[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]





          FIRST YEAR ON THE JOB: CHIEF HUMAN CAPITAL OFFICERS

=======================================================================

                                HEARING

                               before the

                     SUBCOMMITTEE ON CIVIL SERVICE
                        AND AGENCY ORGANIZATION

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 18, 2004

                               __________

                           Serial No. 108-236

                               __________

       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


                                 ______

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana                  HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia               JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia          CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee       LINDA T. SANCHEZ, California
NATHAN DEAL, Georgia                 C.A. ``DUTCH'' RUPPERSBERGER, 
CANDICE S. MILLER, Michigan              Maryland
TIM MURPHY, Pennsylvania             ELEANOR HOLMES NORTON, District of 
MICHAEL R. TURNER, Ohio                  Columbia
JOHN R. CARTER, Texas                JIM COOPER, Tennessee
MARSHA BLACKBURN, Tennessee          ------ ------
PATRICK J. TIBERI, Ohio                          ------
KATHERINE HARRIS, Florida            BERNARD SANDERS, Vermont 
                                         (Independent)

                    Melissa Wojciak, Staff Director
       David Marin, Deputy Staff Director/Communications Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

         Subcommittee on Civil Service and Agency Organization

                   JO ANN DAVIS, Virginia, Chairwoman
TIM MURPHY, Pennsylvania             DANNY K. DAVIS, Illinois
JOHN L. MICA, Florida                MAJOR R. OWENS, New York
MARK E. SOUDER, Indiana              CHRIS VAN HOLLEN, Maryland
ADAH H. PUTNAM, Florida              ELEANOR HOLMES NORTON, District of 
NATHAN DEAL, Georgia                     Columbia
MARSHA BLACKBURN, Tennessee          JIM COOPER, Tennessee

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
                     Ron Martinson, Staff Director
        B. Chad Bungard, Deputy Staff Director and Chief Counsel
                            Reid Voss, Clerk
            Tania Shand, Minority Professional Staff Member


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 18, 2004.....................................     1
Statement of:
    James, Kay Coles, Director, U.S. Office of Personnel 
      Management.................................................     3
    Mihm, Chris, Managing Director, Strategic Issues, U.S. 
      General Accounting Office; Reginald Wells, Deputy 
      Commissioner, Human Resources, Social Security 
      Administration; and Kevin Simpson, executive vice president 
      and general counsel, Partnership for Public Service........    19
Letters, statements, etc., submitted for the record by:
    James, Kay Coles, Director, U.S. Office of Personnel 
      Management, prepared statement of..........................     7
    Mihm, Chris, Managing Director, Strategic Issues, U.S. 
      General Accounting Office, prepared statement of...........    22
    Simpson, Kevin, executive vice president and general counsel, 
      Partnership for Public Service, prepared statement of......    52
    Wells, Reginald, Deputy Commissioner, Human Resources, Social 
      Security Administration, prepared statement of.............    44

 
          FIRST YEAR ON THE JOB: CHIEF HUMAN CAPITAL OFFICERS

                              ----------                              


                         TUESDAY, MAY 18, 2004

                  House of Representatives,
          Subcommittee on Civil Service and Agency 
                                      Organization,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:06 p.m., in 
room 2154, Rayburn House Office Building, Hon. Jo Ann Davis 
(chairman of the subcommittee) presiding.
    Present: Representatives Jo Ann Davis of Virginia, Davis of 
Illinois, Norton and Van Hollen.
    Staff present: Ron Martinson, staff director; B. Chad 
Bungard, deputy staff director and chief counsel; John Landers, 
OPM detailee; Chris Barkley, professional staff member; Reid 
Voss, clerk; Christopher Lu, minority deputy chief counsel; 
Tania Shand, minority professional staff member; Earley Green, 
minority chief clerk; and Teresa Coufal, minority assistant 
clerk.
    Ms. Davis of Virginia. We have some other Members on their 
way but for the sake of time, we are going to go ahead and get 
started.
    The Civil Service Subcommittee is called to order.
    Thank you for being here today. An important provision of 
the Homeland Security Act of 2002 created the position of Chief 
Human Capital Officer [CHCO], at major Federal agencies to 
improve the Federal Government's ability to select, train and 
manage a high performing work force. In creating this new 
position, Congress recognized that Federal employees are the 
Government's biggest asset and drive its performance.
    I have called this oversight hearing to examine how the 
Chief Human Capital Officers Act has been implemented in the 
Federal Government's major departments and agencies since 
enactment a year ago and to make sure that the CHCO Council 
consists of high quality CHCOs committed to strategically 
managing the work force. Congress intends that the CHCO 
position will make a positive difference in the performance of 
the Federal Government bringing the most efficient and most 
effective service at the best value to the taxpayers.
    CHCOs' duties include working closely with the agency head 
to develop and implement an effective personnel policy. Workers 
should be treated fairly and the mission of the agency must 
become the top priority of every employee. Balancing both 
priorities is crucial and requires an official to understand 
both the needs of employees and a broader view of how well an 
agency is serving the American public. Because of this, it was 
Congress' intent that CHCOs be placed among agency leadership 
underscoring the importance of personnel policy. Furthermore, 
the Homeland Security Act created the Chief Human Capitol 
Officers Council to elevate the importance of personnel policy 
governmentwide. The Federal Government is moving toward a 
personnel system that is increasingly merit-based. With a 
majority of Federal workers moving to new pay systems under the 
Departments of Defense and Homeland Security, it is imperative 
to have top level leadership guide this transition. During this 
time, it will be essential for the Chief Human Capital Officers 
to bridge that crucial gap between agency heads and human 
resources departments.
    With all of this in mind, the subcommittee will today look 
at how the addition of the CHCO position and the CHCO Council 
has impacted our Federal agencies. There are certainly lessons 
to be learned and successes to be shared since enactment a year 
ago. Additionally, and maybe more importantly, our witnesses 
will also give us a glimpse of what we are to expect in the 
months and years to come.
    Thank you all for being here today and thank you for your 
patience while we did the transition from one subcommittee 
hearing to another. We look forward to hearing all your 
testimony.
    I will now turn to our ranking member, Danny Davis, for an 
opening statement.
    Mr. Davis of Illinois. Thank you very much, Madam 
Chairwoman. I want to thank you for calling this hearing.
    As we know, Chief Human Capital Officers will assist agency 
heads in carrying out the agency's responsibilities for 
selecting and developing training and managing a high quality, 
productive work force in accordance with merit systems 
principles. The best part of the Federal Government is the 
thousands of dedicated men and women who work on behalf of 
taxpayers each and every day. All of the services Americans 
rely on their Government to provide, from protecting our 
homeland to regulating our markets, would be severely 
threatened unless we improve the way Government manages its 
most important assets, its workers.
    CHCOs must have the vision and leadership skills to 
integrate the agency's human capital needs with its mission and 
program goals while balancing the needs and rights of the work 
force. Having been engaged in public interest work for more 
than 30 years, I believe there is no more fulfilling profession 
than working for the Government and helping to improve the 
lives of all Americans, particularly those who are less 
fortunate. It is troubling then when I hear that young people 
are indifferent to the notion of public service. Young people 
seeking job stability will continue to be indifferent to 
Federal employment when they find that their jobs can be 
contracted out and the weakening basic Civil Service 
protections will certainly not draw young people and highly 
skilled workers to Federal Civil Service.
    CHCOs will have to confront and overcome these challenges. 
The CHCO must help agencies adopt a long term commitment for 
hiring, implementation, professional development, performance 
awards and retention approaches that support the agency's 
mission and create a results oriented culture.
    I look forward to hearing how we have done so far, how 
CHCOs have been developed, organized and put together in order 
to fulfill this mission. I seriously believe, Madam Chairwoman, 
that the notion that Government cannot do its work as well as 
those outside of Government is one that needs to be dispelled 
and the only way we can do it is to make sure that we recruit, 
retain and develop the most highly motivated, most highly 
prepared and most highly dedicated work force that we can put 
together.
    I thank you again for calling this hearing and look forward 
to hearing the witnesses.
    Ms. Davis of Virginia. Thank you, Mr. Davis. I totally 
concur with your last couple of statements and appreciate 
having you on this committee for that reason.
    I ask unanimous consent that all Members have 5 legislative 
days to submit written statements and questions for the hearing 
record and that any answers to written questions provided by 
the witnesses also be included in the record. Without 
objection, it is so ordered.
    I ask unanimous consent that all exhibits, documents and 
other materials referred to by Members and the witnesses be 
included in the hearing record and that all Members be 
permitted to revise and extend their remarks. Without 
objection, it is so ordered.
    On the first panel, we are going to hear today from the 
Honorable Kay Coles James, Director, U.S. Office of Personnel 
Management.
    It is standard practice for this committee to administer 
the oath to all witnesses and if all the witnesses on both 
panels could please stand, I will administer the oath to all of 
you at one time.
    [Witnesses sworn.]
    Ms. Davis of Virginia. Let the record reflect that the 
witnesses have answered in the affirmative and you may be 
seated.
    Director James, it is a pleasure to have you here today. We 
look forward to hearing your testimony. I know you are on a bit 
of a time crunch, so with that we will let you get started. You 
are recognized for 5 minutes.

    STATEMENT OF KAY COLES JAMES, DIRECTOR, U.S. OFFICE OF 
                      PERSONNEL MANAGEMENT

    Ms. James. Thank you, Madam Chairwoman. I want to thank you 
and the other Members for the opportunity to be here today. I 
am going to give an abbreviated statement but I would ask that 
the full text be entered into the record.
    Ms. Davis of Virginia. Without objection, so ordered.
    Ms. James. The passage of this important legislation 
reconfirms a goal that we all share, providing a Government of 
service to the American people envisioned by our President in 
his management agenda. The CHCO Act provides additional 
conduits for advancing this very important agenda.
    First, the statute requires the heads of 24 departments and 
agencies to appoint a Chief Human Capital Officer. In April 
2003, OPM issued a memo on the designation of these important 
new positions. The memo noted that Chief Human Capital Officers 
will require different competencies from those traditionally 
found in an agency's human resources staff function. We also 
advised that, although not required by statute, the spirit of 
the law would best be fulfilled by designating individuals as 
CHCOs who serve as integral members of the agency's leadership 
team.
    I am pleased to report that the individuals selected as 
Chief Human Capital Officers are talented professionals who 
bring a wealth of experience to their positions. Many have 
served the Federal Government with distinction as career senior 
executives while others serve as top level political 
appointees. Demonstrating a longstanding need for high level 
attention to be focused on human resources issues, several 
agencies not listed in the act embraced its spirit and 
designated Chief Human Capital Officers as well. These include 
the Central Intelligence Agency, Federal Labor Relations 
Authority, Internal Revenue Service, and the Peace Corps.
    Second, as the act establishes a Chief Human Capital 
Officer's Council, I as the OPM Director am honored to serve as 
the Chair of the Council. Under the statute, the Council is 
composed of Cabinet department Chief Human Capital Officers and 
others designated by the OPM Director. Employing this 
authority, I asked the Chief Human Capital Officers of several 
large executive agencies and a representative sample of small 
agencies to serve on the Council as well.
    The Council has had a very active first year. Less than 3 
weeks after the act took effect, I convened its inaugural 
meeting. To emphasize the importance that the President placed 
on the strategic management of human capital, we met for our 
first meeting in the Indian Treaty Room at the White House. 
Calling the meeting to order, I described the new body as a 
make stuff happen kind of council. It has in fact been just 
that.
    Since last June, the Council has met six times, adopted a 
charter, established an executive committee to help steer the 
Council and initiated five subcommittees to address important 
governmentwide human capital issues. We have conducted a 2-day 
retreat, drafted a tactical plan for the current fiscal year, 
created a Chief Human Capital Officers Academy and this is a 
forum for members to share their best practices and appointed 
an executive director to oversee the daily operations of our 
council. Let me say that probably one of the best things we did 
was to get Mike Dovilla, who I think was involved in drafting 
that legislation, from Senator Voinovich's staff. I think he 
has forgiven me for that but he is serving very well in that 
capacity and has a vested interest in its success and making 
sure that it is active.
    The Council subcommittees are focused on some of the key 
areas for Federal Civil Service modernization. We all know that 
one of our biggest issues right now is to fix the hiring 
process. So that was one of the first subcommittees we named. 
To complement OPM's efforts to encourage agencies to adopt a 
45-day hiring model, the Subcommittee on the Hiring Process is 
also exploring ways to expedite the recruitment, evaluation and 
appointment of top talent to Federal positions. Dr. Chu from 
the Defense Department heads up that particular subcommittee.
    We believe that one of the most important issues facing the 
Federal work force today is our emergency preparedness and the 
safety of our Federal work force. Gail Lovelace from the 
Department of GSA is preparing and helping us to ensure 
agencies know how to best protect our Federal work force and 
she is doing a fantastic job at that.
    Otto Wolfe is heading the Subcommittee on Performance 
Management, and the full Council has played a very integral 
role in developing regulations for the new SES Performance. 
Based Compensation Plan is under the leadership of that 
particular subcommittee. Bill Leidinger from Education is 
heading the Subcommittee on Leadership Development and 
Succession Planning and is considering individual training and 
development as a part of the strategic plans for our work force 
and is looking at our long-term strategic needs for leadership.
    The Subcommittee on Employee Conduct and Poor Performers is 
reviewing statutes and regulations for ways to streamline the 
process needed to counsel and, if necessary, terminate 
employees who are not performing at an acceptable level. Pat 
Pizella from the Department of Labor is working on that 
subcommittee.
    The CHCO Academy is proving a very productive forum. While 
the subcommittees are working, we are also having a monthly 
meeting with this particular academy. It is, in fact, 
discussing human resource issues, and the forum meets monthly 
to consider such topics as current work force flexibilities and 
compensation reform. Next month, I will be leading a session on 
some of the potential options being considered for the next 
wave of reform of the American Civil Service.
    In addition to these accomplishments, the Council already 
has become more than a body that simply discusses issues. OPM 
is actively including the Council in considering and making 
policy recommendations. Draft regulations to implement the 
President's recent Executive order establishing the 
Presidential Management Fellows Program includes language that 
will give an important role to the Chief Human Capital 
Officers.
    Chief Human Capital Officers are assisting agency heads in 
enforcing OPM's policy that there is no place in the Federal 
employment or in our Government at all for degrees or 
credentials from diploma mills. So the Chief Human Capital 
Officers play an important role in that issue. Our CHCOs are 
communicating internally our policies on adjudication of 
background investigations and security clearances, also a very 
important function that we have, and having someone in the 
agencies at a very high level that has that as part of their 
agenda is very important.
    CHCOs are playing an integral role in observing veterans 
preference statutes and regulations as they hire new employees. 
Next week, the Council will hold a joint meeting with veteran 
services organizations on the important issue of veterans 
preference in hiring. We thought it was very important to do 
this in conjunction with our Governmentwide celebrations of 
Memorial Day. This event will take place at Walter Reed Army 
Medical Center and it is a very appropriate location to reflect 
on the valuable contributions many of our Nation's veterans 
have made in the service and after their military service 
providing them opportunities for the American Civil Service.
    With a quick look ahead, next week's meeting will celebrate 
the body's first anniversary and prominently featured on our 
agenda is a dialog with representatives of several Federal 
employee labor unions providing the Council valuable input from 
these important stakeholders.
    Our first annual report to Congress is forthcoming and this 
document will contain information about the Council's progress 
during the first fiscal year. To enhance our communications 
among the Chief Human Capital Officers and with external 
stakeholders, OPM will soon launch a Web site containing key 
information about the Council.
    The Chief Human Capital Officers Council is adding value to 
the public policy dialog on the future of America's Civil 
Service. The appointment of CHCOs across the Federal Government 
has elevated the institutional profile of the strategic 
management of human capital as never before. This important law 
is having a positive effect on how we manage the Government's 
most important resource, people. The members of the Council 
take seriously these important responsibilities and with 
continued attention to the President's charge to achieve 
results, our Civil Service will only grow stronger as it 
continues to provide the Nation with critical services that our 
citizens expect.
    Thank you again for the opportunity to discuss OPM's 
progress in implementing the Chief Human Capital Officers Act 
and I would be pleased to respond to any questions you may 
have.
    [The prepared statement of Ms. James follows:]

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    Ms. Davis of Virginia. Thank you very much, Director James.
    I will turn now to our ranking member, Mr. Davis, for 
questions.
    Mr. Davis of Illinois. Thank you very much.
    Madam Director, it is clear that implementation of the 
Human Capital Officers' activity has hit the ground running. 
You have done a lot of things. My question is how do internal 
stakeholders fit into the scheme of things and how do we make 
sure they have input to the processes?
    Ms. James. With the strategic management of human capital 
Governmentwide, one of the core values and principles of the 
management of human capital is that you must involve the 
stakeholders at every level. So it would be incumbent upon each 
of the individual Chief Human Capital Officers when they come 
to the meetings, to come prepared with that kind of input to 
enrich the dialog. So it would be important that, internally in 
each of the departments, they are meeting with stakeholders, 
both inside and outside of their agencies and bringing that to 
the table as well.
    As I suggested, also the legislation calls for us to be 
involved at least on an annual basis in a dialog with our 
external stakeholders. We will be doing that next week with 
what I believe to be a very important meeting out at Walter 
Reed, where we will have the representatives of labor as well 
as the representatives of our veterans service organizations.
    Mr. Davis of Illinois. I guess half of the CHCOs have other 
areas of responsibility, significant other areas of 
responsibility. Are we finding there is ample time for them to 
be engaged in the other work they have to do and still pay the 
kind of attention to human capital development that they are 
charged with the responsibility for?
    Ms. James. In all candor, Congressman, that is not true in 
every case. I am concerned that some of our Chief Human Capital 
Officers are stretched far too thin and I am convinced that as 
we proceed with this through the year, some of that may be 
corrected. We will see, I am sure, that some of our Chief Human 
Capital Officers will say their plates are too full, and there 
will be some adjustments made. I can't tell you that every 
Chief Human Capital Officer can focus as much as I would like 
to see them focus on these important issues. I think we are 
going through a shakedown cruise.
    Mr. Davis of Illinois. I think it is an absolutely 
important activity. It has been my experience in life that 
those things to which we give the time, energy and attention 
are where the areas of accomplishment really are. Since we have 
programmed this in as something we really want to do, then we 
will have to find a way to make sure those individuals have the 
ample opportunity to do that.
    Ms. James. We have a pretty aggressive schedule that 
includes not only the meetings of the Council but the 
subcommittee meetings, the executive committee meetings, and we 
never want to meet for the sake of meeting. If we are meeting, 
it is because there are some substantive policy issues to be 
discussed, decisions to be made and as a result of that, it is 
important for people to be there and engaged and in most cases, 
that is in fact the case.
    Mr. Davis of Illinois. Thank you very much. I don't have 
any other questions. I appreciate the implementation that is 
taking place and thank you very much for being here.
    Ms. James. Thank you.
    Ms. Davis of Virginia. Thank you, Mr. Davis.
    Let me just followup on what our ranking member was asking. 
Based on what you said, that some of them do have too much on 
their plate, is it your vision that eventually a the CHCOs will 
be exclusively CHCOs or will they always have to have that just 
as a part of the title?
    Ms. James. I would be less than honest with you if I didn't 
admit that I believe there is sufficient work on the strategic 
management of human capital for that to be a full portfolio. 
Having said that, I do believe that agency heads and Cabinet 
Secretaries know best how to run their departments and what the 
workload is. We will continue to press ahead with the important 
work that we do and if we hit any snags I will have those 
conversations with the Chief Human Capital Officers and with 
the heads of those agencies and if we need to make adjustments 
I am sure we will.
    Ms. Davis of Virginia. You referenced in your opening 
statement, I believe, something regarding the Human Resources 
Directors. I guess I was along with some of those other people 
when CHCOs were developed, what is the head of Human Resources 
for. What do you see as the intended relationship between the 
CHCO and the Human Resources Director?
    Ms. James. I see it as a very close, collaborative working 
relationship. I would say, however, that when the legislation 
was passed, we envisioned a different set of core competencies 
for those who serve at the Chief Human Capital Officer level, 
and I would say that we envisioned that would be an individual 
who has leadership, who works closely with and has the trust 
and respect of the agency head, is a policy person and who is 
involved in the long-term strategic planning for that agency 
and has access to the highest level policymakers in that 
organization and sits at the table with those individuals when 
policy is being made.
    The Human Resources Directors in those agencies are vital 
people. They have technical skills and knowledge that is so 
important and so relevant. We have found in our operations 
that, in many cases, our meetings consist of both, that the 
Human Resources Directors as well as the Chief Human Capital 
Officers attend and are involved in the important dialog and 
discussion.
    Ms. Davis of Virginia. You just said when you were 
answering me that you originally envisioned the CHCOs as being 
one thing. Are they something different than what you 
envisioned?
    Ms. James. Not really. We were very pleased at the level of 
the skill sets and the individuals that were selected by agency 
heads. There were those who were concerned that they were going 
to all be political people in the agencies. That is just not 
the case. We have a great mix of senior, non-career and career 
executives who come together and share a common mission, which 
is the strategic management of human capital for our Federal 
Government. It is an excellent mix. It is a great body. My only 
concern at this point is burnout and wearout because this is 
such an important issue and the issues are so overwhelming that 
it requires a great deal of time. That would be the only note 
of caution that I would sound at this time.
    Ms. Davis of Virginia. You have been going at it now a 
year. What do you see as your biggest success with the Council 
and where do you think your challenges remain other than the 
burnout?
    Ms. James. Our biggest successes I think have been 
identifying the problems and coming up with the strategic plan 
to take on what we believe to be the tough stuff and having 
highly skilled, dedicated leaders in the Federal Government now 
focused on these issues. I believe the legislation has been a 
tremendous success as far as that is concerned. Having a 
conduit at the very highest levels of these agencies now where 
these issues are being addressed and talked about is critical.
    Our biggest challenges are producing results in these 
areas. Yes, we have a Subcommittee on Hiring, but are we fixing 
the hiring process.
    Ms. Davis of Virginia. That was one of my biggest 
questions.
    Ms. James. My biggest challenge is not how you develop 
metrics but holding them accountable, the agencies accountable 
to produce results in these areas. I think a lot of times 
people are confused about the actual role of the Office of 
Personnel Management. We don't hire people for the Federal 
Government. Hiring is done at the agency level. We can produce 
workshops, we can put out memos, we can encourage, we can 
audit, we can do analysis but at the end of the day, to fix 
that will require the agencies to step up to the plate to do 
that.
    I think having the Council as a conduit to have leadership 
now focused on these issues is important. The challenge is 
going to be to encourage, motivate, cajole, whatever the word 
is we can use, force, we don't have the authority to do that, 
agencies to produce results in these various areas is going to 
be our toughest mission.
    Ms. Davis of Virginia. I certainly hope you are able to 
correct the hiring process because that has been a real concern 
of mine from what I have heard throughout my district and I 
know other members have stressed the same thing, that it takes 
too long to hire a Federal employee, so they go somewhere else.
    The major issues you are currently discussing in the 
Council, do you anticipate any legislative proposals?
    Ms. James. Yes, we do. We encourage the Council that this 
isn't just a meeting to attend and check it off your schedule. 
We really are hoping that policy will be developed, that 
legislative proposals will come out of that. We are getting 
back reports now from some of our subcommittees and from that 
you will see suggestions for legislation, for policy changes. 
It is not always legislation that is required; sometimes it is 
just a change in policy, sometimes it can be done by Executive 
order, but if legislation is required, we will be back here 
asking you and the subcommittee for your support to continue 
fixing some of these very difficult issues.
    Ms. Davis of Virginia. We would probably rather you fix it 
yourself but if you can't we are here.
    Thank you, Director James.
    We have been joined by Ms. Norton. I will go to you for 
questions for 5 minutes.
    Ms. Norton. Nice to see you, Director James.
    Ms. James. Nice to see you as well.
    Ms. Norton. Some of us have been very concerned about the 
role and future of human capital in the Federal Government 
because of the competing forces of various kinds, such as many 
more options for people about where to work. I am not sure we 
are getting the best and the brightest the way we always have. 
Your work force could retire on you tomorrow or much of it 
could, and yet you are competing with Fortune 500 types who go 
after the best talent. I really have a series of questions 
about the future of the Civil Service, frankly.
    I would like to know, the Federal Government had something 
to kind of fall into its lap beginning with the Great 
Depression; with not a lot of options, the best and the 
brightest came to the Federal Government. Then there was a 
period in the 1960's when Government was very much appreciated; 
nobody was telling civil servants what many of them hear, which 
is who needs Government, and whole bunches of young people 
flocked to the Government. They weren't terribly interested in 
business then. Now they are everywhere.
    I am interested in how you are going to replace a work 
force of the kind you inherited and that our country inherited 
as half of them could retire tomorrow and leave, and what you 
are doing to compete with folks who are prepared to pay them 
more, not do a whole bunch of reorganization so that they don't 
know whether they will have a job, who will give them full 
health benefits. What is your program for maintaining and 
attracting a work force, not just a work force, particularly in 
the era of terrorism when we are asking things of the work 
force we never thought we would ask the civilian work force, 
how are you going to compete? What are you doing to compete 
with the private sector which spends all of its waking hours 
looking for precisely the kind of talent we need in the Federal 
Government today?
    Ms. James. Great question and the answer is very long and 
convoluted but I will try to be as precise as I can in the time 
that we have. There is good news and there is bad news. I tried 
to explain this to Congressman Davis when he was holding my 
feet to the fire about attracting more minorities, particularly 
into our Senior Executive Service, which is a very real concern 
of mine. The bad news is that we don't do as well as we would 
like to do and the good news is, it is because there are so 
many opportunities that exist for minorities outside of the 
Government that it is no longer adequate for the Federal 
Government just to open the doors and people perhaps will come. 
We have to be more aggressive, we have to be more competitive 
and we have to do something that the Federal Government has not 
done a great deal of which is targeted recruiting, which is 
going out and going after those individuals.
    If you look at a young student coming out of a graduate 
school today that is excellent in their academics, has been 
involved in volunteerism and community service, and has certain 
skill sets, they are a hot commodity and will be sought after 
by the corporate environment. The good news is that those 
individuals, one thing we know about them is that they are 
attracted to the opportunity to work somewhere they feel they 
can make a meaningful and significant difference. We also know 
that those young individuals aren't necessarily interested as 
some of us were in our generation of perhaps coming to work at 
the Federal Government for 30 years. We know that they may 
come, give a portion of their lives, 5 years, 7 years, 
something like that, if they believe they can do meaningful 
work, if they believe they will receive some skill sets, 
training, if they believe they will have opportunities they 
couldn't have in the private sector.
    I have never been one of those individuals who believed 
that we have a hard time attracting people to come to the 
Federal Government. We have done job fairs all over the country 
and I invited some this committee staff to come to New York to 
observe a phenomena that I believe is incredible. We went to 
the job fair and we offered Federal opportunities and I asked 
them to come over and look at the sight I saw out of that 
window. We had 15,000 people in New York City who were there to 
apply for jobs within the Federal Government. I hear sometimes, 
``That may be nice, Kay, but those individuals are not the 
cream of the crop, they are not the best and brightest, they 
don't have the skill sets that we are looking for.''
    We decided to do some analysis of those people to see if in 
fact that was the case and that data is coming back but I can 
tell you my own experience as I walked those lines. Those were 
highly talented, skilled people who were there, ready and 
willing to come to work. Our problem was----
    Ms. Norton. My time is almost up. I just want to ask 
because I certainly would believe that. I just want to ask, for 
example, to take the law school where I taught full-time and 
still teach one course, the best law school in this region, 
Georgetown, do you send folks to Georgetown to interview young 
people coming out of Georgetown to try to get them to come to 
the Federal Government?
    Ms. James. OPM does for Governmentwide, but our agencies 
and again, you have to remember, OPM doesn't hire anybody.
    Ms. Norton. I understand that. My question was, do you 
advise people.
    Ms. James. Yes, we do.
    Ms. Norton. To in fact send people. You are going to get 
people, there is unemployment. The reason I asked about lawyers 
in particular is that it is a market where one can now recruit 
lawyers of a rather high rank because it is hard to make 
partner in a law firm today because they use so many contract 
lawyers.
    Unless OPM is doing the same kind of recruitment on the 
ground that law firms and businesses do, which is not saying 
here are some jobs and let us count and see how many people out 
there will sign up, you will never know whether you are getting 
the best. You know where the best and the brightest are. I 
would be very interested in seeing an example of what your 
recruitment programs look like.
    Ms. James. We do, and one particular one that you may be 
interested in was one that was a little bit controversial, but 
I was committed to it so I did it and that was for Black 
History Month. I said to the folks at OPM, I wasn't 
particularly interested in another program in the auditorium 
with singing and that sort of thing, why don't we go to black 
colleges and universities and recruit on those campuses and do 
something real which is to tell them about the opportunities 
that we have. So we had a job fair at Howard University, we 
went to Hampton University.
    Ms. Norton. I don't know whether that would have been 
controversial, I appreciate that you went.
    Ms. James. That is another whole story. We will have that 
conversation.
    Ms. Norton. Madam Chairwoman, I do have other questions but 
I will wait for another round.
    Ms. Davis of Virginia. Thank you, Ms. Norton.
    We have been joined by Mr. Van Hollen. Mr. Van Hollen, do 
you have any questions?
    Mr. Van Hollen. Just a few. Thank you for being here again.
    I apologize if I am going over territory already covered 
but in terms of the recruitment tools that were provided under 
the legislation we are reviewing, do you believe the tools 
available to you have been adequate and successful in 
attracting new talented people to the Federal Government in 
areas where we have pressing needs or are there additional 
tools that you need to accomplish that mission?
    Ms. James. Congressman, I really truly believe that we 
needed the legislation, we needed those flexibilities in order 
to attract America's best and brightest and get them hired 
quickly in a reasonable length of time. My biggest challenge, 
however, is getting our agencies to use those tools. So we are 
encouraging them, we are monitoring, we are training and we are 
doing everything that we can. I would suggest that it will take 
a little bit more time before I can answer fully for you 
whether or not those tools are being used to the best of the 
agencies' abilities.
    It is discouraging to me that when we have the authority 
for direct hire, that it is not being used as much as it could 
and should be. As an example, before we do a hiring fair, we 
bring those individuals together and say at the hiring fairs, 
we call them hiring fairs for a reason. We want people to get 
hired. Make sure you send people who have the authority to hire 
people and who will use the flexibilities that Congress has 
given us.
    One of the pushbacks that I have said to the agencies is do 
not send hostesses to hiring fairs, people to pass out 
keychains and brochures. Send people to hiring fairs who have 
the authority to make job offers, to evaluate and to interview 
candidates. Those are some of the kinds of things we are 
working with, so I can't answer your question just yet about 
how effective and what more we need. We are struggling to get 
people to use the flexibilities that you have granted us and 
given us.
    Mr. Van Hollen. Let me just ask. There were a couple 
stories. I am sure you know yesterday in the Washington Post 
and I don't know if this issue has been raised but there was a 
front page article about Federal pay and then another article 
about the DOD new reorganization plan. On the first issue, the 
pay question, first of all, it was a long article and I don't 
know if you have any general response. I would be interested in 
your general response. The second issue that sort of comes to 
mind is it talked about bonuses and a whole spectrum of bonuses 
from small bonuses to large bonuses and given our whole debate 
with respect to performance pay and whether or not that bonus 
system is in some ways serving that purpose now and what the 
distinctions are between performance pay and rewarding through 
the bonus systems and the authorities that already exist.
    Ms. James. My general comment would be that I have always 
been concerned about how awards are used in our Government with 
our work force. I think that the systems are good, the various 
awards programs and systems. I am concerned about how they are 
administered. I think if you look at the performance of some of 
the agencies and look at how freely they expend bonuses and 
compare the two, it begs the question, is it really 
performance-based and what are you basing that performance on. 
So I think there is a lot of work to be done there.
    Should we have performance-based pay? Yes. Is it being 
effectively administered at this point? I have some concerns.
    Mr. Van Hollen. It obviously is a longer discussion to get 
into all those issues. Let me ask while we have you here, in 
terms of the DOD reorganization effort, I know there has been a 
question about to what extent your office has been able to be 
involved and have input in that process. Are you satisfied with 
the level of input that you have had? Can you give us an update 
on what you see as the challenge?
    Ms. James. I thought that the article was fairly accurate. 
The only thing that was wrong was the headline because it 
talked about Rumsfeld's plan. Rumsfeld was the solution, he was 
not the problem, because when it got to his level in the 
organization, he and Secretary England were very quick to act. 
We are very pleased about where we are in the process right 
now, the level of input, the ability for OPM to be involved, 
and I think, as a result of that, we are going to see a far 
better product. Stakeholders are and will continue to be 
included, and the employees in that department deserve an 
excellent personnel system, and I think at the end of that 
process, that is what they are going to have.
    Mr. Van Hollen. Thank you.
    Ms. Davis of Virginia. Thank you, Mr. Van Hollen.
    Director James, I want to thank you for being here. I am 
going to assume the complete response you weren't able to give 
to Ms. Norton when you said the problem up in New York was the 
fact that you couldn't get the agencies to do the hiring?
    Ms. James. That is a part of the problem, yes. They are 
actually doing better because after the first two hiring fairs 
when we had hostesses and we said no, we want real people that 
can explain programs and actually make job offers, some of the 
agencies are stepping up to the plate. What we want to do is 
say we are even considering not allowing them to participate in 
the hiring fair unless they have real jobs they are 
interviewing for because those people who stood in line for 4 
hours for the opportunity to work for our Government deserve 
better. They didn't come for keychains, they came for jobs.
    Ms. Davis of Virginia. Thank you, Director James. I just 
want to ask you one question for the record. What is the status 
of the law enforcement officers report that was due to this 
committee on April 30th?
    Ms. James. That report is in review. I understand they are 
waiting on comments. It is currently at OMB and when they 
receive the comments from all the various agencies, I am sure 
it will be released to the committee.
    Ms. Davis of Virginia. Thank you, Director James. I know 
you have another commitment, so we are going to allow you to 
go.
    Ms. James. We are going to go train some Foreign Service 
executives.
    Ms. Norton. Could I ask her another?
    Ms. Davis of Virginia. Actually she has to go give a 
speech, so if you could take your questions for the record for 
Director James.
    Ms. James. If it is a quick one, I am happy to answer.
    Ms. Davis of Virginia. If you could answer quickly because 
we do have four votes coming up and a mark up, plus we have 
another panel.
    Ms. Norton. I would like to ask the question. You mentioned 
apparently in your testimony something about the diploma mills. 
I appreciate that you raised this yourself. I also appreciate 
when you are dealing with huge numbers of employees what it 
would take to somehow do an investigation. Is it possible that 
one could have a list of accredited colleges and that is all 
you need and you would never have to worry?
    Ms. James. The quick answer, no. The reason that is a no 
and the reason it is a sticky problem is by the very nature of 
the diploma mills, they pop up and go down, change the names, 
and so you can't have one quick list of accredited schools. You 
also have schools that for whatever philosophical or 
ideological reason have decided not to go through the 
accreditation process. So it may be a very valid learning 
institution, but for some reason did not want to go through 
that process. So, it isn't quite that easy. We have looked at 
several different categories. We are going after this one 
aggressively, but if you put a name on the list and say this is 
a diploma mill, they drop off the list because they change 
their name, and they are back.
    Ms. Norton. The kind of list I am talking about would be a 
list of bona fide universities. You start there and then you 
have to watch out for the offenders.
    Ms. James. Yes, we have that. That is not where our problem 
is. We have that, and we currently use that, but that is not 
what is causing the problem.
    Ms. Norton. Are you saying that you can't get a hold of 
this or that you are going to get a hold of it? I understand 
the complexity that you have described.
    Ms. James. We are going to get a hold of it and are working 
with Congress for some potential solutions on how we are going 
to get that done. I am not sure that we have all of the tools 
right now that we need to make that happen but we want to work 
with you to come up with some ideas and suggestions for getting 
that done.
    Ms. Norton. I think we have it now everywhere in the United 
States at the State level and city levels as well. One of the 
things we might look to is to see whether or not any 
jurisdiction has found a way to get a hold of this problem. 
Perhaps that could be a model for all of us.
    Ms. Davis of Virginia. Thank you so much, Director James, 
and thank you, Ms. Norton, for bringing up that important 
subject.
    Ms. James. Thank you.
    Ms. Davis of Virginia. I will now ask our second panel of 
witnesses to come forth. We have already sworn you in, so we 
will first hear from Mr. Chris Mihm, Managing Director, 
Strategic Issues, U.S. General Accounting Office. Then we will 
hear from Dr. Reginald Wells, Chief Human Capital Officer and 
Deputy Commissioner, Human Resources, Social Security 
Administration and Mr. Kevin Simpson, executive vice president 
and general counsel, Partnership for Public Service.
    Again, thank you all for joining us here today. I am going 
to recognize the panel for an opening statement in the order I 
called you but I would ask that you summarize your testimony in 
5 minutes and any more complete statement you have, we will 
enter into the record.
    We will begin first with you, Mr. Mihm.

STATEMENTS OF CHRIS MIHM, MANAGING DIRECTOR, STRATEGIC ISSUES, 
    U.S. GENERAL ACCOUNTING OFFICE; REGINALD WELLS, DEPUTY 
COMMISSIONER, HUMAN RESOURCES, SOCIAL SECURITY ADMINISTRATION; 
    AND KEVIN SIMPSON, EXECUTIVE VICE PRESIDENT AND GENERAL 
            COUNSEL, PARTNERSHIP FOR PUBLIC SERVICE

    Mr. Mihm. Thank you, Madam Chairwoman. It is always an 
honor and a pleasure to appear before you and the subcommittee.
    I am pleased to be here to discuss the progress in 
implementing the Chief Human Capital Officers Act. As you know 
and as you have discussed with Director James, Congress 
recently sought to modernize Federal human capital policies by 
allowing certain agencies, most notably Defense and Homeland 
Security, to adopt more flexible approaches to their human 
capital management. At the same time, Congress has provided 
agencies across the executive branch with additional tools and 
authorities needed to strategically manage their work forces. 
The success of these and related initiatives will depend in 
large measure on the existence of high quality Human Capital 
Officers and a strategic and effective Human Capital Officers 
Council.
    My written statement describes the different approaches 
that agencies used in selecting their officers, creating the 
position and the key responsibilities of those officials. In 
the interest of time this afternoon, I will focus my comments 
on the third issue covered in my written statement, the initial 
steps taken by the Chief Human Capital Officers Council and 
some suggested next steps.
    As you observed in your opening statement, Madam 
Chairwoman, an effective and strategic Human Capital Officers 
Council is vital to meeting Congress' goals under the CHCO Act 
as well as addressing the Federal Government's human capital 
challenges. Recent experience has shown us that interagency 
councils can be important leadership strategies in both 
developing policies that are sensitive to implementation 
concerns and gaining consensus and consistent follow through 
within the executive branch.
    The Chief Financial Officers and Chief Information Officers 
Councils have been particularly effective in this regard. The 
Chief Human Capital Officers Council can play an equally useful 
role. Director James discussed many of the Council's activities 
over the last year. However, the Council does not yet have a 
strategic plan to help guide its work and to serve as a 
benchmark for measuring progress, although we understand that 
there is a draft. The shared understandings that can be 
developed as part of the planning process are particularly 
important to councils since they play a vital leadership and 
coordination role. This I believe is exactly the point that Mr. 
Davis was making when he discussed with the Director the 
importance of stakeholder involvement.
    Thus, the timely completion of the Council's strategic plan 
is important to provide a sense of direction for the Council as 
well as to communicate to Congress and other stakeholders the 
role the Council will play and how it will meet its 
responsibilities. The Council has created five subcommittees as 
Director James discussed covering the hiring process, 
performance management, leadership development, succession 
planning, employee conduct and poor performers and finally 
emergency preparedness.
    We understand that three of those five subcommittees, those 
dealing with hiring process, leadership development and 
succession planning and employee conduct and poor performers 
have drafted their first reports for review by the Council's 
executive committee. However, these reports have not released 
to the public. At the request of the chairwoman, Mr. Davis and 
others in Congress, we have undertaken a large body of work in 
recent years that should prove helpful to the council and its 
subcommittees as they develop their initiatives. This work 
which includes the five areas covered by the Council's 
subcommittees, is detailed in my written statement along with 
suggestions on the specific issues for the subcommittee to 
pursue.
    In addition to the important areas covered by the Council's 
subcommittees, our work in GAO suggests the Council should 
ensure that its efforts address agencies' need for guidance, 
assistance, knowledge and leading practice in other key, cross-
cutting areas including developing the capabilities for 
successful use of the flexibilities that were discussed 
earlier, strategic human capital planning, looking into the 
future and making sure we win the war on talent as Ms. Norton 
was discussing, and transforming human capital or HR offices to 
be able to be true strategic partners with business with 
program managers rather than just transactional organizations.
    In conclusion, the need to transform the way the Government 
does business will only increase the importance of integrating 
human capital or people approaches with agencies program plans 
and strategies. While the initial steps taken over this first 
year have shown important progress, this coming year will be 
especially critical to leveraging the progress that has already 
been made and achieving significant accomplishments and 
facilitating lasting change. A strong and effective Chief Human 
Capital Officers Council can serve an instrumental role in 
helping Federal agencies
transform their operations and dramatically improve their 
performance.
    This concludes my statement. I will be happy to take any 
questions you may have.
    [The prepared statement of Mr. Mihm follows:]

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    Ms. Davis of Virginia. Thank you very much, Mr. Mihm.
    Dr. Wells, it is good to have you before our committee 
again. You are recognized for 5 minutes.
    Mr. Wells. Thank you, very much, Madam Chairwoman.
    Thank you for the opportunity to appear before you today to 
discuss my role as SSA's Chief Human Capital Officer, and how 
the Chief Human Capital Officers Act, enacted as an act that is 
part of the Homeland Security Act, provides valuable assistance 
in meeting some of the human capital challenges that the Social 
Security Administration faces.
    As you know, the Chief Human Capital Officers Act of 2002 
was signed into law with the promulgation of the Homeland 
Security Act of 2002. This act established the Chief Human 
Capital Officer and the Chief Human Capital Officers Council. I 
am proud to serve as SSA's Chief Human Capital Officer and as a 
member of the Chief Human Capital Officers Council. The Chief 
Human Capital Officer position and the formation of a national 
Chief Human Capital Officers Council have renewed focus on 
management of human resources as a form of capital investment 
and accountability for the use of that investment.
    As SSA's Deputy Commissioner for Human Resources and CHCO, 
I am responsible for providing leadership on the agency's work 
force development strategies, recruiting, succession planning, 
diversity strategies and other human capital initiatives. I am 
actively engaged in those activities on a daily basis. In this 
dual role, I advise the Commissioner and senior staff in 
carrying out SSA's responsibilities for selecting, developing, 
training and managing a high-quality, productive work force in 
accordance with merit system principles. As such, I have a seat 
at the table that allows me to discuss human capital goals at 
the executive level.
    The CHCO position and the formation of a National Chief 
Human Capital Officers Council are important to our agency 
because of our mission at SSA. Our mission is to ensure that 
Social Security and Supplemental Security Income claims are 
processed quickly and accurately and that over 45 million 
Social Security beneficiaries and Supplemental Security Income 
recipients receive their benefits in correct amounts and on 
time every month of the year. As of January 2004, over 64,000 
SSA employees were delivering services through a network of 
over 1,500 district and hearing offices throughout the country 
in 10 regions.
    SSA recognizes that it is the dedication and hard work of 
its employees that enables this agency to meet its commitments 
to the public. These commitments require that we continue 
effective human capital planning to ensure that we are 
successful in our mission. The Chief Human Capital Officers Act 
of 2002 is an important tool in our efforts to fulfill our 
goals. Effective human capital planning in our environment 
presents unique challenges. We face increasing retirement and 
disability claims, workloads resulting from our aging national 
population. As the baby boomers reach their peak retirement 
years, we must plan carefully to ensure that trained employees 
will be in place to do the work, and at the same time, maintain 
our quality standards.
    The same time as our agency faces dramatically increasing 
workloads, we also face the fact that many of our dedicated 
employees are baby boomers themselves. SSA's employee 
retirement wave will not only affect our ability to deliver 
service to the American public but it will also result in a 
significant drain of institutional knowledge. SSA will be faced 
with the continuing challenge of hiring and retaining a highly-
skilled and diverse work force in what is expected to be a very 
competitive job market.
    At SSA, we are fortunate that we have been planning for 
quite some time how to address many of these human capital 
challenges. The Chief Human Capital Officers Act is Congress' 
recognition of the fact that human resources are another form 
of capital investment that we make in order to carry out our 
mission. I am confident that SSA will meet the challenges we 
face through effective human capital planning. To this end, I 
am pleased to report that SSA has implemented a comprehensive 
human capital plan which provides a high-level focus for human 
planning efforts. It is directly linked to the SSA strategic 
plan. The human capital plan closely tracks outcomes and helps 
us to focus on the results of our human capital initiatives.
    I would also like to point out the importance of the Chief 
Human Capital Officers Council which provides a valuable forum 
for our agency to discuss a wide range of human resources 
issues, such as modernization of human resources systems, the 
impact of legislation affecting human resources operations and 
organizations, recruitment and retention strategies, emergency 
preparedness guidelines and safety measures, work force 
flexibilities and competitive sourcing. Collectively, the 
members of the Council use their insights and experiences to 
address government-wide work force issues.
    Thank you again, for holding this hearing. The enactment of 
the Chief Human Capital Officers Act will support SSA and other 
participating Government agencies as we face the human resource 
challenges presented in the 21st Century.
    I would be happy to answer any of your questions.
    [The prepared statement of Mr. Wells follows:]

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    Ms. Davis of Virginia. Thank you very much, Dr. Wells.
    Mr. Simpson, thank you for being here with us today and you 
are recognized for 5 minutes.
    Mr. Simpson. Thank you very much for the opportunity to 
appear before your subcommittee today.
    I serve as the executive vice president and general counsel 
of the Partnership for Public Service, a non-partisan, non-
profit organization dedicated to revitalizing the Federal Civil 
Service.
    Since the position of the Chief Human Capital Officer was 
created, the Partnership has had many opportunities to work 
closely with those officers, with the community of Federal HR 
directors, with OPM Director, Kay Coles James, and her team and 
with the executive director of the Council, Mike Dovilla. We 
applaud their accomplishments to date and we are especially 
heartened by the continued commitment to effective 
congressional oversight that this hearing represents.
    In our work with the Federal Government agencies, we have 
noted many positive developments in connection with the Chief 
Human Capital Officers. The level of discourse about human 
capital management issues in the Federal space has increased. 
Agency managers are being integrated more tightly into the 
discussion. There is greater collaboration among agencies and 
more energy around the issues of strategic planning. NASA has 
become the first agency to go to green on OMB's human capital 
management score card followed by Labor. OPM Director James has 
rightly and consistently championed the successes of those two 
agencies and encouraged other agencies to model their best 
practices. More importantly, I can report to you that the Chief 
Human Capital Officers feel well supported by this committee 
and its staff.
    As the committee considers its oversight role going 
forward, it is worth recalling two of the key underlying goals 
of the original legislation, one, to improve strategic planning 
and two, to encourage the development of metrics to gauge 
progress on work force management issues. On the first issue, 
strategic human capital planning, the Chief Human Capital 
Officers should be responsible for identifying the talent needs 
that exist now as well as those that will predictively arise in 
the future, given attrition and other factors. Once those needs 
have been identified, then proactive strategies have to be 
developed by the Chief Human Capital Officers to meet those 
needs.
    On this topic I would commend to your attention the 
Partnership's recent report on bioterrorism which outlines some 
of the serious work force challenges being faced by agencies 
responsible for our bioterror defense. The basic conclusion of 
the report was that we can't get the people we need and we 
can't keep the people we have. One reason for that was a lack 
of adequate work force planning.
    In the face of increasing difficulties in recruiting the 
technical expertise they needed, agencies did not necessarily 
have plans in place to overcome these difficulties. I would 
suggest this subcommittee should look for the CHCOs to be 
proactive in responding to work force challenges, especially 
where the data is showing a downward trend. The Chief Human 
Capital Officer Council in particular is an institution that is 
well suited to coordinate a strategic response across agencies 
in situations like these where several agencies are pursuing 
the talent pool.
    The second goal was to try to develop a series of metrics 
that gave progress on human capital goals. If you measure it, 
it can change. This is an explicit charge of the Chief Human 
Capital Officer legislation and it is central to the 
effectiveness of your own congressional oversight. The Chief 
Human Capital Officers should be able to explain to Congress 
which measures they regularly track and most importantly, how 
that information is then used to shape agency policy, planning 
and results. In our view, the administration's Presidential 
management agenda and the accompanying balanced score card have 
already laid the groundwork for the HR metrics that should be 
adopted by the Government. Having established this important 
conceptual framework, the priority for the next year should be 
to safeguard the consistency of these benchmarks to ensure 
their interpretation is consistent and transparent to the 
agencies that will be required to live by them and to show 
progress by them.
    The other crucial aspect of the Chief Human Capital Officer 
legislation was the creation of the Chief Human Capital Officer 
Council, which really represented a profound congressional 
commitment to a collaborative approach to work force issues 
across government agencies. To date, as described by Director 
James, the Chief Human Capital Officer Council has begun to 
fulfill that promise by forming subcommittees and developing 
responses to the major challenges all of the offices face, such 
as the need for transformation of the HR function and 
performance management. The Chief Human Capital Officer for the 
Department of Education, for example, leads one subcommittee 
that has done some great work on leadership development.
    This progress, however, could be undermined by changes in 
agency leadership that invariably accompany every Presidential 
transition, regardless of who is elected. The Partnership would 
make two suggestions in this regard. First, the subcommittee 
might consider asking the Council to develop a point of view on 
the continuity issue and to offer its own recommended 
solutions. It would be instructive, for example, to learn how 
the CFO and the CIO communities deal with transition issues.
    Second, it may be appropriate to review the staffing 
resources available to the Director of OPM for the Council. The 
Executive Director of the Council, for example, could benefit 
from dedicated staff that would allow him to expand his 
coordinating function. The committee might also examine where 
the newly appointed officers are receiving consistent guidance 
and orientation about how to fulfill the responsibilities of 
their position. I would also humbly suggest that good 
government groups such as the Partnership have a considerable 
interest in this issue that could be leveraged to support the 
Council's planning and transition efforts.
    In closing, there is no doubt in my mind that the creation 
of the Chief Human Capital Officers was an important pre-
condition to the broader transformations that will be necessary 
to improve the Government's ability to deliver results. 
Congress has signaled the seriousness of its intent by 
demanding accountability, measures of progress and increased 
collaboration. You have the ingredients to drive organizational 
change on an incredibly large scale and you and the Chief Human 
Capital Officers have our support in that enterprise.
    [The prepared statement of Mr. Simpson follows:]

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    Ms. Davis of Virginia. Thank you very much, Mr. Simpson.
    Mr. Wells, I want to ask you a question. In the November 
2002 law that President Bush signed into legislation for the 
Department of Homeland Security, it contained several resource 
reforms including the ability for agencies to use category 
ranking hiring method instead of the rule of three. It also 
provided governmentwide authority for voluntary separation 
incentive payments and voluntary early retirement. More 
recently, we in Congress enacted the Student Loan Repayment 
Program. Is the Social Security Administration using these 
flexibilities and are there any other personnel flexibilities 
that you need to help transform your work force? I know you are 
having a bit of a difficult time there.
    Mr. Wells. Yes, Madam Chairwoman, we are using a number of 
those flexibilities, however, not all. There are reasons why we 
have decided not to use them all. I think where flexibilities 
are concerned, you really do have to consider the particular 
culture, institutional aspects of the organization, size, a lot 
of dimensions and variables.
    With regard to early retirement, that is something we have 
actually used very strategically to help flatten the retirement 
wave. We analyzed some 6 to 7 years ago that we would in fact 
have a certain number of retirements hitting us in the 
beginning of the decade and we started using early retirement 
as a mechanism for having those retirements happen at a little 
more steady pace than might have happened had we not offered it 
as an option.
    With regard to tuition reimbursement, that is not a 
flexibility we are currently using. The ability to administer 
that in a way that would not create other issues for us and 
given the resource limitations, it makes it very difficult to 
consider that one as we have looked at it from various angles. 
It has not been one of the things we have had to resort to for 
purposes of recruitment. I will knock on wood here that we have 
actually done quite well. We have had, I guess, last year 
something like 3,500-3,700 retirements or people leaving the 
agency and we were able to replenish without a tremendous 
amount of difficulty at this stage.
    One of the other flexibilities you mentioned, categorical 
ranking, is something we are studying right now. We have to 
think through all the nuances of it as it relates to how we are 
accustomed to doing business and we should have some results on 
how we are going to use it very shortly. I can report back to 
the committee on its use. I think we are certainly viewing it 
as a very favorable option over the rule of three.
    Ms. Davis of Virginia. Are there other personnel 
flexibilities you can think of that you need we might be able 
to help you with?
    Mr. Wells. There are a number that we have put together and 
we would be more than happy to submit those to the committee as 
well.
    Ms. Davis of Virginia. If you would do that, we would 
certainly appreciate it. I am going to ask one more quick 
question and go to my colleagues.
    Mr. Simpson, it is going to be you because my ears perked 
up when Director James said that some of the CHCOs were 
political appointees. I know that the Partnership for Public 
Service has said that shouldn't be, something to that effect. 
Could you elaborate on that?
    Mr. Simpson. Early on during the initial legislative debate 
about the Chief Human Capital Officer legislation, I believe we 
did express a preference that perhaps the Chief Human Capital 
Officers should all be career but we are very sensitive to the 
other side of the argument and it really was important to us 
that the Officers have a seat at the table as it were and 
sometimes a political appointee is really the best candidate 
for the job for that reason.
    I think actually the way it is working right now as 
Director James described, it is a good mix from everything that 
I have heard, from my understanding. There is a lot of synergy 
and give and take between the different experiences these two 
different categories of officers bring. I would not suggest 
what we have heard and the input we have received means that we 
ought to revise the act itself to require career officers. It 
is a little too soon for that but I do think Director James was 
quite candid and forthright in suggesting that even some of the 
political appointees need to focus their attention and energies 
on the substantial responsibilities of the position itself.
    Ms. Davis of Virginia. Thank you.
    I am going to yield back my time and go to our Ranking 
Member, Mr. Davis.
    Mr. Davis of Illinois. Mr. Simpson and Mr. Mihm, how 
important do you think it is for the CHCOs to report directly 
to their agency heads? They must directly to the agency 
director. How important do you think that is?
    Mr. Simpson. To my mind, it is very important. It signals a 
commitment from the very top of the agency to the importance of 
human capital as a matter of critical importance to the agency. 
Your agency mission is not going to be accomplished unless you 
have your human capital shop in order. Jack Welch, the head of 
GE, used to say we spend 70 percent of our time on the people 
thing and the day we get the people thing wrong, we have really 
messed up. I think that is a model that should be emulated in 
the Government space.
    Mr. Mihm. I would agree Mr. Davis. It is important that 
they report to the highest level of the organization. The thing 
we need to keep in mind is that a number of management 
positions now report to the head of the agency, CFO, CIO, 
CHCOs. This fact has been given some impetus of the notion of 
creating Chief Operating Officers within agencies often at the 
deputy level or an equivalent through which the various 
management functions could report up so they are able to have 
the high level of attention they deserve but it is not 
necessarily all going into the Office of the Secretary. My 
understanding is the Select Committee on Homeland Security is 
considering that model with the Department of Homeland Security 
creating a Chief Operating Officer, basically elevating the 
entire management function up to the next level.
    Mr. Davis of Illinois. Let me ask each of you do you think 
one can do this effectively on a part-time basis, that is with 
other duties and responsibilities as well? I will start with 
you, Mr. Mihm.
    Mr. Mihm. I would take Director James' point that I think 
it will be exceedingly difficult over time to devote the 
necessary time and attention if it is dual-headed or even 
triple-headed with other functions. The key differences she was 
pointing out between a HR Director and a Chief Human Capital 
Officer and it is characterized by Dr. Wells' comments about a 
seat at the table is that it is much more than responsibility 
for the traditional HR categories which are important enough. 
It is being able to be a real leader in much of the 
transformation that is going on within an organization. If we 
are vesting with these top officials technology, financial 
management, administration, other management functions, it gets 
exceedingly difficult to see when they are going to be able to 
sleep.
    Mr. Wells. Mr. Davis, I am very happy that I wear both 
hats, that is I am the Deputy Commissioner for Human Resources 
and the Chief Human Capital Officer, so I am probably a little 
biased. I struggle with doing a really good job at it with that 
full responsibility. I think it is a full-time job. I 
appreciated the Director's forthright remarks about some of the 
challenges that some of my colleagues face, and from talking to 
some of them, I can certainly appreciate that they do.
    I think some of it depends, frankly, on the agency. I can 
see where that may play a role and the amount of support a 
particular executive may have surrounding them, but I certainly 
feel that having direct access to the head of the agency is 
critical. If you don't have the seat at the table, if you are 
not able to have that direct access, it would strike me, as you 
indicated earlier in your remarks, that we do things well, that 
we pay attention to and put effort into. I would certainly 
agree with that.
    Mr. Simpson. My own sense, Congressman Davis, is it is a 
big portfolio, it is a substantial portfolio of responsibility 
that each Chief Human Capital Officers needs to focus on. If 
you look into the private sector and look at comparable 
positions, a chief people officer at a large corporation for 
example, I doubt you would find many models where those 
responsibilities are shared, one person has those 
responsibilities as well as significant other portfolios.
    Mr. Davis of Illinois. I have no further questions. Thank 
you, Madam Chairwoman.
    Ms. Davis of Virginia. Thank you, Mr. Davis.
    We have four votes but I believe we have time for 5 minutes 
for Ms. Norton to ask questions.
    Ms. Norton. Let me quickly ask Mr. Mihm a question. You 
have indicated that in addition to essential operations, there 
should be some focus on border agency operations. I wonder if 
you saw any indication that the Emergency Preparedness 
Subcommittee or any part of CHCOs is looking beyond emergency 
matters? I ask that in light of what happened here. When 
anthrax occurred here in the Senate, there were many, many 
employees who simply couldn't work at all. Nobody had arranged 
for them to work from home, a lot of government waste occurred 
during that time. How will we avoid that under the present CHCO 
situation?
    Mr. Mihm. In fact we have done quite a bit of work on this. 
The issue first arose in the mind of members here in Congress 
in terms of requesting our work, is that they had been noticing 
a lot of the work on continuity of operations and there had 
been discussions of critical infrastructure and the need to 
protect critical infrastructure and they noted their chiefs 
were not considering people as part of our critical 
infrastructure. We are worried about protecting technology, 
desks and office buildings but we are not so much worried about 
people. So we were asked to look at the people considerations 
within continuity of operations plans. Here is the essential 
issue.
    Emergency preparedness and response at the Federal level 
with both FEMA guidance and the existing OPM guidance is 
actually pretty good from the standpoint of worrying about 
immediate health and safety issues of employees. That is 
obviously our overriding immediate concern. We were identifying 
a large set of issues that I think are exactly on point of what 
you are suggesting. Once we have had an incident and we have an 
emergency response team that is kind of restanding up the 
agency, how do we reengage the broader group of employees that 
may be out there whether through distributed workplaces or 
technology or alternative work locations or all the rest? We 
don't really know yet what the Emergency Preparedness 
Subcommittee and the CHCO Council is coming up with, although 
as I mentioned in my statement we are making available to them 
our work and our suggestions on what they should look at. We 
have been working with OPM in terms of giving them the earlier 
report and have been working very closely with FEMA and FEMA 
did accept our recommendations about the need to expand 
guidance on continuity of operations plans.
    Ms. Norton. I certainly would like to see people able to 
work from home. Talking about backup, we really do need 
particularly since essential is very narrowly defined.
    Mr. Mihm. Yes, Ma'am.
    Ms. Norton. You say in your testimony, Mr. Simpson, you 
humbly suggest a good government group such as your own be 
considered in this issue and could be leverage to support. Are 
you saying you haven't been consulted?
    Mr. Simpson. We were just trying to make it clear that we 
were willing to be helpful to the administration.
    Ms. Norton. I am asking, have you been consulted? Have you 
had any input?
    Mr. Simpson. We feel that we have had input into the 
process, yes. We consult regularly with the Chief Human Capital 
Officers and with the HR community. We think it is a very free 
and open exchange. One of the reasons we formed our perspective 
is that in fact transition is going to present some real 
challenges, and we wanted to offer to be helpful if somebody 
thought we could be helpful in that way.
    Ms. Norton. It looks like it is already happening, Mr. 
Simpson. Thank you very much.
    Ms. Davis of Virginia. Thank you, Ms. Norton.
    We are going to have to break for four votes, so rather 
than holding the panel, if members have additional questions 
for our witnesses, they can submit them for the record and we 
will get the witnesses to agree to get them back to us for the 
record.
    I would like again to thank each and every one of you for 
being here and for your patience.
    With that, the hearing is now adjourned.
    [Whereupon, at 3:20 p.m., the subcommittee was adjourned, 
to reconvene at the call of the chair.]
    [Additional information submitted for the hearing record 
follows:]

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