[Senate Hearing 107-381]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-381
 
                   NOMINATIONS OF JOHN L. HOWARD AND
                              DAN G. BLAIR
=======================================================================


                                HEARING

                               before the


                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                                 ON THE

NOMINATIONS OF JOHN L. HOWARD TO BE CHAIRMAN, SPECIAL PANEL ON APPEALS 
 AND DAN G. BLAIR TO BE DEPUTY DIRECTOR, OFFICE OF PERSONNEL MANAGEMENT

                               __________

                            FEBRUARY 8, 2002
                               __________

      Printed for the use of the Committee on Governmental Affairs







                     U.S. GOVERNMENT PRINTING OFFICE
78-619                       WASHINGTON : 2002
________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512-1800  
Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001







                   COMMITTEE ON GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 FRED THOMPSON, Tennessee
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
RICHARD J. DURBIN, Illinois          SUSAN M. COLLINS, Maine
ROBERT G. TORRICELLI, New Jersey     GEORGE V. VOINOVICH, Ohio
MAX CLELAND, Georgia                 PETE V. DOMENICI, New Mexico
THOMAS R. CARPER, Delaware           THAD COCHRAN, Mississippi
JEAN CARNAHAN, Missouri              ROBERT F. BENNETT, Utah
MARK DAYTON, Minnesota               JIM BUNNING, Kentucky
           Joyce A. Rechtschaffen, Staff Director and Counsel
              Jason M. Yanussi, Professional Staff Member
Nanci E. Langley, Deputy Staff Director, Subcommittee on International 
                               Security,
                   Proliferation and Federal Services
         Hannah S. Sistare, Minority Staff Director and Counsel
                  Johanna, L. Hardy, Minority Counsel
           Alison E. Bean, Minority Professional Staff Member
         Brooke L. Brewer, Minority Professional Staff Member,
   Subcommittee on International Security, Proliferation and Federal 
                                Services
                     Darla D. Cassell, Chief Clerk








                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator Akaka................................................     1
    Senator Carnahan.............................................     1
    Senator Cochran..............................................     7

                               WITNESSES
                        Friday, February 8, 2002

John L. Howard to be Chairman, Special Panel on Appeals..........     3
    Prepared statement...........................................    15
    Biographical and financial information.......................    17
    Responses to prehearing questions............................    32

Dan G. Blair to be Deputy Director, Office of Personnel 
  Management.....................................................     8
    Prepared statement...........................................    38
    Biographical and financial information.......................    41
    Responses to prehearing questions............................    46

                                Appendix

Letter of support for Mr. Blair from Congresswoman Constance A. 
  Morella........................................................    70
Letter of support for Mr. Blair from Congressman John M. McHugh..    71










             NOMINATIONS OF JOHN L. HOWARD AND DAN G. BLAIR

                              ----------                              


                        FRIDAY, FEBRUARY 8, 2002

                                       U.S. Senate,
                         Committee on Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:30 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Daniel J. 
Akaka presiding.
    Present: Senators Akaka, Carnahan, Stevens, and Cochran.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. The Committee will come to order. I want to 
thank all witnesses and their families and our guests for being 
with us today.
    This morning we are considering the nominations of John L. 
Howard to serve a 6-year term as Chairman of the Special Panel 
on Appeals, and Dan G. Blair to serve as Deputy Director of the 
Office of Personnel Management.
    Before we call upon our witnesses, I would like to welcome 
our colleague from Missouri. I know she is busy and she has 
another thing to do, so I asked her to introduce Mr. Blair. The 
Hon. Jane Carnahan.

             OPENING STATEMENT OF SENATOR CARNAHAN

    Senator Carnahan. Thank you very much, Mr. Chairman.
    Since September 11, our country has been reawakened to what 
public service really means. Once again, we understand that 
public service is a noble profession. We have a new sense of 
appreciation for all those who engage in service to our Nation. 
Public servants are on the front lines, working to keep our 
Nation safe and our government running, even in times of 
crisis.
    The Office of Personnel Management oversees the staffing 
needs of the Federal Government. This is a huge responsibility. 
Its importance has only been reinforced in the last 6 months.
    Today I have the honor of introducing a Missouri native, 
Dan Blair, to be the Deputy Director of the Office of Personnel 
Management.
    Mr. Blair brings a wealth of experience to this important 
position. In fact, this very Committee has firsthand knowledge 
of his expertise and abilities. Prior to moving over to OPM, 
Mr. Blair served as Senior Counsel to Senator Thompson for the 
Senate Governmental Affairs Committee. During his tenure with 
the Committee, Mr. Blair was responsible for review of 
legislation and policy affecting the Federal Civil Service, the 
U.S. Postal Service, the Federal budget process, and government 
ethics.
    I am confident of Mr. Blair's ability to meet the 
challenges facing OPM. Already he is reaching out to young 
people and working to inspire them to get involved in public 
service. I am proud to support such an outstanding Missourian 
to this position.
    Mr. Blair, incidentally, was born and raised in Joplin, 
Missouri and he attended two of our fine Missouri institutions, 
the University of Missouri Columbia School of Journalism and 
the University of Missouri Columbia Law School. In fact, I 
originally met Mr. Blair as a first-year law student. He went 
to law school with one of my sons and they were in the same 
class.
    To celebrate the first year being completed, the two of 
them, along with a group of about 15 friends, went on a 2-day 
float trip on one of our very fine rivers, the Current River. 
My husband and I invited the whole group to our family farm in 
Rolla after that 2-day excursion. I still have fond memories of 
meeting Mr. Blair that afternoon. I am glad that I will now 
have the opportunity to work with you in your new position.
    Thank you again, Mr. Chairman, for allowing me to introduce 
Mr. Blair, and I encourage the Committee to support his 
nomination. Thank you very much.
    Senator Akaka. I appreciate your warm comments, Senator 
Carnahan. Thank you very much.
    The rules of the Committee on Governmental Affairs require 
an inquiry to be conducted into the experience, qualification, 
suitability, and integrity of a nominee to serve in the 
position for which he or she has been nominated.
    The Committee has received all of the required information 
we need. The nominees have provided written responses to pre-
hearing questions submitted by the Committee concerning issues 
relevant to the positions for which they have been nominated. 
Committee staff have reviewed all of the information and have 
examined the financial disclosure reports submitted by the 
Office of Government Ethics.
    Copies of the nominees biographical information and their 
pre-hearing responses will be placed in the record as part of 
this hearing, and are available upon request.
    The financial statements are available for inspection by 
the public in the Committee office, and Senator Cochran and I 
have reviewed the FBI background investigation reports.
    The Committee asks that all nominees be under oath while 
testifying on matters relating to their suitability for office, 
including the policies and programs which the nominee will 
pursue if confirmed.
    Our first witness will be Mr. Howard. Would you please come 
to the witness table and remain standing? Please raise your 
right hand.
    Do you solemnly swear to tell the truth, the whole truth, 
and nothing but the truth, so help you, God?
    Mr. Howard. I do.
    Senator Akaka. Thank you very much. You may be seated.
    At this time, I will ask for any statement from Senator 
Cochran.
    Senator Cochran. Mr. Chairman, I have no opening statement. 
I welcome the witness and congratulate him on his nomination 
and look forward to our hearing today, which I think will be 
very brief because he is so well qualified for this position.
    Mr. Howard. Thank you, Senator.
    Senator Akaka. Thank you very much, Senator Cochran.
    The Special Panel on Appeals was established under the 
Civil Service Reform Act of 1978. The Panel resolves certain 
disagreements between the Merit Systems Protection Board and 
the Equal Employment Opportunity Commission in so-called mixed 
cases where an employee appeals a personnel action to the MSBP 
and also petitions the EEOC alleging that the action was based 
on discrimination.
    We are committed to protecting Federal employees from 
discrimination and retaliation for disclosing fraud and waste 
and commend you for agreeing to serve as chairman of this 
panel.
    Mr. Howard, I would like to thank you for being with us 
today and congratulate you on your nomination. Do you have any 
relatives or friends that you want to introduce to the 
Committee? If not, we look forward to your statement.

TESTIMONY OF JOHN L. HOWARD\1\ TO BE CHAIRMAN, SPECIAL PANEL ON 
                            APPEALS

    Mr. Howard. Thank you, Senator. As I told you, because I 
have triplet boys who are 9 years old, respecting the decorum 
of the Senate, it seemed the better part of valor to leave them 
in Illinois.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Howard appears in the Appendix on 
page 15.

     The biographical information appears in the Appendix on page 17.

     Responses to prehearing questions appear in the Appendix on page 
32.
---------------------------------------------------------------------------
    I thank you for the opportunity to appear before you today 
and to be considered to be Chairman of the Special Panel on 
Appeals. I am honored by the confidence of the President, as 
indicated by this nomination, and I pledge that if confirmed I 
will do my best to ensure that the Special Panel on Appeals 
fulfills its statutory mandate.
    As you noted, the Special Panel of Appeals plays an 
important role to help ensure fairness in the administration of 
our Federal workforce. Because mixed cases involve issues 
spanning the unique expertise of two independent agencies, the 
Equal Employment Opportunity Commission with responsibility for 
discrimination law, and the Merit Systems Protection Board with 
responsibility for Civil Service law, there is sometimes a 
dispute on questions of law between these two agencies.
    The Special Panel of Appeals has the statutory 
responsibility to resolve these disputes. If, when reviewing a 
mixed case, the Merit Systems Protection Board determines that 
the EEOC misinterpreted a Civil Service law rule, regulation or 
policy, it must certify the case to the Special Panel of 
Appeals. The Special Panel of Appeals' statutory responsibility 
is to decide the issue in dispute on the basis of the record 
and issue a final decision.
    In doing so, the Special Panel of Appeals must pay due 
deference to the respective expertise of both the Board and the 
Commission. To ensure there is parity between the EEOC and the 
MSPB, the Special Panel of Appeals consists of a member from 
each of those agencies and a chairman. Once convened, the 
Special Panel has 45 days to issue a decision, which is then 
judicially reviewable.
    While the role of the Special Panel, as defined by statute, 
is quite narrow, it sits atop of an administrative procedure 
that is very important to the administration of the Civil 
Service laws and to ensuring that the Federal workplace is free 
from prohibited discrimination.
    The statutory framework that preserves this expertise in 
both the EEOC and the MSPB has led to lengthy and highly 
complicated procedures for adjudication. Wending the way 
through this complex process involves employees making many 
choices and the appeals can take years. This complexity and 
this delay makes it imperative that the Special Panel fulfill 
its statutory mandate to issue decisions within the 45 days of 
certification.
    Given the important adjudicatory role of the Special Panel, 
it is essential that the chairman take all appropriate measures 
to ensure that any case certified is decided in a timely, 
careful, and fair manner. The chairman must faithfully and 
independently adjudicate matters appropriately before the 
board, making certain that its deliberations are fair and 
result in an expeditious decision.
    If confirmed, I will faithfully fulfill these mandates.
    Mr. Chairman, this concludes my statement. I thank you for 
your time. I thank you for your consideration, and I would be 
pleased to answer any questions you or the Committee may have.
    Senator Akaka. Thank you, Mr. Howard, for your statement. I 
have a couple of questions for you, but before I proceed, the 
Committee has three questions we ask all of the nominees for 
the record.
    Is there anything you are aware of in your background that 
might present a conflict of interest with the duties of the 
office to which you have been nominated?
    Mr. Howard. No, sir.
    Senator Akaka. Do you know of any reason, personal or 
otherwise, that would in any way prevent you from fully and 
honorably discharging the responsibilities of the office to 
which you have been nominated?
    Mr. Howard. No, sir.
    Senator Akaka. Do you agree without reservation to respond 
to any reasonable summons to appear and testify before any duly 
constituted committee of Congress if you are confirmed?
    Mr. Howard. Yes, sir, I will.
    Senator Akaka. Thank you very much.
    Here is my first question. Since 1978 the Special Panel on 
Appeals has met fewer than a dozen times. Given the infrequency 
of this panel being convened, what role do you see for yourself 
as chairman of the panel? And what role do you see the panel 
playing in a contemporary appeals system?
    Mr. Howard. Sir, the role of the chairman of the Special 
Panel, as set out in the statute is quite clear, that once 
convened you have to issue a decision within 45 days. Following 
this time frame and making sure that there is careful, fair, 
consistent decision both with the statute and with the 
precedent is essential to the role of the Special Panel.
    The fact that I think there has been four or five cases 
would not, in any way, say that this Special Panel is not 
important to the process. As long as you split the functions of 
adjudicating issues of discipline and management of the Federal 
workforce from adjudicating issues of discrimination, you need 
some mechanism so that the expertise of those two adjudicators 
can mesh and that disputes can be resolved with coherent 
workplace rules.
    I think the fact that there is a Special Panel encourages 
both the Board and the EEOC to be careful in adjudicating their 
issues and to follow each other's precedents where it is 
possible.
    Senator Akaka. Thank you. You have a strong background in 
government, having served with the MSPB, the Department of 
Justice, and on the staff of Vice President Quayle. Given your 
understanding of the government's Civil Service system, are 
there changes you would make to the Federal appeals process?
    Mr. Howard. Senator, I also started my career as a Federal 
employee at the Office of Personnel Management.
    The Civil Service has, since its inception, been one that 
has been carefully reviewed and criticized, sometimes fairly, 
often unfairly. Moving forward, as the Civil Service has gone 
through the various iterations to ensure that the Federal 
workers can do their job and have appropriate protections and a 
fair workplace, the system has become very complicated.
    It seems to me that as long as we do have a split in 
adjudication functions that we will have a period where we have 
justice denied because there are delays. As you know from your 
work on the Committee, it is a very complex problem. There is a 
lot of balances involved. I do not think that there is any 
single fix that would solve the problem.
    But I do think that careful adherence to the statutory time 
frames is required, not just by the Special Panel, because by 
the time a case gets to the panel it is between 3 and 5 years 
old. But as the process moves through, that there are certain 
times when the EEOC has to issue decisions. They have to be 
within the time frame. The other agency, the MSPB has 120 days. 
They have to issue a decision within the time frame.
    So without getting into major Civil Service overhaul, I 
think it is imperative that people meet the statutory 
obligations that have been imposed.
    Senator Akaka. Thank you very much for your responses. 
Senator Cochran.
    Senator Cochran. Mr. Chairman, thank you.
    I noticed that you said there were only four or five cases 
that have been handled by this panel, and I assume that is from 
the date 1978 when it was created?
    Mr. Howard. Yes, sir.
    Senator Cochran. It seems like a long period of time within 
which only four or five cases have been before the panel. Does 
this mean that we should take a look at whether or not there 
should even be a panel? So few cases over such a long period of 
time, is there an argument that can logically be made to 
dissolve this panel and just let the other appellate panels 
handle so few cases?
    Mr. Howard. Writing on a clean slate you might not end up 
where we are. But as long as you have split, the MSPB looking 
at the performance issues or misconduct issues, as long as you 
have the EEOC looking in the Federal workplace, then you need 
some way to resolve inconsistent results.
    So I think that resolving the Special Panel issue by 
eliminating it would not take the problem away.
    Senator Cochran. Were there any cases decided by the panel, 
in these four or five instances, that would not have come out 
the same way without the panel?
    Mr. Howard. There would be a disagreement between the Board 
and the EEOC on the rehab act, the within grade increases, and 
frankly I do not remember the subject matter of the other two 
cases. But I think that looking at the role of the panel just 
in those four cases may not be a broad enough scope, because I 
do think that the panel serves the effect of having the hearing 
officers at the EEOC, the administrative judges at the MSPB pay 
more attention and give due deference to each other's 
jurisprudence and to follow the panel's jurisprudence as well.
    Senator Cochran. Thank you very much for your response to 
our questions. I wish you good luck and I know that you will 
carry out these responsibilities in a fine professional way. 
Congratulations on your selection.
    Mr. Howard. Thank you, sir.
    Senator Akaka. Thank you very much, Senator Cochran.
    We have no further questions at this time, Mr. Howard. 
However, Members of the Committee may submit questions in 
writing. The Committee would appreciate your timely response to 
those questions.
    Mr. Howard. Sir, I would be remiss if I did not compliment 
both of you on your outstanding staff for their patience, and 
also their direction in working through the process. You have 
truly professional staffs.
    Senator Akaka. Thank you very much for that.
    The record will remain open a week for any questions or 
further statements from my colleagues. Mr. Howard, thank you 
again for being here this morning, for your cooperation with 
this process, and for accepting this nomination to public 
service.
    Mr. Howard. Thank you, sir.
    Senator Akaka. Given your strong professional experience, 
both in and out of Federal Government, I believe you are well 
suited for this position.
    Mr. Howard. Thank you.
    Senator Akaka. We wish you well. You may be excused.
    Mr. Howard. Thank you, sir.
    Senator Akaka. Thank you very much.
    We will proceed now to the nomination of Dan G. Blair. Mr. 
Blair, I invite you to come to the witness stand. Please stand 
and remain standing. Please raise your right hand.
    Do you solemnly swear to tell the truth, the whole truth, 
and nothing but the truth, so help you, God?
    Mr. Blair. I do.
    Senator Akaka. Thank you very much. You may be seated.
    Thank you again, and I thank Senator Carnahan for her warm 
introduction. I wish to welcome you to the Committee this 
morning and congratulate you on your nomination. After having 
staffed so many Congressional hearings, you now have the 
opportunity to see the view from the other side of the dais.
    Before we begin, I want to acknowledge that Senator 
Thompson is unable to be with us today. I know he shares the 
pride we all feel when a member of the Senate family is chosen 
for a position of such high honor.
    As someone who has spent his professional career advising 
Members of Congress on issues relating to Civil Service, you 
are aware of the challenges and opportunities that await you if 
confirmed as the Deputy Director of the Office of Personnel 
Management.
    I would like to state for the record that OPM is the 
central management agency of the Federal Government. It 
administers and enforces Federal Civil Service laws, 
regulations and rules while aiding the Executive Branch in 
managing the Federal workforce. OPM supports the Federal 
Government in recruiting, retaining, training and motivating 
the best and the most effective workforce possible.
    As Chairman of the Senate International Security, 
Proliferation and Federal Services Subcommittee, I look forward 
to working with you and Director James on the critical issues 
facing our Federal workforce.
    At this time, I would like to ask Senator Cochran whether 
he has any statement to make?

              OPENING STATEMENT OF SENATOR COCHRAN

    Senator Cochran. Mr. Chairman, first let me congratulate 
Dan Blair on his selection for this important position. He has 
served this Committee very capably over a long period of time 
and he has also had experience in other jobs as well. But as 
senior counsel to Senator Thompson, as Chairman of the 
Committee and Ranking Member, he has proven to be a very 
valuable resource because of his experience and expertise in 
matters dealing with the Federal personnel system and the U.S. 
Postal Service.
    So I am confident that he has the qualifications to do an 
exceptionally fine job as Deputy Director, is that the official 
title? Deputy Director.
    We appreciate his presence this morning and his cooperation 
with the Committee during the confirmation process, as well.
    Senator Akaka. Thank you very much, Senator Cochran.
    Mr. Blair, we are happy to have you here this morning.
    Mr. Blair. I am happy to be here, sir.
    Senator Akaka. Although your parents, David and Conness 
were unable to travel from Missouri to Washington, I know their 
thoughts are with you today, and I am sure many others. I want 
to extend my aloha to them.
    I understand that you have family and friends here?
    Mr. Blair. I do, sir.
    Senator Akaka. I am going to give you the opportunity to 
introduce them.
    Mr. Blair. I do have family and friends here and I would 
like to introduce, in the front row, my wife, Michele; my good 
friend, Karen Howard; and the patriarch of the Blair family, my 
uncle, Newell Blair. I would also like to acknowledge Helen and 
Jim Cauthen in the second row and their two children, Will and 
Sarah. Helen and I grew up together in Joplin, Missouri and was 
responsible for introducing Michele and me, so I would like to 
take that opportunity.
    Senator Akaka. I want to welcome all of you to this 
hearing, I know with their sitting back there gives you a lot 
of strength. Thank you very much and welcome to all of you.
    Will you proceed then and I will put your statement in the 
record. Please proceed with your statement.

TESTIMONY OF DAN G. BLAIR \1\ TO BE DEPUTY DIRECTOR, OFFICE OF 
                      PERSONNEL MANAGEMENT

    Mr. Blair. Thank you, Mr. Chairman, Senator Cochran, those 
were very kind remarks.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Blair appears in the Appendix on 
page 40.

     The biographical information appears in the Appendix on page 43.

     Responses to prehearing questions appear in the Appendix on page 
48.
---------------------------------------------------------------------------
    I want to thank you for holding the hearing today and for 
the many courtesies that you and your staff have extended to me 
during this confirmation process.
    I want to thank Senator Carnahan for that introduction, as 
well. I am very proud of my Missouri roots and I appreciated 
those kind words.
    I want to begin today by expressing my gratitude to 
President George W. Bush and to Director Kay James. It is 
indeed a high honor and privilege to be nominated for Deputy 
Director of the U.S. Office of Personnel Management. I very 
much look forward to this opportunity to serve.
    The Federal Government faces serious challenges in the 
management of its human resources, but these challenges in turn 
create opportunities. And I cannot imagine a more exciting time 
to be a part of the Bush Administration or at OPM.
    Federal human capital management has taken on a new 
significance and its prominence on the President's management 
agenda underscores the importance that Federal HR issues have 
in this administration. The groundwork for this increased 
attention was laid by the work of this Committee and by the 
work of GAO. And Federal HR management is indeed an issue upon 
which common solutions can be forged.
    Given this high level of interest, Director James has moved 
forward vigorously in leading OPM as it guides and helps 
agencies to more strategically address the human resources 
management. We are working hand-in-hand with the Office of 
Management and Budget in a government-wide effort to help 
agencies and departments assess and respond to their current 
and future HR needs.
    We are also assisting them in making progress in managing 
and improving their marks on the President's Executive Branch 
management scorecard.
    Further, OPM has been asked to manage four e-Government 
initiatives that will improve efficiency and effectiveness 
throughout government. And we were recently tasked with leading 
the effort to consolidate and modernize the government's 
payroll systems.
    With this Committee's consent and the Senate's approval, I 
will have the opportunity to serve as the deputy in an agency 
that is quickly moving away from the traditional role of 
passive rules enforcer to that of a nimble and proactive policy 
consulting organization.
    Yet we have barely begun to scratch the surface. Director 
James have laid out a comprehensive and ambitious vision to 
make OPM a world class model for HR management. As you may have 
heard, we are coordinating efforts across government to 
streamline the hiring process, harness technology, and do all 
we can to position the Federal Government to recruit, hire, and 
retain a highly skilled and qualified workforce. This includes 
a thorough review of the Federal Government's current pay 
structure and our ongoing legislative efforts with this 
Committee, the Senate, and the House to achieve enactment of 
the President's Managerial Flexibility Act.
    I am very honored to be nominated by the President for a 
position where there is so much opportunity to make a real 
difference. My career includes 17 years on the staffs on the 
House and Senate Congressional Committees charged with Civil 
Service oversight. During this time, I had the high honor of 
serving as senior counsel on this Committee for Senator 
Thompson. I want to acknowledge my debt of gratitude for that 
opportunity.
    I also want to express my deepest sympathies to Senator 
Thompson and his family for their recent loss.
    I have to admit that I appear before the Committee today 
from a distinctly different vantage point than the one I was 
accustomed to only a few short months ago. Yet, I feel as if 
today is a homecoming of sorts for me. I have the greatest 
respect and deep affection for the Members and staff of this 
Committee. I consider it a true honor to have been a part of 
this staff and it was a privilege to have worked so closely 
with such outstanding colleagues.
    Mr. Chairman, I have a written statement that I would ask 
be entered into the hearing record, and look forward to your 
questions.
    Senator Akaka. Without objection, that will be placed in 
the record.
    I want to thank you, Mr. Blair, for your statement which 
clearly reflects the dedication and enthusiasm you bring to 
this position and the experience you have had in this body.
    Mr. Blair, at this point may I ask the three questions of 
our witnesses? Is there anything you are aware of in your 
background that might present a conflict of interest with the 
duties of this office to which you have been nominated?
    Mr. Blair. No, sir.
    Senator Akaka. Do you know of any reason, personal or 
otherwise, that would in any way prevent you from fully and 
honorably discharging the responsibilities of the office to 
which you have been nominated?
    Mr. Blair. No, sir.
    Senator Akaka. Do you agree without reservation to respond 
to any reasonable summons to appear and testify before any duly 
constituted committee of the Congress if you are confirmed?
    Mr. Blair. Yes, sir.
    Senator Akaka. As you noted, this Committee has examined a 
wide range of management issues within the context of hearings 
and GAO reviews. Next month, I plan to hold a hearing on the 
legislative proposals offered by Senator Thompson and Senator 
Voinovich, as well as a hearing on S. 1800, the Homeland 
Security Federal Workforce Act that I introduced with Senator 
Durbin and Senator Thompson.
    I believe the events of September 11 underscored the 
strengths and weaknesses of our Federal Government, and our 
bill would provide recruitment and retention incentives for 
Federal employees with national security skills.
    Today's agencies are taking on broadened homeland security 
missions with limited funding and personnel. I was pleased to 
learn from your written statement how seriously OPM is taking 
the responsibilities in working with the frontline agencies. 
However while the focus is on agencies with obvious national 
security roles such as the military, law enforcement, and 
intelligence community, most other agencies play less obvious 
but equally important roles in homeland security.
    I support a cohesive and coordinated Federal Government and 
feel that a strong workforce is key to our success in 
protecting our country and operating in an effective and 
efficient manner.
    My first question to you is what is OPM's strategy to 
ensure that agencies across the Federal Government are 
adequately staffed with the right people and the right skills 
to carry out these new and expanded homeland security missions?
    Mr. Blair. At OPM, since the events of September 11, we 
have been focusing on what ways we can help agencies staff 
homeland security positions. We have done a number of things. 
Immediately following September 11, we issued a special 
temporary hiring authority for any agency that would need to 
quickly fill any of these positions. We have delegated 
authority to waive what we call those dual compensation 
requirements, thereby allowing retirees to return to work 
without having their retirement checks or their new paycheck 
affected by that. We have done that for 15 agencies and nine 
others have the authority to waive the repayment of the 
voluntary separation incentive or the buyouts that employees 
may have received during the downsizing that took place over 
the last 8 years.
    Others have requested and received waivers on a specific 
case-by-case basis and OPM has had a turnaround time of 
approximately 24 hours for those individual waivers.
    We have further established what we call the Patriot 
Readiness Center that includes a toll-free number, an E-mail 
address and a website. We have had almost 12,000 Federal 
retirees access this in an effort to return to work. And 25 
agencies have utilized that already.
    We have worked with the Customs Department, and the 
Department of Transportation in helping them recruit and retain 
top people for these areas. We have also shared blueprints and 
made recommendations for other agencies for testing and hiring 
large numbers of Federal employees in this area.
    Senator Akaka. Thank you for that response.
    I also want to mention that Senator Cochran is a cosponsor 
of S. 1800, and I hope that OPM will work with us to enact this 
legislation.
    Many studies point to the government's inability to compete 
with the private sector as one reason why we are unable to 
attract and retain qualified employees. In 17 of the past 20 
years, military and Federal personnel have received equal pay 
increases, yet the President's budget proposes an across-the-
board adjustment of only 2.6 percent while the military would 
receive 4.1 percent in increase.
    This 2.6 percent increase is less than the FEPCA formula 
and fails to close the pay gap between Federal and private 
sector workers. How do you justify the lack of parity in pay? 
And how would you address the competitive pay gap that exists 
in government?
    Mr. Blair. I want to first begin by saying I fully support 
the proposals contained in the President's budget. The way that 
we would justify this is that we are on a war footing right now 
and a war footing requires us to engage in the allocation of 
scarce resources.
    It is important to consider the 2.6 percent proposed 
increase in a broader context however. The 2.6 percent is an 
increase across-the-board adjustment that will be given to all 
employees. Employees will also be able to avail themselves of 
their longevity increases or otherwise known as within-grade 
increases. Employees will also be eligible for other 
performance-based increases as well, such as quality step 
increases, career ladder and merit promotions, incentive 
awards, and retention bonuses.
    But you raise a very good question of how we will look at 
this in terms of comparability. And that is one of the areas 
that Director Kay James is beginning to look at and has been 
talking about and instructed staff to look at quite carefully.
    We have a pay system that really is in need of careful 
review and study. This past pay period, in January, we awarded 
an across-the-board increase of 4.6 percent. Looking at that, 
that was more than $5 billion if you calculate in the benefit 
component on that. And we awarded that across the board.
    However, many people have looked at that and said ``(i)s 
that the right way of spending the money? '' It is not a 
question of whether it was too much or too little, but these 
across-the-board increases reward poor performers and good 
performers in the same way and in the same amounts. And 
Director James has asked why not look at this and see if our 
compensation systems are designed in such a manner, or how we 
can design our compensation systems in such a manner as to 
enhance good performance.
    Our compensation system, now that we have it, is grounded 
in the 1949 Classification Act. That was at a time when over 
half of the Federal Government were GS-2s and GS-3s. Now I 
believe the mean average grade is GS-11. So we really need to 
have an updated compensation system. I think you will see 
Director James coming out soon with ideas to stimulate this 
debate and conversation.
    Senator Akaka. Another area of concern is the continuing 
rise in the cost of FEHBP premiums. Senator Cochran and I have 
initiated a GAO review of the administration of the program. 
Director James is aware of my interest in keeping down costs, 
and I understand that OPM is working to keep costs under 
control.
    Would you explain what steps are being taken? And do you 
believe the government should increase its share of the 
premiums?
    Mr. Blair. We do not have an opinion at this time on 
increasing the government's share. I would point out that the 
government's share is set in statute. In comparison to the 
private sector, which has the ability to raise or lower their 
contribution toward the overall premium, government's 
contribution remains stable.
    We also have some differences between FEHBP and the private 
sector that are worth noting. We cover our retirees fully and 
everyone pays the same level premium. It is not differentiated 
according to age. But increases in the FEHBP premium are of 
concern to me and to this director and the administration.
    Sadly, it reflects increasing costs, I think, in health 
care nationwide. We have been working hard to maintain a 
comprehensive system that is current and contemporary, but at 
the same time we want to be able to keep costs in line and make 
sure it is affordable.
    Most of the increase in the past year was due to several 
components. One was increasing drug costs. Others were 
utilization of medical facilities, technology and just general 
medical inflation.
    In this year's FEHBP program you will see a number of 
programs starting to offer three tiers of drug benefits in an 
effort to help rein in these costs. I think you will see us 
working more and more in helping plans strive to find ways to 
cut their costs while maintaining a comprehensive set of 
benefits.
    Senator Akaka. Thank you. I would like to go back to the 
issue of homeland security for a moment. As the Federal 
Government continues to expand the role of Federal agencies to 
defend our borders and people, additional personnel will be 
needed. However, there is a hybrid Federal employee evolving, 
such as the airline baggage screeners who at this time lack 
Title V protections; the right to unionize and protection from 
retaliation for reporting waste, fraud or abuse under the 
Whistleblower Protection Act.
    Given the difficulties agencies face in recruiting or 
retaining workers, the question is how will the government 
convince people to take these positions if they do not have the 
same rights as other employees?
    Mr. Blair. I think that is a tough question and it was 
thoroughly debated both inside and outside of Congress when 
Congress considered the Airline Security Bill this past fall. 
It was decided, for a number of reasons, that the protections 
and the appeal right we grant to rank and file Federal 
employees would not go to the new screeners.
    I understand that a decision regarding their rights to 
unionize has not been decided at this point. However, I would 
be happy to work with the Committee as you review further 
legislative issues involving this area.
    Senator Akaka. Thank you very much, Mr. Blair, for your 
responses. Senator Cochran.
    Senator Cochran. Mr. Chairman, thank you.
    I was glad you mentioned in your statement, Mr. Blair, the 
efforts being made by OPM to respond to this challenge of 
dealing with the war on terrorism from a personnel standpoint 
in the way that it is, assisting, as you pointed out in your 
statement, frontline agencies in recruiting and retaining 
critical personnel, assembling strike force teams of human 
resource experts, to address special needs in specific 
agencies.
    Do you have any knowledge of how this is going? I know the 
plan is to be aggressive in the way we go about meeting 
responsibilities government-wide in this war on terrorism, but 
is your assessment so far of your review of OPM policies and 
procedures that they are on track? Are they fulfilling these 
goals that they have set for themselves?
    Mr. Blair. Since Director James has come on board, she has 
aggressively made herself and the agency proactive in 
addressing these specific concerns. We have had what we call 
our agency strike force teams go over to the Department of 
Energy, and the Department of Transportation. We have been 
helping the new Office of Homeland Security meet its staffing 
requirements.
    And so while there is a tremendous amount of work to be 
done in this, we have been aggressively pursuing it and 
proactive in making OPM available to help be a solution for 
these agencies in their hiring and staffing, rather than be a 
problem.
    Senator Cochran. I also noticed that you mention the 
legislative efforts that the Office of Personnel Management was 
undertaking to support the enactment of the President's 
Managerial Flexibility Act. What changes in that act do you see 
as the most important that we should ensure are included in 
that final legislative enactment?
    Mr. Blair. While I would like to see the whole package, I 
think that there are some key components in there. We look at 
recruitment, retention, and staffing needs in terms of timing 
of bonuses and the timing of incentives and rewards.
    We also have, I think, a prudent proposal for streamlining 
the demonstration project authority that we currently have. 
Right now, to establish a demonstration authority can take up 
to, I believe, 2 years. We would like to be able to streamline 
that.
    We also have a provision that would allow agencies to 
access those flexibilities that have been awarded other 
agencies systemwide, because if it works for one agency why 
cannot it work for another?
    So I think those are some key components just off the top 
of my head that I would like to see OPM be able to administer.
    What I believe is especially important is the ability for 
OPM to work to see that these agencies get these flexibilities. 
As you know, this Committee has addressed over the period of 
the past few years, a number of agencies seeking their own 
independent personnel system. This is an attempt to keep 
agencies within the rubric and framework of Title V while 
recognizing that each agency has its own distinct and unique 
personnel needs.
    Senator Cochran. I appreciate your willingness to serve in 
this capacity. I think it is an important responsibility and 
you are obviously bringing to the job a lot of experience and 
ability. I am confident you are going to make your presence 
felt in a very positive way. And I congratulate you again.
    Mr. Blair. Thank you, Senator.
    Senator Cochran. Thank you, Mr. Chairman.
    Senator Akaka. Thank you very much, Senator Cochran.
    Let me pose the last question. Over the past 10 years, OPM 
has been subject to significant downsizing. It has only 43 
percent of the workforce it had in 1993. A key priority of the 
President's management agenda is human capital. Agencies will 
now be evaluated according to their performance as measured by 
OMB's management scorecards.
    Does OPM have the resources needed to meet the goals 
identified by the scorecards? And how are you and the Director 
planning to play a role in the oversight and improvement in 
these scorecards?
    Mr. Blair. Right now we are building capacity to be able to 
respond to the agency needs. But OPM's leading role in the 
scorecard shows that it will be a chief proponent in the whole 
HR debate and administering of the whole human resource 
management issue in this administration.
    In the President's budget we received approximately a 15 
percent increase. I think that is recognition of the role that 
the new OPM will be playing in this administration. We will be 
managing four e-Government initiatives plus payroll 
modernization. And we own the human capital component on the 
scorecard. I think that is terribly important because it raises 
OPM's visibility throughout government. And we will be working 
hand-in-hand with agencies to ensure that human capital 
management is indeed a high priority for each agency, and that 
will be reflected on their marks on the scorecard.
    Senator Akaka. Thank you very much. Senator Cochran, do you 
have any further questions?
    Senator Cochran. I have nothing further, Mr. Chairman.
    Senator Akaka. Mr. Blair, we have no further questions for 
you at this time. I wish to insert into the record two letters 
of support from you, one from Representative Connie Morella and 
one from Representative John McHugh.\1\
---------------------------------------------------------------------------
    \1\ The letters from Congressman McHugh and Congresswoman Morella 
appear in the Appendix on page 38 and 39 respectively.
---------------------------------------------------------------------------
    Furthermore, the record will remain open for any questions 
or statements and I would appreciate your timely response to 
any of these questions.
    Judging from the number of your former colleagues and well 
wishers, including the Chairman of the Postal Rate Commission, 
George Omas, in our audience today, I believe Director James is 
gaining a deputy of high quality.
    We look forward to working with you on the challenges and 
opportunities ahead and I thank you again for being here this 
morning, for your cooperation with this process, and for 
accepting the nomination to public service.
    Any further business? If there is no further business to 
come before the Committee, the Committee will stand adjourned.
    Mr. Blair. Thank you, Senators.
    [Whereupon, at 11:18 a.m., the Committee was adjourned.]
                            A P P E N D I X

                              ----------                              

[GRAPHIC] [TIFF OMITTED] T8619.001

[GRAPHIC] [TIFF OMITTED] T8619.002

[GRAPHIC] [TIFF OMITTED] T8619.003

[GRAPHIC] [TIFF OMITTED] T8619.004

[GRAPHIC] [TIFF OMITTED] T8619.005

[GRAPHIC] [TIFF OMITTED] T8619.006

[GRAPHIC] [TIFF OMITTED] T8619.007

[GRAPHIC] [TIFF OMITTED] T8619.008

[GRAPHIC] [TIFF OMITTED] T8619.009

[GRAPHIC] [TIFF OMITTED] T8619.010

[GRAPHIC] [TIFF OMITTED] T8619.011

[GRAPHIC] [TIFF OMITTED] T8619.012

[GRAPHIC] [TIFF OMITTED] T8619.013

[GRAPHIC] [TIFF OMITTED] T8619.014

[GRAPHIC] [TIFF OMITTED] T8619.015

[GRAPHIC] [TIFF OMITTED] T8619.016

[GRAPHIC] [TIFF OMITTED] T8619.017

[GRAPHIC] [TIFF OMITTED] T8619.018

[GRAPHIC] [TIFF OMITTED] T8619.019

[GRAPHIC] [TIFF OMITTED] T8619.020

[GRAPHIC] [TIFF OMITTED] T8619.021

[GRAPHIC] [TIFF OMITTED] T8619.022

[GRAPHIC] [TIFF OMITTED] T8619.023

[GRAPHIC] [TIFF OMITTED] T8619.024

[GRAPHIC] [TIFF OMITTED] T8619.025

[GRAPHIC] [TIFF OMITTED] T8619.026

[GRAPHIC] [TIFF OMITTED] T8619.027

[GRAPHIC] [TIFF OMITTED] T8619.028

[GRAPHIC] [TIFF OMITTED] T8619.029

[GRAPHIC] [TIFF OMITTED] T8619.030

[GRAPHIC] [TIFF OMITTED] T8619.031

[GRAPHIC] [TIFF OMITTED] T8619.032

[GRAPHIC] [TIFF OMITTED] T8619.033

[GRAPHIC] [TIFF OMITTED] T8619.034

[GRAPHIC] [TIFF OMITTED] T8619.035

[GRAPHIC] [TIFF OMITTED] T8619.036

[GRAPHIC] [TIFF OMITTED] T8619.037

[GRAPHIC] [TIFF OMITTED] T8619.038

[GRAPHIC] [TIFF OMITTED] T8619.039

[GRAPHIC] [TIFF OMITTED] T8619.040

[GRAPHIC] [TIFF OMITTED] T8619.041

[GRAPHIC] [TIFF OMITTED] T8619.042

[GRAPHIC] [TIFF OMITTED] T8619.043

[GRAPHIC] [TIFF OMITTED] T8619.044

[GRAPHIC] [TIFF OMITTED] T8619.045

[GRAPHIC] [TIFF OMITTED] T8619.046

[GRAPHIC] [TIFF OMITTED] T8619.047

[GRAPHIC] [TIFF OMITTED] T8619.048

[GRAPHIC] [TIFF OMITTED] T8619.049

[GRAPHIC] [TIFF OMITTED] T8619.050

[GRAPHIC] [TIFF OMITTED] T8619.051

[GRAPHIC] [TIFF OMITTED] T8619.052

[GRAPHIC] [TIFF OMITTED] T8619.053

[GRAPHIC] [TIFF OMITTED] T8619.054

[GRAPHIC] [TIFF OMITTED] T8619.055

[GRAPHIC] [TIFF OMITTED] T8619.056

[GRAPHIC] [TIFF OMITTED] T8619.057

                                   - 
