Thank you, Mr. Chairman.
    Mr. Tom Davis of Virginia. Thank you very much, Mr. Horn.
    Let me start, Mr. Walker, with you. I'll just go straight 
down and there's no one else here. I'll just go till I finish 
my question and we'll get on to the next panel.
    In 1969, an exchange program was established that lasted 
through the early 1990's. What's your opinion of that program 
and do you know if there are any other initiatives that are 
currently underway?
    Mr. Walker. My understanding is that program involved 
exchanges, both public sector people going to the private 
sector and private sector coming to the public sector, for up 
to around 2 years, which is similar to yours, that there were 
about 800 to 900 individuals that took advantage of that 
program during that period of time, and that ultimately I 
believe it was terminated in the early 1990's by former 
President Bush, if I am not mistaken. My understanding is that 
as time went on, there became some reluctance on behalf of the 
Federal managers to allow their employees to go out into the 
private sector; that there was a desire to be able to obtain 
private sector individuals to come into government for a period 
of time, but there was less desire on behalf of the public 
managers to allow their people to go out to the private sector 
because in many cases they felt that they didn't have enough 
people to begin with and they needed to have a net plus if 
there was going to be some type of a fellowship program rather 
than just an even exchange.
    I am not aware of any overall programs. Director James may 
be. I know that we at GAO from time to time have had exchange 
programs and fellowship programs, and I have found that one of 
the things you have to be careful of in that regard, and I 
think your bill incorporates this, you need to have a cooling 
off period. You need to have a cooling off period whereby if 
the private sector sends somebody to government, then there's a 
period of time in which the government promises not to hire 
that individual, and vice versa. If the government sends 
somebody to the private sector, there's a period of time in 
which that employer promises not to hire that individual in 
order to provide reasonable assurance that they'll come back. I 
think you do have that in your bill. I think that's important.
    But I think in reality what's going to end up happening is 
you're going to find that there will be great demand on behalf 
of the public sector to have private sector people. There'll be 
some willingness to allow public sector employees to go to the 
private sector, but not in as great a number, I believe, as the 
other way.
    Mr. Tom Davis of Virginia. OK. You've seen the basics of 
what we've proposed. What are your comments on that? You 
skimmed over it in your remarks. What are the pluses and 
minuses as you see it?
    Mr. Walker. Well, I haven't read the exact bill. From a 
philosophical standpoint I think it has great conceptual merit. 
As I mentioned, you know, you've got it as a two-way program. 
You've also attempted to deal with some of the conflict of 
interest issues. That's obviously a matter that was always in 
the forefront of people's minds. I think those are manageable, 
but we need to have them in the forefront of our mind. You also 
have a cooling off period, which I think is a positive. I think 
the major point that I would make, Mr. Chairman, is I think 
realistically, given the fact that we have a significant 
shortfall in an adequate number of skilled and knowledgeable 
professionals in the Federal work force in the IT area, I think 
from a realistic standpoint you're going to find that this 
program will work best if you have more people coming into 
government than you have going out. And I think realistically 
that's the way it's going to work.
    But you do allow flexibility, as I understand, for each 
individual department and agency to decide what should be done. 
And I think that's appropriate because I think, you know, it's 
going to vary agency to agency as to what the right answer is 
there.
    Mr. Tom Davis of Virginia. You've reported that agency 
efforts to address human capital challenges in the IT area have 
generally been challenging. It's still a serious issue even 
though we're seeing layoffs and so on. Do you see the 
government stepping up their recruitment efforts as we get 
layoffs in the region at this point? And I'll let Ms. James or 
Mr. Perry answer that as well.
    Mr. Walker. I think we need to try to capitalize on the 
current slowdown, but I think we have to recognize that it's 
just a slowdown in the IT sector. The fact of the matter is the 
numbers that I have seen is there's still 400,000 to 500,000 
net unfilled positions in the IT sector, you know, U.S.-wide. 
It was up to 900,000 to a million, and so while the imbalance 
is not as great as it was before the slowdown, it still is 
significant.
    And you know, clearly we have to sell what we have to sell. 
I mean, the government has some things to sell that the private 
sector doesn't. It has the ability to sell in many cases 
additional responsibility, the ability to be able to make a 
difference for your country, better work-family balance, I 
think, than many private sector, somewhat better job security. 
There are certain things that it does have to sell and it does 
provide reasonable compensation where I think we need to look 
at whether or not we need to have even more flexibility with 
regard to critical occupations.
    But if people are looking to maximize their net worth 
rather than their self-worth they're not going to come into 
government. They've got to be looking to maximize their self-
worth.
    Mr. Tom Davis of Virginia. I just have an article in front 
of me from a local newspaper. It said that the jobless rate 
rose in Prince William County, which is right outside of 
Washington, which is in my district, last week. It rose to 2.1 
percent. And that Manassas Park rose to 1.6 percent 
unemployment. So you have to put it in perspective, which is, I 
guess, what you're saying.
    I am going to ask if Ms. James or Mr. Perry have any 
comment. You don't have to. And then I am going to yield to Mr. 
Turner.
    Ms. James. Certainly. I would just say several things to a 
couple of the questions that you posed to Mr. Walker. In terms 
of governmentwide exchange programs there have been, from time 
to time, programs like that within the Federal Government, not 
specifically targeted necessarily to the IT profession like 
this particular legislation that you're proposing does.
    Yes, there was a program that was much talked about and 
heralded in the early 1990's and I would just like to say that, 
Mr. Chairman, my understanding of that is that program did not 
fail on its merit, but failed because of some of the 
administrative and management issues surrounding it. And so I 
think that it's important to understand that it is a good idea 
and one that the Federal Government I believe could benefit 
from.
    I know that in your specific legislation you try to address 
some of the issues that were surrounding that first program. 
The one that seems to be most troubling of course is the 
conflict of interest that caused some serious concern. And I 
trust that as it goes through the legislative process, that 
those concerns will be addressed and even strengthened.
    Yes, I think you point out quite accurately that while 
there may be some cooling off in the IT market, that certainly 
isn't indicative of what we see in this particular area. It is 
still highly competitive and it is still difficult. All you 
have to do is ask some of our managers how difficult it is for 
them to recruit and retain a skilled IT work force. And so 
there is a lot yet to be done and we look forward to working 
with you on resolving some of those issues.
    Mr. Perry. Just a quick followup on one point that leads to 
a thought about the two-way flow of these people. First of all, 
as has been pointed out, as we are all keenly aware, this is 
not a short-term imbalance shortage issues. This is a very 
long-term issue. And as Mr. Walker pointed out, many statistics 
show that many of the IT jobs of the type that we're talking 
about will remain vacant because the people in the short term 
are just not available. So as we think about this, I think that 
has to be a part of our thought process. We're not fashioning a 
solution to bridge some short-term problem that's going to go 
away in 2 years. This is going to be with us for a while.
    And in that regard, if you, in my judgment, take a look at 
the issues facing the Federal Government, IT security, and 
again the things that Mr. Walker eloquently outlined in his 
opening statement, one could easily argue that the crisis or 
emerging crisis facing the government is even more significant 
than that which faces the private sector. And as a result, 
there should be an effort to make sure we take care of what the 
government needs to have done, which may mean that there should 
be a greater emphasis on bringing people in.
    Now, it's obviously the case that as we move people out to 
the private sector, they can gain some knowledge that will be 
useful to the government when they return. The question is, can 
we wait 2 years to make that happen?
    My only point is I think the situation that we face would 
cause us to want to give heavy emphasis to bringing people in.
    Mr. Tom Davis of Virginia. Let me just make one comment. If 
you go back 10 to 15 years, a lot of people went to the 
government because of security. You did get security in a 
government job. You did get some of the financial rewards or 
advancements but there was some predictability. However that's 
no longer true if you look at how the Federal work force has 
shrunk.
    We have also cut benefits. The FEHBP has been threatened 
back and forth. We have seen COLAs that have been cut. If 
you're retired getting your Social Security, you got your COLA 
on time. If you're a Federal retired employee, you got your 
COLA delayed. We have seen parking taken away. We saw 
government shutdowns.
    Again, we have just used this as a budget item to be cut 
instead of our greatest asset. And the legislation that we have 
proposed here is just a small step in trying to--it is still a 
recognition that our employees are an asset. And we have these 
folks and if we properly train them and motivate them for the 
taxpayers of America, we can get more out of it. We've got some 
great people who have given their lives to government service. 
And we abuse them, from our perspective. We are just not using 
that asset. This is an opportunity to ask some of these people 
to go out and grow professionally and bring ideas, cross-
pollinate public and private and bring them both--that's all 
we're talking about here.
    Let me yield to Mr. Turner.
    Mr. Turner. Thank you, Mr. Chairman. I just want to 
followup, Mr. Perry, on what you've said. You seem to be saying 
that you believe that the more important thing to accomplish 
with the chairman's legislative proposal is to bring people 
into government, rather than to send government employees out. 
Expand on that just a little bit for me and what is your fear 
about Federal employees going out or your concern about that?
    Mr. Perry. Yes, Congressman. I don't have a fear about 
Federal employees going out. In fact, I think, as I say, it 
will be a useful thing. The experience that they would gain and 
bring back would be very beneficial, no question about it.
    It's a question of as we think about what we want to try 
and accomplish, for example, in the area of government and in 
the area of providing IT security and all that entails, it just 
seems to me that as we would supplement our current Federal 
work force with people from the outside who may have had 
different experiences with respect to those matters, and I can 
envision them now working side by side to accomplish some of 
these really big tasks that are on the table in front of us, I 
think both the private sector person and the Federal employee 
working together in that scenario would benefit from the kind 
of things they would be working on and it would enable us to 
get out in front of the curve on some of these issues.
    So my concern is a matter of urgency. If, in fact, we 
believe that some of the IT issues facing the government are 
that urgent, then it would appear to me that we would put the 
full court press on those urgencies.
    Mr. Turner. Now I would assume that current practice is in 
many cases to bring private contractors in to perform tasks and 
to take on these big projects you are talking about, so that we 
really don't depend currently on Federal employees to do a lot 
of these bigger tasks. Is that an accurate assessment?
    Mr. Perry. At least in part. But I think it falls to the 
Federal Government manager to develop the idea or the business 
process improvement. We don't go to the private sector, for 
example, and say--I don't think in many instances--ask them to 
initiate what business processing improvement we should work on 
in a given agency.
    So I think there is some level of IT management inside the 
organization, which is under the jurisdiction of the Federal 
employee, to first decide what it is that we need to do. And 
then I do agree with you that when it comes to execution, then 
we often would defer to contractors in the private sector to 
help with the execution. But the initial idea generation or 
system design is often done by people inside the agency.
    Mr. Turner. Mr. Walker.
    Mr. Walker. Mr. Turner, I think you will find that most IT 
operations in the Federal Government will have a core group of 
Federal workers and they will rely, to differing extents, but 
fairly significantly, on outside contractors, in part because 
they made the judgment that there are certain types of 
activities that should be contracted out and in part because 
even though there are certain activities they would prefer to 
be done by Federal workers within the government, they have not 
been able to attract, retain and motivate an adequate number of 
qualified people to get that done. And therefore, they have 
been placed in the position of having to contract out in 
certain circumstances activities, because they really have no 
other choice in order to be able to get it done.
    What is critically important is that irrespective of what 
does get contracted out, is that we got to have an adequate 
number of people with the right kind of skills and knowledge to 
manage cost, quality and performance of those contractors. 
Because without doing that, then both the government, the 
taxpayers and, frankly, I would say the contractors as well are 
at risk as a result of that. So it is going to be a serious and 
continuing challenge, I think, in this area.
    Mr. Turner. Mr. Walker, Mr. Perry of course made the 
emphasis on the more urgent need of bringing outside private 
sector folks into the government, and I was interested in your 
assessment of whether or not there may be some resistance on 
the part of the private sector to participate in this exchange 
program because I would think that if they felt we were 
bringing people in from a company that might have the 
opportunity or currently be contracting for those IT services, 
they may not want to loan that employee to the Federal 
Government and transfer that skill in-house for the government 
rather than having the option of continuing to contract it.
    Mr. Walker. My personal view is I think it needs to be a 
two-way street. I think it is beneficial for it to be a two-way 
street. However, I think from a practical standpoint that there 
will be more people coming into government than will be going 
out of government.
    Clearly, in exchange, there are a number of potential 
benefits. First, both sides benefit from the exchange of 
knowledge and experience. No question about that. But post-
exchange program, I would argue that the private sector is in a 
position to benefit potentially more on a recurring basis than 
the government might benefit because both are benefiting from 
the exchange and that is because a growing percentage of 
information technology projects are being done by contractors. 
And obviously, to the extent that you have a contractor who is 
willing to participate in this exchange program and they gain 
knowledge of the government and how it operates and its systems 
and its processes and the key players, then they are obviously 
in a good position to hopefully more effectively compete for 
future government work.
    There's nothing wrong with that. I mean, we need quality 
contractors to be able to help us address our challenges here.
    But I think realistically, my view is that while exchange 
is a good idea and while it ought to be a two-way street, that 
realistically, we would need relatively more people to come in 
than we're probably going to be able to send out. And I hope 
and I expect, quite frankly, that firms like Accenture are not 
doing this merely for the profit motive, they're doing this to 
do something for their country. Personally, I believe everybody 
ought to do something for their country, and this is a pretty 
constructive way to get that done, I think.
    Mr. Turner. Ms. James.
    Ms. James. There's a sort of hidden benefit, I believe, in 
this program and it's sort of an unspoken benefit that I think 
is worthy of note, and that is, as we talk about the exchange 
and, you know, who is to benefit more, people as they go out to 
the private sector or the private sector as they come in, one 
of the challenges that we have before us with the Federal work 
force right now is to create environments where workers--to 
recruit and retain excellent employees. One of the unspoken 
fears, I believe, is if they go to the private sector, they 
might not come back, that they will find that environment so 
seductive.
    I think that our challenge as Federal managers in this, 
people who have been given the task of building a Federal work 
force is that we will create an environment with the proper 
incentives, with the proper authority for managers in terms of 
the work and creating interesting work. The challenges that 
people have in the Federal Government in terms of the types of 
work that are available to do just aren't available in the 
private sector. If you are an IT manager and you want to be on 
the cutting edge and have the opportunity to work on some of 
the most interesting and exciting work going on in your field, 
in many cases that is happening in the government.
    So I think it creates an opportunity for us to become 
competitive and more excellent in terms of what we offer 
workers in the work force, in terms of the work itself, not 
just in terms of incentives.
    Mr. Turner. Mr. Perry.
    Mr. Perry. If I may add on this issue of the two-way 
street, I think what is really good about this legislation is 
that it enables that flexibility. I am only suggesting that we 
don't stay only with that.
    There certainly will be some contractors in particular who 
will be very interested in the exchange for various reasons. 
But there, I believe, on the public service side of this, will 
be a number of companies who are not contractors and have no 
continuing interest in doing contracting IT work with the 
government, but who nevertheless have IT professionals on their 
staff doing e-government types of things, and those people 
would benefit immensely from having an opportunity to come to 
the government to work on a project that is much bigger than 
they might work on in their own place. It would be a 
developmental thing for that person to come to the government 
to work on such a project.
    And in addition, there is that issue of public service. And 
as it is the case that we've got some big challenges ahead of 
us, I think there would be a number of private sector companies 
who would be willing to participate in this on a nonexchange 
basis. The legislation enables it to happen both ways, and I 
think we ought to take advantage of both aspects of that.
    Mr. Turner. Thank you. Thank you, Mr. Chairman.
    Mr. Tom Davis of Virginia. Thank you very much. Let me just 
go through my questions.
    Mr. Walker, last October, Congress gave GAO additional 
personnel authorities through legislation. These included the 
authorities to offer voluntary early retirements, voluntary 
separation incentives to reshape the GAO work force as well as 
the authority to establish senior level positions to meet 
critical scientific, technical or professional needs in such 
areas as economics and information technology. Do you think 
other agencies would benefit from this flexibility?
    Mr. Walker. From a conceptual standpoint, yes, I do, Mr. 
Chairman. I would divide them into two categories. In the area 
of the senior level position and also the area of voluntary 
early outs and buy-outs in order to realign the work force 
rather than downsize the work force, I believe that has broad 
application and, in fact, broad acceptance based upon my 
experience last year.
    The last proposal, which is the proposal that we had which 
changed the way in which RIFs are conducted, is somewhat more 
controversial. I believe it has merit, but I believe it is an 
issue that should be considered within the context of broader 
Civil Service reform at a later date as part of a comprehensive 
package with discussions with all the interested stakeholders 
in conjunction with that, because it's really focused on the 
central premise that more decisions in government should be 
made based on skills, knowledge and performance rather than 
years of service. And I think while that has considerable 
merit, it relates to more of the element of more fundamental 
Civil Service reform.
    Mr. Tom Davis of Virginia. It's also come to our attention 
that many agencies view legislative relief from Title V as 
their only option to solving hiring challenges. Many agencies 
view the application process for existing flexibilities to be 
either too burdensome to meet or too time-consuming.
    In your view, do you think agencies understand what hiring 
and recruitment and retention flexibilities are available to 
them?
    Mr. Walker. I don't think that they have a good sense of 
all the flexibilities that are currently available. And I know 
that OPM recently published a document that was intended to try 
to help them gain a better understanding of what flexibilities 
are available.
    I think that it's also important for OPM to take a look at 
how many of those flexibilities require OPM approval and to 
what extent can more authority be delegated to the agencies, 
possibly with periodic followup to make sure people aren't 
abusing any of that delegated authority, because clearly one of 
the biggest challenges we have right now is being able to hire 
people in a timely manner. That is a huge problem. People have 
too many different options. They aren't going to wait around 
when they have these other options, and so I think it's clearly 
an area that needs additional focus.
    Mr. Tom Davis of Virginia. Mr. Perry, let me ask you a 
couple of questions. You mentioned mentoring in your testimony 
as an important benefit offered to employees. I agree with 
that. Some of the testimony today mentions the importance of 
reverse mentoring, which is where young IT professionals are 
paired with senior level managers for a specified period of 
time. Have you considered offering such a benefit to your 
acquisition and IT work forces in your recent recruitment and 
retention efforts? And have you measured the percentage of 
individuals under 30 or under 35 coming into government, and do 
you know how many of these individuals are coming in at the GS-
12 to 15 range? Do you have any feel for that?
    Mr. Perry. Let me talk about the mentoring aspect first. I 
certainly agree that can happen and should happen. That's very 
powerful. We haven't talked about it in terms of one-on-one 
mentor-protege, as I have used it in the private sector, but we 
have certainly talked about that in terms of groups.
    Now with respect to the work force, people that we're 
bringing in and their average age, I am not able to quote the 
average age of our recent recruitments. I know that we have 
brought in about 29 IT professionals. My expectation is that 
they are under 30, but I don't know as a fact. I know our 
average age for our IT people is about 46, and we have a little 
over 1,100 of them. So that tells you that our work force is on 
the higher age side.
    Mr. Tom Davis of Virginia. That's the younger age side from 
my perspective.
    Mr. Perry. Relative to their remaining work years, on the 
higher side.
    Mr. Tom Davis of Virginia. Also, you mentioned the newly 
created CIO University. Is this a governmentwide program?
    Mr. Perry. It is a governmentwide program. It is an on-line 
self-paced study program. As I understand it, there is a great 
deal of utilization by IT people and that is the case within 
GSA as well. So it's just another one of those tools to provide 
for the updating of the IT work force. I think it is being used 
very successfully at this point.
    Mr. Tom Davis of Virginia. I think those are the questions 
that I wanted to ask. Anybody want to add anything before we 
get to the next panel?
    I would like to say to all of you, we appreciate your being 
here. Ms. James, thank you on your maiden testimony up here. 
You did great. We look forward to hearing from you again. And 
why don't we take about a 2-minute recess as we switch panels.
    [Recess.]
    Mr. Tom Davis of Virginia. I would like to welcome our 
second panel to the witness table. We have Dr. Steve Kelman of 
Harvard University; Martin Faga of MITRE Corp.; Dr. Ernst 
Volgenau of SRA International; and Steve Rohleder of Accenture.
    And as you know, it is the policy of the committee to ask 
everyone to swear and raise your hands.
    And let me just say, Dr. Kelman, to start with, I have seen 
your daughter is in the room and your father-in-law, Senator 
Metzenbaum, is here, and we welcome you, Senator, to these 
proceedings.
    Would you stand, please, and raise your right hands. We'll 
swear you in.
    [Witnesses sworn.]
    Mr. Tom Davis of Virginia. I think you know the rules. 
Orange light will go on 4 minutes in, and try to sum up and 
we'll go right to questions.
    Steve, we'll start with you and then Mr. Faga and move 
straight on down the row.

STATEMENTS OF DR. STEPHEN KELMAN, ALBERT J. WEATHERHEAD III AND 
  RICHARD W. WEATHERHEAD PROFESSOR OF PUBLIC POLICY, HARVARD 
UNIVERSITY, JOHN F. KENNEDY SCHOOL OF GOVERNMENT; MARTIN FAGA, 
   CEO AND REPRESENTATIVE OF THE NATIONAL ACADEMY OF PUBLIC 
  ADMINISTRATION [NAPA], THE MITRE CORP.; DR. ERNST VOLGENAU, 
   PRESIDENT AND CEO, AND REPRESENTATIVE OF THE INFORMATION 
 TECHNOLOGY ASSOCIATION OF AMERICA [ITAA], SRA INTERNATIONAL; 
        AND STEVE ROHLEDER, MANAGING PARTNER, ACCENTURE

    Mr. Kelman. Thank you very much for holding this hearing 
today to try to focus attention on the government's need and 
ability to get good people working in public service.
    Congressman Turner, in his opening statement, made some 
reference to the passage in the House yesterday of the bill on 
allowing government employees to keep frequent flyer miles. I 
had the privilege while I was in the government of getting such 
incredible travel perks as a trip to Warren, MI in February to 
visit the Army Tank and Automotive Command. There were other 
similar perks of my office. And I think----
    Mr. Tom Davis of Virginia. That explains why you are at 
Harvard, I guess.
    Mr. Kelman. Whatever. I think as the Comptroller General 
pointed out in his testimony, it is a small thing, but it is a 
good signal to the Federal work force about a more positive 
attitude.
    As a professor in an institution devoted to training people 
for public leadership, I see myself as a sort of frontline 
soldier in the government's war for talent. And we should all 
be disturbed, though, by a very dramatic statistic, which is 
that 20 years ago or so, about three-quarters of graduates in 
our Public Policy Program at Harvard took their first job in 
government. And now that figure is down to about one-third. 
And, in fact, our dean, Joe Nye, is so concerned about this 
problem that he is going to be personally chairing a series of 
four meetings up in Cambridge during the next academic year 
with senior government and private sector people to try to 
figure out what we can all do together to help the government 
win its war on talent.
    Let me just highlight a few things from my testimony. First 
is the issue of recruiting people from outside government for 
mid-level positions, and there are three facts I think is very 
important to keep in mind. One is about how the government 
works, which is traditionally the government has recruited from 
people from the outside only at two levels, entry levels and 
senior political levels. That is fact 1.
    Fact 2 is that a lot of my students and a lot of young 
people today fully expect to be doing a number of jobs during 
their career and not stay in one place.
    Fact 3 is that a lot of young people, actually more than 
ever before because of high school and college programs, have 
experienced an interest in doing some public service.
    When my older daughter--not the one who is here today--my 
older daughter was applying to college this last year, a number 
of the college applications from the schools she was applying 
to include in the application a thing saying, what public 
service have you done?
    So the idea of doing some public service is more and more 
something that a lot of young people understand.
    So I think that these three facts together suggest to me 
that government is missing an opportunity, No. 1, because 
people switch jobs a lot, to recruit some people at mid-levels 
rather than just entry levels, taking advantage of people 
switching jobs or whatever; and No. 2, by, in the career work 
force, only having people who are going to be doing entire 
careers in the Federal Government, missing an opportunity to 
allow young people who want to do a brief period of time in 
public service to do that. And I think there are potentially a 
lot of strategies the government should be looking at to try to 
take advantage of mid-level recruiting.
    The one we are specifically considering today and I think 
is a fantastic innovative initiative that you announced this 
morning, Mr. Chairman, together with Steve Rohleder from 
Accenture, is the idea of giving industry an opportunity to 
lend some of their mid-level employees to do a 1 or 2-year 
period of public service and help the government out with its 
human capital crises in the IT area.
    And some conversations I've had with senior government 
career people, I know they're very eager to get this Digital 
Tech Corps underway. So I hope we can do it at something more 
like Internet time than traditional time.
    Second thing I wanted to talk about briefly is addressing 
human capital problems through other than just traditional H.R. 
kinds of issues, because there are a lot of things that are in 
the jurisdiction of this subcommittee and the full committee 
that don't come packaged to you as human capital issues, but 
really are human capital issues or partly human capital issues.
    One area that I'm obviously interested in is procurement 
reform, where you and this whole committee have been engaged. 
One of the benefits of reducing for the customers within the 
government of the procurement system, of reducing the hassles 
and delays in the procurement system, is to make the government 
a more attractive workplace for those people so they don't have 
to deal with something where they have to wait 3 months to get 
a simple thing delivered to their office.
    In this regard, just to take something that's been in the 
news the last few days, there have been these reports, you 
know, on small numbers, tiny numbers of abuses of the 
government credit card; you know, 100 out of 50,000 
transactions or something like that, some of which, on closer 
examination, turn out not even to be abuses.
    But if we were to react in an old-fashioned knee-jerk way 
and say we have a few abuses and say we are going to destroy 
the whole system, it would not only hurt the taxpayer because 
the administrative cost savings of this--of the credit card are 
far, by a factor of 10, 20, 30, 40, greater than the cost of 
abuses, but it also would have a bad implication for the human 
capital crises for the government because it would return the 
front line government employee to a situation where they need 
to wait months just to get the simplest of things in their 
office.
    So that's an example of where things that don't come under 
the rubric of human capital crises actually are part of it.
    Similarly, and I will conclude here, the work that we do--
you do in the subcommittee and the full committee does with the 
Clinger-Cohen Act or the Government Performance Results Act, 
young people want a workplace that is results-oriented, that is 
a high performance workplace. Taxpayers need that. So anything 
this committee does to get the Federal Government workplace a 
more results-oriented workplace is making the government a more 
interesting place to work for young people.
    So as we think about the human capital crises, we shouldn't 
just think about narrowly things called ``HR,'' but broader 
kinds of changes, many of them under the jurisdiction of this 
committee, that make the government a more attractive 
workplace.
    [The prepared statement of Mr. Kelman follows:]
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    Mr. Tom Davis of Virginia. Thank you. Mr. Faga.
    Mr. Faga. Thank you very much, Mr. Chairman. It is a 
pleasure to appear here this morning on behalf of the National 
Academy of Public Administration. As you know, Mr. Chairman, 
the Federal IT Work Force Committee of the Chief Information 
Officers Council has asked the academy to undertake an 
alternative pay systems study and also to assess related human 
resources management issues as it affects the Federal 
Government's ability to attract and retain information 
technology talent.
    It hardly needs to be said here that the number of 
qualified workers currently available in the United States is 
way below the number of growing vacancies in the field. We find 
not surprisingly that the Federal Government needs a flexible 
and responsive human resources management system that it does 
not currently have. The currently available tools we find are 
not sufficient to the job.
    The academy project team undertook an extensive search of 
literature and, importantly, interviewed chief information 
officers, financial officers, human resource directors and line 
managers from the public sector, from nonprofit organizations, 
from academia and the private sector. We paid particular 
attention to the innovative practices that we found in some 
private sector companies.
    Several themes emerged from this. Research is clear on one 
thing--not surprising. To compete for and retain qualified IT 
professionals, salaries must be within a competitive range. Now 
the usual definition of competitive range is within 10 percent 
of the market norm. Interestingly enough, there are categories 
of IT workers in the government that are in that range. There 
are many others who are not.
    There are a number of new and modified compensation 
approaches that may help to improve recruitment and retention 
of IT professionals. They certainly do in private sector. They 
do at MITRE. One is establishing market-based pay systems.
    Second, a broad-band approach to the pay structure, that 
is, allowing pay for a given job to range as much as plus and 
minus 50 percent from the average for that job. Moving to 
compensation systems where pay is based on skill and 
experience--I'm sorry on skill and experience in the field and 
not on the definition of the job. Pay systems where annual pay 
increases are based on merit rather than length of employment, 
a change we made at MITRE just a few years ago. Ensuring that 
compensation is linked to the organizational goals and 
objectives, as we invest in training people so they can carry 
out jobs that are important to the institution, not something 
that is just a peripheral interest perhaps of the employee.
    Compensation systems for IT professionals need to be 
separate from the compensation system for other kinds of jobs. 
This is the case at MITRE and many private corporations. And 
there is the need to use various mechanisms to increase total 
compensation. These are bonuses and other special forms of pay. 
Once pay is in the competitive range, it does not play a major 
role in retaining IT professionals. In our studies of ourselves 
at MITRE, it ranks fourth.
    Five key nonpay factors that are important include good 
management. In fact, employees generally don't leave employers, 
they leave managers; that is, their immediate manager is 
somebody they don't want to work for.
    A good work environment. This includes physical environment 
but also the IT environment, of course, and the nature of the 
work.
    Challenging work. This has been spoken to by the previous 
panel, and it cannot be overemphasized.
    Flexible working arrangements, allowing people to work 
essentially on flex hours to the extent that the job permits, 
and the government is in pretty good shape in this regard.
    Training and development. Throughout a career, people need 
lots of additional training, including a form of training we 
find very important at MITRE, and that is supporting employees 
toward getting a degree, which is something generally the 
government doesn't do.
    Now we have been able to implement most of these principles 
in our technical work force at MITRE with good results, And I'd 
be happy to talk about that in the questions. I'd also like to 
add my support to your information and technology executive 
exchange initiative. I think this is an important step in 
bringing people to government with special skills as well as 
loaning people from government. Moreover, importantly, I think 
that it recognizes that government won't and probably shouldn't 
hire all of the skilled people it needs on a full career basis. 
This is a big change for government, as has been said before.
    In summary, Mr. Chairman, information technology has the 
power to transform the level, quality and quantity of 
government services provided to American citizens. To realize 
this goal, the Federal Government must have the tools needed to 
win the war for talent. The tools in the current system are not 
adequate to do the job.
    Thank you very much.
    [The prepared statement of Mr. Faga follows:]
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    Mr. Tom Davis of Virginia. Thank you. Dr. Volgenau.
    Mr. Volgenau. Mr. Chairman, as CEO of SRA International, we 
are very familiar with the problems of the information 
technology shortage. We are a system integration and consulting 
firm in the area of information technology and we understand 
the problem quite well.
    I also have a second job, which is chairman of the 
Information Technology Association of America Work Force and 
Education Committee. ITAA represents 500 companies in its 
membership and works very hard to solve work force and other IT 
problems. Each year, we have an annual information technology 
work force convocation. We bring together government, academia 
and business to discuss work force issues.
    In addition to that, we have partnerships and grants with 
various government organizations that look at such subjects as 
how to make education and training more relevant to the 
workplace and how to employ more people with disabilities and 
minority members.
    In January, ITAA completed a study, which is one of a 
continuing set of studies that we have had of the work force. 
We found there are more than 10 million IT workers in the 
United States, and that this year, 2001, there will be a demand 
for 900,000 workers. In addition to that, the projected 
shortfall at that time was about half that number, 425,000 
workers.
    Now these figures are dynamic. If we were to take that 
survey today, it might be a smaller figure of openings. 
Nevertheless, we believe that there is a shortage of supply 
compared to demand.
    I've been in information technology for about 40 years and 
I have seen it grow almost continuously.
    Recently, ITAA completed its 11th annual survey of Chief 
Information Officers of the Federal Government. They all cited 
the concern that other speakers have made about the large 
number of Federal employees who can retire in the next few 
years, and they all cited competition with the private sector 
as far as recruiting and retention. Government can alleviate 
some of this shortage through outsourcing, which is an 
increasing practice, even in the private sector. But even with 
outsourcing, government still needs people to manage the 
contracts, and there are certain government jobs that simply 
don't lend themselves to outsourcing.
    Government should, as other speakers have said, use some of 
the practices of the private sector in terms of attracting and 
retaining workers.
    ITAA supports the Information Technology Executive Exchange 
Program. As a matter of fact, we attempted an exchange program 
in 1999 with the Department of Justice, and that concerned the 
Cyber Citizen Program. After fairly extensive discussions, we 
abandoned that program for a variety of reasons. Nevertheless, 
the objections to that exchange program we feel are 
surmountable. ITAA and its member companies want to work with 
the government to deal with this problem, and we look forward 
to working with this committee to help you do that.
    Thank you very much.
    [The prepared statement of Mr. Volgenau follows:]
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    Mr. Tom Davis of Virginia. Thank you very much. Mr. 
Rohleder, thank you for being here.
    Mr. Rohleder. Chairman Davis, thank you for inviting me to 
testify today on the Federal human capital crises.
    I would like to ask that my full testimony be submitted for 
the record, please.
    I am Steve Rohleder, the managing partner of Accenture's 
U.S. Government Practice. Accenture is the world's leading 
provider of management and technology consulting services and 
solutions. We employ more than 75,000 employees in 46 
countries, generating $9\3/4\ billion in revenue in year 2000. 
We employ about 2,500 people in RST, and the majority of which 
work in our U.S. Government practice.
    Today my testimony will focus briefly on the impact the 
technology work force shortage has had on the ability of 
agencies to develop effective solutions to improve taxpayer 
services and highlight three areas where I believe the private 
sector can help address government's human capital challenges.
    The shortage of high-tech workers over the past decade is 
legend. That shortage has had a disproportionate effect on the 
Federal Government, which has been unable to compete with the 
private sector for these critical, new-age workers. The impact 
on government's ability to manage its $44 billion annual IT 
investment has been profound. There's a shortage of highly 
skilled managers to oversee complex IT programs. There is a 
severe shortage of IT professionals with cutting edge Internet-
based skills. And the IT work force has not been able to fully 
harness the power of technology to save taxpayers billions of 
dollars while improving efficiency.
    One solution we support is the establishment of a Digital 
TechCorps. It would allow public IT middle-level managers to be 
loaned to the private sector and, conversely, the commercial IT 
managers to be loaned to government for 1 to 2 years. Accenture 
believes that a Digital TechCorps comprised of the best and the 
brightest of both government and industry can be funneled 
toward projects that will help transform the Federal Government 
into a 21st century government.
    Accenture applauds the legislation you've drafted, Chairman 
Davis, and believe it will pave the way toward helping address 
the human capital crises by committing managerial high-tech 
talent to unique e-government challenges. It will also serve as 
a model from government and private sector collaboration. It 
will break the paradigm whereby entry to government service 
generally takes place only at the entry level and very senior 
levels with very little entry at the mid-career.
    And finally, it will serve as a final step to 
reinvigorating a culture of public service for a whole new 
generation of technology managerial workers.
    There are three areas I believe the private sector can 
help.
    First, Accenture has committed to loan five of our best and 
brightest to the Digital TechCorps for the first 2 years as 
soon as the legislation is passed and will challenge others in 
our industry to match our offer. We would hope that the initial 
TechCorps would be comprised of government and industry 
professionals dedicated to working on cross-agency e-government 
initiatives at the direction and in collaboration with the 
Office of Management and Budget and the Chief Information 
Officer Council.
    Second, there are many innovative human resource management 
best practices that government can and should adopt from world 
class private sector organizations. In our written testimony, 
we have offered some innovative solutions on how an 
organization can assess their work force, prioritize their 
risks and then mitigate them.
    Specifically, we believe agencies and Congress should 
review strategies to preserve the brain trust, embrace talent 
management and deployment, develop the next generation of 
Federal servants and achieve operational excellence.
    Third, as Federal agencies begin developing their human 
capital management assessments and mitigation strategies, it 
will be apparent that they do not have the tools to adequately 
track, manage and assess progress in aligning their human 
capital with their organizational mission. Human resource 
technology can enhance the quality of performance evaluation, 
skill tracking, training, knowledge transfer in recruiting and 
retention efforts.
    In conclusion, consistent with Mr. Walker and Mr. Perry's 
testimony, we believe the private sector can play an integral 
role in helping the Federal Government reshape its work force 
for the 21st century. Accenture is committed to helping launch 
a government-industry Digital TechCorps fostering a knowledge 
exchange beneficial to both industry and government.
    There are numerous human resource management commercial 
best practices that can and should be adapted to the Federal 
Government. Some will need legislation. Others need only be 
implemented.
    Finally, Accenture recommends that Congress continue to 
urge agencies to utilize technology to help manage the Federal 
Government's most precious asset, its people.
    Thank you.
    [The prepared statement of Mr. Rohleder follows:]
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    Mr. Tom Davis of Virginia. Thank you all very much. Let me 
start, Mr. Faga, with you.
    Does MITRE, being an FFRDC, have constraints on its hiring 
and the way it can remunerate people through other government 
contractors? You can't do stock options because you are not a 
stock company.
    Mr. Faga. We have to attract people basically purely on 
salary and opportunity to serve the public service, which by 
the way, proves to be a very important incentive. Because of 
those limitations, though, a year ago our attrition rate was 
running about 12 to 14 percent. Right now, it's running 5.
    Mr. Tom Davis of Virginia. The tightening job market also 
helped that, you think?
    Mr. Faga. Absolutely. And employees who are staying are 
talking about now the stability of the work as opposed to the 
attraction of going for the brass ring.
    Mr. Tom Davis of Virginia. Sure. I was intrigued when you 
talked about good managers making a big difference. We lose a 
lot of people because they are managed badly and go out. I 
think this can help with that. But most of all is making this 
challenging work, giving people an opportunity to step outside 
of government for a year or two and see what it is like there, 
learn new innovative techniques as part of a career path in 
government.
    Mr. Faga. Let me say just one more word about the idea of 
challenging work. One of the things I found, having been in 
government and also at MITRE, the challenge is to some degree 
self-generated by a group and there needs to be a critical mass 
of people. For example, in the field of information security 
engineering, we have about 200 technical people. They work on 
projects throughout the company. If they did not stay together 
as a mass--doesn't have to be as large as 200, but it can't be 
one and two. And one of the problems that you see in government 
is having--trying to hire 1 or 2 people who are specialists in 
a field and then hope that they would stay current and 
productive in that field for many years. Cannot be done.
    That's one of the beauties of your TechCorps is--I mean, we 
have all kinds of people, and I'm sure that my colleagues do, 
too, who would love the opportunity to spend a couple of years 
right inside of government helping with problems they think are 
important.
    And I might add further, Mr. Chairman, there is a related 
program called the Intergovernmental Personnel Act Program, 
which allows the government to exchange and nonprofits like us 
to contribute. We have about 12 people in those assignments 
now. This does not supplant what you are doing. It doesn't meet 
the need, but it does prove that it can work because it is 
already working in a small scale way.
    Mr. Tom Davis of Virginia. Dr. Kelman, I have a question 
for you. You noted in your testimony that one-third of your 
graduating professionals are interested in entering the 
government work force, which is down, and I ask if that means 
you are letting more Republicans into Harvard.
    Mr. Kelman. Many Republicans go to work for the government, 
especially now.
    Mr. Tom Davis of Virginia. What type of career paths are 
they interested in? What are they doing instead of government?
    Mr. Kelman. We still, even now, we have 70 percent of our 
graduates going into what I would call some version of public 
service broadly conceived. So this is ballpark. We have about 
35 percent go into government, about 25 percent go into 
nonprofit and about 20 percent go into the public sector 
divisions of private sector firms. They might work for the 
public sector division of Accenture or another firm. So we 
still got around 70 percent going into public service of one 
sort or another. And we consider that, broadly speaking, part 
of our mission.
    But we agree with the statement that you made and a number 
of the statements witnesses have made earlier on, the 
government--there's public service that's not just government 
service. However, the government needs talented people.
    So we want to make sure that a significant number of our 
people do go into government service. Now the ones who don't go 
in--and many of them, because we got concerned about these 
numbers--we do interviews both when they graduate--students who 
don't go into government--or we do interviews a few years out. 
Many, many of those who have not gone into government express 
an interest in an opportunity during their career or more than 
one opportunity to have a chance doing some public service, 
even if it's not their whole career. We need to make it more 
easy for people who don't want to devote a whole career in 
government and are not at the level of senior political 
appointees, assistant secretaries, whatever, to have some 
chance to do public service.
    Mr. Tom Davis of Virginia. It seems, then, of your graduate 
pool, most of them aren't going in to make money. They are 
really going in to, like you said, nonprofits, other public 
sector areas for the mission. And our key is to give them a 
mission in government. So many times, it seems you go into 
government and there is no mission. It's regulation-driven.
    Mr. Kelman. And I think that, again, when we interview our 
students--and we are doing a lot of work on this because we are 
very concerned about this problem--I mean it's the center both 
to our commitment to public service and the mission of our 
institution--when we interview our students, a lot of them 
express--and I'm going to call it stereotypes because I don't 
think it is necessarily true across the board by any means--but 
a lot of them express a stereotype that if you go into 
government, it is not results driven, that it is filled with 
bureaucracy, red tape and regulations and so forth.
    And there--and in early May, the fairly newly elected mayor 
of Baltimore, Mayor O'Malley, came to speak at the Kennedy 
School and talked about some of the things he's trying to do in 
Baltimore. He brought with him a bunch of overheads about--and 
he sort of sees his goals that there are about five or six 
performance measures for the city of Baltimore: Crime rate--he 
had a bunch of them. He's tracking them every week and brought 
along charts. And I happened to be in the audience and a number 
of my students came up to me and asked, can I go to work for 
this guy?
    I think that young people, talented young people want 
challenging and results-driven work. And as I said in my 
testimony, anything that we can do as a government that you can 
do from your perch on this subcommittee to get the government 
workplace less bureaucratic, more results-driven, we couldn't 
do anything more to attract good Federal workers than that. 
That's the biggest thing we can do in a lot of ways.
    Mr. Tom Davis of Virginia. Dr. Volgenau, let me ask a 
couple of questions. What are some of the benefits that you 
extend to your employees to get them to come there and to 
retain them--I guess many were constrained by going into 
government? And what could you offer us in government?
    Mr. Volgenau. First of all, as other speakers have said, 
Mr. Chairman, the best thing that any organization, government 
or private, can offer its people is leadership and the 
inspiration that comes with good leadership.
    In terms of financial incentives, we compensate our people 
better than the average in the private sector. We offer bonuses 
for good performance. And on top of that, we have stock 
options. We are a privately listed firm, but we have a 
provision where we're appraised by an independent outside 
company so people can, even in a company that is not publicly 
listed, can do very well in terms of stock options.
    Mr. Tom Davis of Virginia. You are obviously a very highly-
regarded company. Do you feel there would be managers and 
employees in your company who would welcome the chance to come 
into government for a year?
    Mr. Volgenau. Yes, particularly if they felt they could 
really make a national contribution. Again and again, people 
are inspired by that. I'm a product of that system. The 
government sent me to the Naval Academy and then during the 
course of my military service for a Ph.D. in electrical 
engineering, and I ended up spending 20 years in the military 
and another 3 years in a senior position in Civil Service. And 
I felt for most of that time, even though the salaries were 
better for engineers, that the idea of national service and 
having real responsibility, the opportunity to make a 
contribution, caused me and many other people to stay. And I 
think that still holds today.
    Mr. Tom Davis of Virginia. How often do you undertake a 
work force assessment of your organization to ensure that you 
are adequately meeting the needs of the changing marketplace? 
And what kind of attrition rate do you have?
    Mr. Volgenau. Mr. Chairman, are you talking about my 
company as opposed to ITAA?
    Mr. Tom Davis of Virginia. You can do both.
    Mr. Volgenau. ITAA wouldn't have a formal----
    Mr. Tom Davis of Virginia. So your company would be a good 
example.
    Mr. Volgenau. I'll start with ITAA.
    Mr. Tom Davis of Virginia. And you're here for them. That's 
fine.
    Mr. Volgenau. We do an annual assessment. And it's very 
comprehensive and it includes not only openings, but skilled 
categories. And then every year, ITAA does an assessment--
survey of Chief Information Officers in the government. From a 
company standpoint, we are continually assessing our 
competitiveness and we use many outside studies to make sure 
that our--particularly our executives are paid well. We pay our 
people in the 75 percentile in terms of cash compensation. And 
when it comes to stock option, we are up in the 90 percent. But 
for that, we demand performance. If they are going to be paid 
at the 75 percentile, then our company must perform at the 75 
percentile and they individually must perform at that rate.
    Mr. Tom Davis of Virginia. You note that the ITAA tried for 
a year to develop an information security work force exchange 
program. What kind of roadblocks and difficulties did they 
encounter?
    Mr. Volgenau. Well, some of the things that the government 
speakers mentioned this morning, there was the concern about an 
exchange being perceived as a gift. There was the worry on the 
government side that people might, having gone to the private 
sector for a year or so, decide to stay there. Pay inequity was 
an issue. And then there was the concern that if those 
executives came from government contractors, that somehow or 
other those government contractors would have an advantage in 
competition compared to others. All of those items we feel are 
surmountable.
    Mr. Tom Davis of Virginia. Sure. Thank you.
    Mr. Rohleder, let me ask you a couple of questions. You 
mentioned 6 percent of Accenture's annual budget is spent on 
training. Do you know what it is in the Federal budget?
    Mr. Kelman. The best we have is about 1 percent.
    Mr. Tom Davis of Virginia. Have you measured the results of 
your training to ensure that your employees are receiving the 
most up-to-date skills and how critical is that? This is a 
bell. We will go on for about 10 more minutes and then we will 
adjourn.
    Mr. Rohleder. First of all, the training is absolutely 
critical. It's a fabric of the firm. We hire about 80 percent 
of our people right off of campus. Next to the Federal 
Government, we are the largest recruiter off of campuses in the 
United States. So training is an absolute critical component to 
a person's development with our firm. In fact, they've got a 5-
year training program that they go through. And we manage and 
promote them based on that training and their performance on 
the job.
    Mr. Tom Davis of Virginia. And for you, then, that is a 
recruitment tool, the fact that they are going to be constantly 
trained?
    Mr. Rohleder. Absolutely. I think the people that we 
recruit see that as a differentiator for our firm. They see 
that training program and that commitment to development as a 
key component in their decision to come work for us.
    Mr. Tom Davis of Virginia. I think one of the problems in 
government is that when budgets are cut, training is just one 
of the first things to go. And it's a demoralizer, but it also 
just puts us behind the 8 ball on so many different issues.
    Mr. Rohleder. Especially in the technology area where 
technology is changing so often that you have to keep your 
skills current to be able to develop the solutions that are 
going to help you.
    Mr. Tom Davis of Virginia. You note in your testimony that 
part of e-government is improving communications and service 
delivery between the Federal Government and State and local 
governments with whom they have to communicate. Would Accenture 
be interested in pursuing this type of an exchange program with 
State and local governments as well?
    Mr. Rohleder. Yes, we would. In fact, I have had 
conversations already in California with the commissioner of 
the tax board out there. Interestingly enough, his point was he 
wasn't interested in information technology exchange, but 
auditors. So they were interested in going into a different 
direction, but the need is still there. I don't think the human 
capital crises is only an issue in Federal. You can see it 
happening in State and local governments as well.
    Mr. Tom Davis of Virginia. Some of today's testimony noted 
that many agencies view legislative release from Title V as 
their only option for solving their hiring challenges. Many 
agencies view the application process for existing 
flexibilities as either burdensome or just too time-consuming. 
In your opinion, do agencies understand what hiring and 
recruitment and retention flexibilities are available to them 
now?
    Mr. Rohleder. I think some do. I think you take some 
agencies that have been relieved from their Title V 
requirements and they have gotten a little bit more creative. 
Most, I think, are still caught in H.R. policies and practices 
in the last 10 years. And I don't think they really do 
understand.
    Mr. Tom Davis of Virginia. Doctor, let me go back to you. A 
recent Computer News article stated that over 57 percent of 
government managers believe that information systems are 
critical to the agency's mission. In your experience, in and 
out of government, is the current IT work force shortage 
impacting the ability of government agencies to accomplish 
their missions?
    Mr. Kelman. Yeah. I think particularly--again, as Dave 
Walker and others have suggested--from a contract management 
perspective--and I think that--my own view is it doesn't make 
sense to say we need to keep a whole bunch of computer 
programmers in the government just so we can have people come 
up the system and be able to manage contractors. If it doesn't 
make sense to have the programmers in the government and it 
makes more sense to outsource them, we should outsource them. 
But we do definitely need IT--or skills of people who know 
something about IT to help establish strategy, requirements, 
evaluate RFPs, do contract management.
    I think that we need to be--and again, I think a lot of 
those people can initially come in at the mid-career level and 
move up there. They can come in, you know, at an 11, 12, 13 
level and work up from there. But I think that, as you 
mentioned earlier, we still have a big problem with failed IT 
projects in the government. And we just--yes, IT is crucial to 
the government's ability to serve citizens better and being 
able to manage IT at the front end of strategy and design and 
at the back end, of managing contractors, is a crucial, central 
skill for the government. And I think actually being able to 
manage--it's really a management issue, not doers, managers, 
executives, leaders. I think this is becoming a core competency 
for government to be able to manage those kinds of situations, 
and it hasn't got the attention it needs.
    Mr. Tom Davis of Virginia. Let me ask each of the private 
sector reps. I mean the idea of coming in and working on a 
massive program at the governmental level that they may not be 
able to get for your company would have an appeal, wouldn't it? 
You get that kind of experience and then they can come in and 
it gives you--later on, it gives your company someone who has 
actually worked with a wide body. You probably get some of that 
when you hire people from the Federal Government already. But 
for a younger person to work on that level could be a great 
tool.
    Mr. Rohleder. Absolutely.
    Mr. Tom Davis of Virginia. Dr. Kelman, have you shared the 
concept of the Digital TechCorps with your students, and what's 
their reaction to this kind of thing?
    Mr. Kelman. I haven't shared this specific idea with the 
students. I was involved in a focus group with some 30 
something Accenture employees on this and they were as a 
group--we did a focus group with eight of them. Seven of them 
said under the provision of your legislation, it was important 
that they continue to be able to maintain their association 
with their own firms and salaries. But with those conditions, 
they were very, very--seven out of the eight said they want to 
apply.
    So Steve may have--you said the best and the brightest. You 
probably got a lot of people to pick among. I think it's 
interesting--if I could just tell another interesting story.
    I have shared this with my colleagues back at Harvard. I 
went and saw a government team unit at Accenture, some new 
employees working in their Government Division, and they showed 
a little training film developed within Accenture for new 
employees in the Government Division. You know, it was 
interesting. The appeal to public service there and the flag 
and making a difference, I'm almost embarrassed to say, I think 
they did a greater job selling public service to their 
employees at Accenture than we a lot of times do in the 
government selling public service to our own employees.
    Mr. Tom Davis of Virginia. Well, we forget the product we 
have sometimes when we do that. But I'll tell you, the last 10 
years have been--20 years have been difficult for Federal 
employees with the downsizing and the benefit cuts and 
everything else. It's been very demoralizing. And I think when 
we can start recognizing employees as an asset instead of a 
line item to be cut and nibbled at, it just changes the whole 
perspective.
    Mr. Kelman. You know, Mr. Chairman, I mentioned this in my 
written testimony. One of the things that you could do and this 
subcommittee could do is why not hold a hearing every 6 months 
or even once a year, whatever, where you bring in career people 
in the government who have been involved in delivering some 
improvement and service through information technology and 
start sending the message that when career people are called 
before a committee like this, they are not just being called to 
be hectored; that every once in a while at least they are 
called to be honored because they deserve it. And that's a 
contribution that you could make and the subcommittee could 
make.
    Mr. Tom Davis of Virginia. That would be a first.
    Mr. Kelman. Let's show we can break the mold.
    Mr. Tom Davis of Virginia. We are long overdue. And I will 
take that under advisement. And that's a good idea.
    Let me ask Dr. Faga. They have now changed some of the IT 
positions in government in terms of their salary that you and 
Ms. James have testified on that. Is that going to be helpful?
    Mr. Faga. I'm sure it will. I am not very familiar with how 
they're doing it in government at this moment. I did discuss 
with your staff the fact, for example, at MITRE, we moved a few 
years ago to 29 different job categories, to recognize the idea 
that, you know, some skills are hot at any given time and some 
skills are not. We have to differentiate them.
    Mr. Tom Davis of Virginia. And you can do that in the 
private sector a lot easier than we seem to be able to.
    Mr. Faga. And I think that's what Ms. James is talking 
about, is better recognizing what are the skills.
    Another point I might throw in while I have the mic that I 
think is related to this is there can be a tendency to 
overspecify positions and their requirements to fulfill them. 
There are a large number of people who have IT skills who would 
not qualify for jobs in the government and many cases in a 
place like MITRE. And I'm trying to break that mold at MITRE.
    For example, we just hired a young man who went into the 
Army after high school, got excellent technical training and 
became familiar with some programs that we work on for the 
Army, and we have hired him as a technician. He has some 
college that he gained while in the Army. He will complete his 
degree while at MITRE and become a member of the professional 
staff 2 or 3 years downstream. So we and the Army are getting 
good service from him now at the technician level. We'll see 
him as a computer engineer downstream. We have to go on our 
own. We just have to make more of them.
    Mr. Tom Davis of Virginia. Thank you. We have a vote on and 
I don't want to hold you longer. So I want to take a moment to 
thank everybody for attending this very important oversight 
hearing today. I want to thank all the witnesses, Congressman 
Turner, Representative Horn and other Members who participated 
and thank my staff for organizing it. I think it's been a very 
productive hearing.
    I'm going to enter into the record the briefing memo that 
was distributed to the subcommittee members.
    We will hold the record open for 2 weeks from this date if 
you want to forward an additional submission or an additional 
thought that occurs to you. We very much appreciate your time 
and your testimony today.
    Thank you. These proceedings are closed.
    [Whereupon, at 12 p.m., the subcommittee was adjourned.]

                           



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