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





      THE KEY TO HOMELAND SECURITY: THE NEW HUMAN RESOURCE SYSTEM

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

                             JOINT HEARING

                               before the

                     SUBCOMMITTEE ON CIVIL SERVICE
                        AND AGENCY ORGANIZATION

                                 of the

                     COMMITTEE ON GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                                and the

                SUBCOMMITTEE ON OVERSIGHT OF GOVERNMENT
                 MANAGEMENT, THE FEDERAL WORKFORCE, AND
                        THE DISTRICT OF COLUMBIA

                                 of the

                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 25, 2004

                               __________

                           Serial No. 108-183

                               __________

    Printed for the use of the Committees on Government Reform and 
                          Governmental Affairs


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


                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
95-409                      WASHINGTON : 2004
____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001

                     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          ------ ------
------ ------                                    ------
------ ------                        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


                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania          RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah              THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois        MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire        FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama           MARK PRYOR, Arkansas

           Michael D. Bopp, Staff Director and Chief Counsel
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                      Amy B. Newhouse, Chief Clerk

                                 ------                                

   OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE AND THE 
                   DISTRICT OF COLUMBIA SUBCOMMITTEE

                  GEORGE V. VOINOVICH, Ohio, Chairman
TED STEVENS, Alaska                  RICHARD J. DURBIN, Illinois
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
ROBERT F. BENNETT, Utah              THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois        FRANK LAUTENBERG, New Jersey
JOHN E. SUNUNU, New Hampshire        MARK PRYOR, Arkansas

                   Andrew Richardson, Staff Director
   Marianne Clifford Upton, Minority Staff Director and Chief Counsel
                      Kevin R. Doran, Chief Clerk


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on February 25, 2004................................     1
Statement of:
    Gage, John, national president, American Federation of 
      Government Employees; Colleen M. Kelley, national 
      president, National Treasury Employees Union; and Mike 
      Randall, president, National Association of Agricultural 
      Employees..................................................    80
    James, Kay Coles, Director, Office of Personnel Management; 
      and James Loy, Deputy Secretary, Department of Homeland 
      Security...................................................     7
    Walker, David M., Comptroller General, U.S. General 
      Accounting Office..........................................    46
Letters, statements, etc., submitted for the record by:
    Davis, Hon. Danny K., a Representative in Congress from the 
      State of Illinois, prepared statement of...................    28
    Gage, John, national president, American Federation of 
      Government Employees, prepared statement of................    82
    James, Kay Coles, Director, Office of Personnel Management, 
      prepared statement of......................................    10
    Kelley, Colleen M., national president, National Treasury 
      Employees Union, prepared statement of.....................   118
    Loy, James, Deputy Secretary, Department of Homeland 
      Security, prepared statement of............................    22
    Randall, Mike, president, National Association of 
      Agricultural Employees, prepared statement of..............   136
    Walker, David M., Comptroller General, U.S. General 
      Accounting Office, prepared statement of...................    49

 
      THE KEY TO HOMELAND SECURITY: THE NEW HUMAN RESOURCE SYSTEM

                              ----------                              


                      WEDNESDAY, FEBRUARY 25, 2004

        House of Representatives, Subcommittee on Civil 
            Service and Agency Organization, Committee on 
            Government Reform, joint with the Subcommittee 
            on Oversight of Government Management, the 
            Federal Workforce, and the District of 
            Columbia, Committee on Governmental Affairs, 
            U.S. Senate,
                                                    Washington, DC.
    The subcommittees met, pursuant to notice, at 10:05 a.m., 
in room 2154, Rayburn House Office Building, Hon. Jo Ann S. 
Davis of Virginia [chairwoman of the Subcommittee on Civil 
Service and Agency Organization) presiding.
    Present: Mrs. Davis of Virginia, Mr. Mica, Mr. Davis of 
Illinois, Ms. Norton, Mrs. Blackburn, and Mr. Van Hollen.
    Also present: Senators Voinovich, Lautenberg, and Akaka.
    Staff present: Ronald Martinson, staff director; B. John 
Landers and Christopher Barkley, professional staff members; 
Robert White, director of communications; Reid Voss, clerk; 
Tania Shand, minority professional staff member; and Teresa 
Coufal, minority assistant clerk.
    Senator Voinovich [assuming Chair]. I'd like to explain 
that our Chairwoman, Jo Ann Davis, is on the floor doing 
something that's very important, getting the GAO bill passed 
this morning, something that we just got finished in the 
Senate. Hopefully we'll get that done and have the President 
sign it and we can move on with some changes in our personnel 
system here in the Federal Government.
    I am going to make my opening statement and hopefully Jo 
Ann will be back. If she's not, then we have a problem, because 
I have to leave at 10:30 to go over and cast a vote in the 
Senate.
    This joint hearing of the Senate and House Subcommittees 
with oversight of the Federal work force is extremely 
important, for we're examining the new human resources system 
for the Department of Homeland Security. When Congress wrote 
the Homeland Security Act of 2002, it required that the Office 
of Personnel Management and the Department of Homeland Security 
collaborate with the Federal employee unions to design a modern 
personnel system that meets the mission needs of the 
Department. This process has taken over a year, and just last 
Friday the administration published the regulations for the new 
human resources system for the Department of Homeland Security.
    The Department was established to protect the United States 
from further terrorist attacks. Make no mistake, the employees 
of the Department and the way in which they are managed are 
critical to ensuring the operational success of this Department 
and the security of the United States. Because September 11 
happened a while back, I think we forget, except periodically 
when the President issues an alert, that we still have serious 
domestic national security problems that need to be addressed. 
That's why we've created this new Department.
    It is my hope that this human resources system will 
facilitate the recruitment and retention of the best and 
brightest Americans into the Department. I always stated, if 
your business is going to be successful you have to have good 
finances and you have to have good people. If you've got both 
of those, you're in great shape. We need to do that in the 
Federal Government.
    It is my hope that this Department will compensate and 
treat their employees fairly, that it will provide them the 
training they need to reach their full potential and perform 
their jobs at the highest level. Training is a high priority 
with this Senator and needs to be a much higher priority in the 
Federal Government. And we hope that this system will 
facilitate productive labor management relations, which are so 
important to any successful governmental operation.
    I was pleased also that the Homeland Security Act included 
several government-wide human capital reform provisions, which 
I authored.
    As important as this is, the new Homeland Security human 
resources system is notable for another reason. It is a 
milestone in the evolution of the Civil Service. It is possible 
that elements of this human resources system could be applied 
elsewhere in the executive branch in the coming years. 
Therefore, what the Department of Homeland Security is doing 
and the imperative to get it right has implications far beyond 
the Department. I know that the unions were concerned with this 
legislation for this reason. They realize that once this is all 
over, there's a good possibility that other departments in the 
Federal Government will be asking for the same kind of 
flexibilities that exist in Homeland Security.
    Director James and Admiral Loy, I would like to compliment 
you for the manner in which you worked to design the new 
personnel system. You clearly have taken a thoughtful and 
deliberate approach that should serve as an example to others. 
I look forward to your testimony and learning the details of 
the new human resources system. I would also like to thank Clay 
Johnson, the Deputy Director of Management at the Office of 
Budget and Management, who is also involved in this important 
task.
    I must tell you that I was very concerned about the 
management function of the Office of Management and Budget. I 
always said that there was an OMB, but there was no ``M.'' This 
administration tried very hard initially to put an ``M'' into 
OMB. From my meeting with him, Clay Johnson seems to get it and 
understand that it's important that this be an open process and 
that you work with everyone.
    I congratulate you on the time you have taken. I know that 
everyone is not happy with the result, but the fact of the 
matter is that I was concerned that there might be a rush to 
get it done in 30 days, publish the regs and go through it. I 
think that you really spent a great deal of time trying to do 
this the right way, trying to give everybody an opportunity to 
share their concerns with you.
    For that I thank you very much, because you took care of 
something that I was concerned about. I think you 
conscientiously did this in a systematic way and tried to be as 
sensitive as you could to understanding that if the system 
doesn't have the input of the people that are going to be 
involved with it, in the long run it may not be a success.
    I'm also looking forward to hearing the views of 
Comptroller David Walker. Mr. Walker has been a leader on the 
human capital issue, both as an advocate of reform in the 
Federal Government and as a practitioner of that reform at the 
General Accounting Office. And as I said, that's what 
Congresswoman Davis is doing today, giving GAO more 
flexibility.
    As such, his views carry extra weight with me. I was 
pleased to introduce and advance this legislation in the 
Senate. It's my understanding that similar legislation, is 
going to pass this morning.
    Last but certainly not least, I'm looking forward to the 
testimony of the leaders of the three Federal employee unions 
that represent the greatest number of employees in the 
Department. My staff and I have enjoyed working with the 
presidents of the unions and their staff during my time in the 
Senate. I know that they have serious concerns about the new 
personnel system.
    When the Homeland Security Act was pending in Congress, I 
thought it was very important that there be a dialog among the 
administration, and the employee unions. In addition, I thought 
that the law should allow for third party arbitration of 
impasses between labor and management. That wasn't part of the 
legislation.
    Once the legislation passed, as I mentioned, I was 
concerned that the administration might rush and try to 
establish the system without conducting dialog, and as I 
mentioned, I'm glad that dialog did occur. From what I 
understand, there were robust discussions between the 
administration and the unions. While I appreciate that there 
are real differences, and I've read some testimony that 
expressed some real concerns, I'm glad that the dialog 
occurred. I hope it served to reduce the number of areas of 
disagreement. I'm sure that it did.
    The 30 day statutory collaboration period in which the 
unions will make their formal requests for changes to the 
personnel regulations has begun. I'm interested in learning 
what those requested changes will be. In addition, now that it 
is over, I'd like to hear the union presidents' evaluation of 
the collaborative process of last year.
    I might also say that one of the big concerns that the 
unions had was that the President might exercise his National 
Security Exclusionary Authority. Many of the unions were very 
concerned about this. I'm pleased that the President has not 
exercised this authoirity, as many said that he would. There's 
a provision in the law that says if he does, that it doesn't go 
into effect until 10 days notice is given, so that everybody 
knows it's going to be happening. It's not going to be 
something that's done at 2 a.m. So I'm pleased with that.
    Finally, I will be asking all of today's witnesses their 
views on next steps. It is likely that additional 
administrative or legislative changes will have to be made to 
the new system to ensure that it works as it should. I look 
forward to working with the administration, Federal employee 
unions and my colleagues on this effort.
    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, so ordered.
    I ask unanimous consent that all exhibits, documents and 
other materials referred to by Members and the witnesses may be 
included in the hearing record and that all Members be 
permitted to revise and extend their remarks. Without 
objection, so ordered.
    Senator Lautenberg and Senator Akaka, I appreciate your 
being here. Would you like to make some opening remarks?
    Senator Lautenberg. I appreciate that, Mr. Chairman. I 
thank you for convening this. I'm always happy to see Admiral 
Loy, his first name is Admiral. We can't stop calling him that. 
[Laughter.]
    Anyway, this is a very complicated situation and I think 
that having this hearing at this time is particularly 
appropriate. I wasn't here in the Congress when the Homeland 
Security Act of 2002 became law. But obviously I had an 
interest and have an interest. If I had been here, frankly, I 
would have objected to some of the personnel provisions that 
are included in the bill, particularly those that denied 
employees of DHS the same rights to bargain and to appeal 
personnel decisions afforded to other Federal employees.
    This notion that somehow or other collective bargaining 
rights threaten national security, that Federal employees who 
belong to a union are somehow suspect is, I find, deeply 
offensive. It's tiring to hear the administration's relentless 
attacks on organized labor. One came up the other day regarding 
teachers and the education association. We have to look at this 
as it affects not only the individuals but the well-being of 
our country. We have in the Federal Government, I think, an 
unusually talented, committed group of people. And I want to 
see that we respect their rights and listen to the things they 
have to say.
    In the case of the World Trade Center calamity, the first 
responders, who were civilians, filed past the victims on the 
way down, the way up, they belong to unions. I challenge anyone 
to question the commitment or the professionalism or certainly 
the bravery of the union members who gave their lives on 
September 11 trying to save other people.
    I'm a strong believer in protecting the Federal work force. 
As someone who has had fairly extensive experience in the 
private sector, I can attest to the unique commitment, talent 
and spirit of public service that we have in our Federal 
employees.
    With regard to the new DHS personnel proposal, it was truly 
comprehensive. But within the 167 page plan, there are some 
troubling and problematic provisions. I'm particularly 
concerned with a plan that allows DHS management to install 
rules, unilaterally, on the deployment of personnel and the 
assignment of work.
    I'm also skeptical about the proposed pay for performance 
system, which certainly could be subject to political 
manipulation. Who's going to make those decisions and who are 
they going to talk to as they make those decision can make a 
substantial differences in the outcome.
    Also, doing away with the normal GS system probably creates 
more problems than it solves. The new system, which sets wages 
according to the results of annual salary surveys of private 
sector workers in different occupations, different regions, 
strikes me as almost impossible to carry out in a fair manner. 
I think it's unfair to the Federal workers.
    There are conditions that may dictate a format in a region. 
But we forget that Federal employment often creates more modest 
salaries for similar jobs in the public sector than we see in 
the private sector. Private sector wages often vary regionally 
or fluctuate due to sporadic market changes. And I don't think 
that Federal pay scales should be determined by directly 
comparing public sector wages to private sector ones. Nor do I 
think that this system will effectively draw the Nation's best 
and brightest to work at DHS.
    Finally, I'm perplexed why TSA employees would be left out 
of the plan. What is there about the screeners that makes them 
different? Is it because they're brought in, if they are 
brought on as a full agency employee, they would have to be 
given the right to organize? I hope that's not the case, and I 
am anxious to hear from our good friend and distinguished 
public servant, Admiral Loy, he's very familiar with TSA, about 
whether or not the screeners at airports should be allowed to 
organize.
    These words aside, I think we share overriding goals, which 
are to attract the best human capital to DHS and make the 
working conditions at DHS the most effective and productive 
that we can for the 180,000 Federal workers who have been 
brought together from lots of different agencies and 
departments. We want them to feel good about their work so that 
their productivity can be at its highest level.
    I hope we can work together to fix some of these 
problematic components of the new plan. I welcome our 
witnesses, and Mr. Chairman, once again I thank you and I 
appreciate the opportunity to make my statement.
    Senator Voinovich. Senator Akaka.
    Senator Akaka. Thank you very much, Mr. Chairman.
    I want to say thank you to you for holding today's hearing 
on the proposed regulations establishing a new human resources 
system for the Department of Homeland Security. Also I want to 
say thank you to Chairwoman Jo Ann Davis, who has been 
unavoidably detained this morning. She certainly will be here.
    I also want to welcome Admiral Loy to the hearing and say 
thanks for many things he has done since he has been in this 
position. The Homeland Security Act required DHS and the Office 
of Personnel Management to work together to propose joint 
regulations for the new human resources system. I want to 
applaud you, Admiral Loy, and the manner in which you solicited 
and gathered input for the joint proposal.
    Although I do not agree with all of the provisions of the 
proposed regulations, I believe that the open, transparent and 
accountable manner in which these regulations were developed 
exemplify the level of cooperation and interaction expected 
under the Homeland Security Act and what I would look for in 
other reform proposals.
    The Federal Civil Service is responsible for implementing 
and managing Government programs in an effective and responsive 
manner. However, defining the proper relationship between the 
career Civil Service and elected and appointed officials has 
always been a critical issue. We share a common desire to 
ensure that all employees are able to do their job without 
undue influence.
    I would like to remind my colleagues that the Civil Service 
Reform Act was passed back there in 1978 to address the various 
conflicting responsibilities of the Civil Service Commission, 
which was charged with providing equal employment opportunity, 
ethics, protecting the merit system, overseeing labor relations 
and personnel management. Congress divided the responsibilities 
of the Commission because we found that fostering the 
principles of modern personnel management was inevitably in 
conflict with the commission's role in ensuring the application 
of rules and procedures.
    The reforms in the CSRA shored up a cornerstone of the 
Federal Civil Service system, by ensuring that Federal 
employees who are charged with protecting the interests of the 
American people have real and meaningful protections. The 
passage of the Homeland Security Act in 2002 was to provide 
managers with work force flexibility, and not reduce the rights 
and protections of the Civil Service. The act required the new 
human resources system to be based in merit principles and 
provide for collective bargaining.
    For DHS to recombine these responsibilities in the 
Department suggests that we are no longer on the same page when 
it comes to employee protections. Some of the proposals appear 
to be in direct conflict with the fundamental principles of the 
Federal Civil Service and could substantially erode the rights 
and protections of Federal employees.
    Under the proposed regulations, DHS would create an 
internal appeals process to review certain aggravated offenses 
which require mandatory firing. This internal appeals panel 
would be governed by individuals who would be appointed by and 
removed by the Secretary. There are currently no provisions for 
judicial review of panel decisions.
    In 1996, Congress granted the Federal Aviation 
Administration similar authority to create an internal appeals 
system. Despite the inclusion of certain safeguards, Congress 
reinstated appeal rights to the Merit Systems Protection Board 
in 2000 amid concerns that the internal process was unfair and 
impartial.
    The fact that the proposed internal panel at DHS would be 
selected by the Secretary and would be required to give 
deference to agency mission and operations fails to assure 
employees and even me that the panel would be objective and 
unbiased. Furthermore, the proposed changes to MSPB processes 
and the fact that DHS and OPM could eliminate MSPB appeals 
should MSPB decisions fail to give due weight and deference to 
the Department's critical mission would undermine the 
effectiveness of the independent quasi-judicial agency.
    Likewise, I am concerned that the proposed labor relations 
system at the Department could strip the bargaining rights of 
Federal employees. Granting the Secretary sole discretion to 
engage in bargaining to implement agency regulations and select 
and remove the members of a proposed internal labor relations 
panel would eliminate the very essence of bargaining and turn 
labor unions into policy advisors, rather than active parties 
and about the bargaining process.
    It has been proven time and again that there must be 
separation of management and oversight. Otherwise, conflicts 
exist. The proposed regulations, while reserving some of the 
basic rights of Federal employees, is in effect reinventing a 
square wheel. I look forward to our witnesses' testimony and 
their thoughts on how to best protect employee rights at the 
Department of Homeland Security. And I would like to also 
compliment Director James for her work on this regulation as 
well.
    Thank you very much, Mr. Chairman.
    Senator Voinovich. Thank you, Senator Akaka.
    It's the standard practice for this committee to swear in 
all the witnesses. If the witnesses could please stand, I will 
administer the oath.
    Please raise your right hands.
    [Witnesses sworn.]
    Senator Voinovich. Let the record indicate that they have 
answered in the affirmative.
    I understand that Congresswoman Davis is on her way over. 
But in order to move forward with this hearing, I'd like to 
begin the testimony this morning with Director James.

 STATEMENTS OF KAY COLES JAMES, DIRECTOR, OFFICE OF PERSONNEL 
  MANAGEMENT; AND JAMES LOY, DEPUTY SECRETARY, DEPARTMENT OF 
                       HOMELAND SECURITY

    Ms. James. Thank you and good morning, Mr. Chairman.
    First of all, I want to thank the members of the 
subcommittees and I'm grateful for the opportunity to be here 
today. I'd especially like to thank Chairman Voinovich and 
Chairwoman Jo Ann Davis and Senator Durbin and Congressman 
Danny Davis for their continued commitment to the best 
interests of Federal workers and for their steadfast commitment 
to the American Civil Service.
    I'd also be remiss if I didn't thank Secretary Ridge and 
Deputy Secretary Loy for their leadership and their cooperation 
throughout this design process. I think that working together 
in a true collaboration, I can report to the subcommittee with 
complete confidence that we are and have been united as a team 
with a single purpose and that is to create a personnel system 
that will honor those in service to our country at the 
Department of Homeland Security.
    And as you know, the bipartisan legislation that created 
the Department gave the DHS Secretary and the Director of the 
Office of Personnel Management authority to jointly prescribe 
regulations establishing a completely new HR system for most of 
the Department's 180,000 employees. Those proposed regulations, 
published last week for employee and public comment, represent 
a historic step in the evolution of the Federal Civil Service, 
rewriting the laws and regulations that govern how the 
Department classifies, evaluates, compensates and disciplines 
its employees as well as how it deals with its labor unions.
    As originally envisioned and as enacted in law, the 
regulations remain firmly grounded in and bound by our Civil 
Service system's core principles and values. As we focus on 
what is changing, I think it's also important to focus on what 
has not changed: merit, equal employment opportunity, due 
process, veterans preference, and protections against reprisal, 
discrimination and other prohibited personnel practices.
    As we discuss those proposed regulations today, it's 
important, I think, not to lose sight of their genesis. On 
September 11, 2001, our Nation came face to face with a 
horrific terrorist attack on our homeland. And it was against 
that backdrop that the President asked Congress to consider his 
proposal to create the Department of Homeland Security. That 
merger represented one of the largest of its kind since the 
creation of the Department of Defense.
    As Director of OPM, I am held accountable for preserving 
and protecting our core Civil Service principles and values in 
the new DHS HR system. And even as we seek to give the 
Department all the flexibility it needs to deal with the most 
ruthless and resourceful of enemies, it's important to remember 
those core values and those principles.
    The Department's new HR system must assure the Department's 
ability to achieve its primary mission: safeguarding the 
American people from a terrorist attack and other threats, 
natural and man-made, to our homeland security. DHS must have 
the unfettered flexibility to move people and resources without 
delay. It must be able to get the right people into the right 
jobs at the right time, give them the technology they need, and 
hold them accountable for their performance.
    I believe that the new HR system will do so without in any 
way compromising the fundamental rights of the Department's 
Civil Service. Even before the enactment of the Homeland 
Security Act, and well prior to the legislative debate, 
Secretary Ridge and I made a commitment to the Department's 
employees and major unions that if the legislation passed, the 
new HR system would be designed using a collaborative and 
inclusive process. I'm here to report today that I believe we 
have kept that promise.
    Over the course of the last 10 months, we have met and 
talked to over 2,500 DHS employees and managers in town hall 
meetings and focus groups across the country. We've consulted 
with dozens of experts to identify promising and successful 
models from the private sector, State and local governments and 
other Federal agencies as well. We worked with the presidents 
of the Department's major unions and their key staffs, 
literally providing OPM office space for the latter so they 
could be an integral part of the design process.
    And with that input and involvement, our joint design team 
developed and presented an impressive array of options to top 
DHS, OPM and Federal employee union officials for careful 
examination and discussion. Those officials, along with a 
number of highly regarded experts in the field of public 
administration, provided Secretary Ridge and me with a 
thoughtful review of the options that inform the development of 
the proposed regulations we published last week.
    Again, none of this was required by law. It was just the 
right thing to do to identify the best thinking and make 
employees inside DHS equipped to succeed. And I should say that 
we will hear as we go throughout the hearing today that at the 
end of the day, we may not all agree on the outcome. But the 
process is not yet over. We are in the comment period, and we 
are looking forward to that part of the process as well.
    Such openness and inclusion are absolutely essential to any 
large organizational transformation. Secretary Ridge and I want 
employees and unions to have a voice in the process. And while 
we may not be able to alleviate all of their anxieties nor 
satisfy their every request, their honest involvement has 
contributed significantly to its high quality and will help 
shape the future outcome.
    Secretary Ridge and I are both committed to continuing this 
open and inclusive, transparent collaboration as we begin to 
finalize the regulations and then start the implementation 
process. In doing so, we will realize the promise and the 
historic opportunity of the Homeland Security Act.
    I want to thank you again for the opportunity to testify 
before you today and look forward to an engaging dialog. Thank 
you very much.
    [The prepared statement of Ms. James follows:]

    [GRAPHIC] [TIFF OMITTED] T5409.001
    
    [GRAPHIC] [TIFF OMITTED] T5409.002
    
    [GRAPHIC] [TIFF OMITTED] T5409.003
    
    [GRAPHIC] [TIFF OMITTED] T5409.004
    
    [GRAPHIC] [TIFF OMITTED] T5409.005
    
    [GRAPHIC] [TIFF OMITTED] T5409.006
    
    [GRAPHIC] [TIFF OMITTED] T5409.007
    
    [GRAPHIC] [TIFF OMITTED] T5409.008
    
    [GRAPHIC] [TIFF OMITTED] T5409.009
    
    Senator Voinovich. Thank you very much, Director James.
    Admiral Loy.
    Admiral Loy. Good morning, Mr. Chairman, Chairman Davis 
when she arrives, and to the rest of the members of the 
committee. Thank you very much for a chance to discuss this 
enormously important foundation element for moving this new 
department forward in the service of our country.
    You all have been enormously strong advocates for the 
General Service schedule system over time. And it is enormously 
important that we continue to inter-operate, if you will, 
together to sort our way through the tail end of this process 
that we've undertaken to get this very important piece right.
    Secretary Ridge is testifying elsewhere today and asked me 
to join Director James for this hearing. I'm honored to do so, 
and would offer my written statement for the record if I may, 
Mr. Chairman, and mention just a few points as a part of an 
oral opening statement.
    First, we report to you today on a task that was explicitly 
offered by the Congress in the Homeland Security Act. The 
challenge so offered recognized the importance of licensing the 
Secretary and the Director to design a new HR system that would 
meet the needs of our time to get past the times of the past, 
including the cold war or even World War II kinds of thoughts.
    The General Service system has served this country 
enormously well. But like so many things identified with the 
cold war, it simply fails to measure up to the needs now clear 
to all of us in the very different post-September 11 security 
environment. We must build a sense of urgency in to our HR 
system, just like we have done with equipment or procedures or 
protocols or tools elsewhere in the other aspects of DHS 
responsibility. We at DHS have been challenged to think and act 
in bold, broad, 21st century ways. And I can offer dozens of 
examples of having done exactly that.
    We must now do so after a very sound, methodical review 
with our HR system. I for one believe it's a fundamental key, a 
very real foundation block, for doing what America expects of 
this new Department.
    What do we want to accomplish? First, we want to be able to 
meet mission, to meet mission which, as the chairman mentioned, 
causes us to remember September 11 on a daily basis one way or 
the other. Our system must be designed to safeguard America and 
its citizens from terrorist attack and from threats, natural or 
man-made. September 11, September 11, September 11. Remember 
that terrible day. It's our generation's Pearl Harbor or our 
Alamo. And given that people make the choices and do the things 
to preclude recurrence, this HR system is every bit as 
important to rethink and rebuild as any intelligence system or 
any sophisticated sensor.
    Clarity, simplicity, efficiency, agility, adaptability, 
these are all elements of something called transformation that 
will make the difference for us. Lots of things tie for sort of 
a distant second place. But we must be very concerned about 
attracting and retaining the very best we can in the Federal 
work force. We must reward performance instead of longevity. We 
must provide competitive pay in job categories in local as well 
as national markets. And we must protect all merit principles, 
including whistle blower provisions that the Director has 
already itemized.
    We must demand timely, efficient decisions from our 
processes and from our people. Key flexibility areas for us 
have to do with deployment, have to do with technological 
inserts, have to do with people assignments, those things our 
HR system must support. We believe we have done so in the four 
basic areas that we were by law allowed to change. There are 
actually six that sort of tend to converge on four.
    Remember, our work force is in great majority those people 
on line operationally, actually doing this work for America. 
This is not like DOD, so to speak, where civilian support, 
enormously important, is not what is actually on the line doing 
the work. In DHS, it is the civilian Federal work force in the 
trenches.
    A word on process, Madam Chairwoman. We are very proud of 
the inclusiveness and of the thoroughness of our process. 
Director James and Secretary Ridge met even during 
congressional dialog and deliberations on the law. Meetings 
were held with key union officials, experts were consulted and 
the work force members were polled for ideas.
    A design team was formed of over 80 people, experienced 
experts as team leaders, union members, representatives from 
work units across the Department, supervisors, managers, 
consultants, HR inputs literally from across the land. Sixty or 
more town hall meetings were held, and more focus groups than 
that, with our own work force members at DHS. Senior DHS 
representatives were on the stump listening to concerned work 
force members. Enormously high quality inputs were received.
    The process produced concepts and ideas then offered to a 
senior review committee. I sat on that committee with senior 
DHS colleagues, with agency heads, with assistant secretaries, 
with the three Union presidents, with academics, with public 
administration experts and for 3 days, we listened very 
carefully to the presentation from the design team in a very 
public forum, robust with discussions and presentations.
    The Secretary has since sat down personally, as did Ms. 
James, with union presidents to ensure we heard their concerns 
and ideas, even beyond the senior review committee. The final 
product in the proposed regulations published on Friday 
reflects significant listening and idea incorporation.
    Madam and Mr. Chairman, this is anniversary week for DHS, 1 
year. We have just completed our strategic plan for the 
Department, our vision, if you will, of the way ahead. One of 
our seven strategic goals is organizational excellence. This 
new HR system is our chance, with the Congress' blessing, to 
step up and do the right thing. This new system will pay for 
performance when lesser performance would jeopardize America. 
It will clarify and simplify job classifications. It will 
recognize differences in local variations in pay markets. It 
will ensure the ability to act quickly and decisively when 
appropriate to secure America. It will introduce new technology 
now to improve performance. It will resolve disputes quickly 
and fairly. It will protect merit principles. It will set 
standards for all of Government to emulate, and it will 
preserve union bargaining rights over important working 
conditions.
    I believe this is the right system for the right time. As 
the Director mentioned, we began on Friday a 30 day comment 
period which offers still more opportunity to work with the 
committee, with the members and the staff, to work with the 
unions, to work with all who would comment, so that at the end 
of that effort, we will have the very best system we can 
possibly design.
    I believe this is one of the most important changes we 
potentially can make in furthering the mission of this 
Department. The comment period began Friday, we look forward to 
offering every opportunity for continued dialog. This is a 
chance for us to discuss proposed regulations that have the 
potential to continue the evolution the chairman spoke of in 
this system that serves America so well.
    Thank you, Mr. Chairman. I look forward to your questions.
    [The prepared statement of Admiral Loy follows:]

    [GRAPHIC] [TIFF OMITTED] T5409.010
    
    [GRAPHIC] [TIFF OMITTED] T5409.011
    
    [GRAPHIC] [TIFF OMITTED] T5409.012
    
    [GRAPHIC] [TIFF OMITTED] T5409.013
    
    Senator Voinovich. Thank you very much, Admiral.
    I want to make one comment before I turn the meeting over 
to my co-chairman, Representative Davis. I envisioned that we 
would be having this hearing after you did your 30 day period. 
And this is going to give everybody, including those that are 
proposing the regulations and those that have some questions, 
to comment publicly during this period. In other words, even 
without this hearing, there is a chance for everybody to look 
in and see what's going on and what your recommendations are 
and what the concerns are of stakeholders.
    I was pleased to hear from you, Director James, that it's 
not over, that you're still listening. That's very positive. 
Again I want to thank the two of you and the team that you have 
for taking the time to try and do this the right way.
    Senator Lautenberg. Mr. Chairman, I have a question. I 
assume the record will be open, because we have a vote now over 
in the Senate, and we'll submit our questions in writing. We 
thank our colleagues from the House for joining us for today's 
very important hearing. We look forward to an outcome that's 
going to try to satisfy everybody. Ms. James and Admiral Loy, 
you're both used to this kind of thing, so we know that it's 
going to come out right. Thank you very much.
    Mrs. Davis of Virginia [assuming Chair]. Thanks for your 
patience with our musical chairs here. Today's sort of been 
Murphy's law, if it could happen, it will, and it has. I 
apologize, I had to go over to the floor to manage the GAO bill 
that is a very important piece of legislation we passed out of 
this committee. So I do apologize.
    I'm not going to take the time to do an opening statement, 
other than to publicly say how much I appreciate Senator 
Voinovich and his leadership on this issue as well. It's just a 
real pleasure to work with him. I thank him and his colleagues 
for coming over today.
    I would like to recognize our ranking member, Mr. Davis, if 
you have an opening statement.
    Mr. Davis of Illinois. Thank you very much, Madam 
Chairwoman. Because of the logistics of what I've got to do, I 
am going to read an opening statement and ask that the 
witnesses just give me the opportunity to do that.
    Chairman Davis, House and Senate colleagues, witnesses and 
observers, we have embarked on a sad and troubling era in the 
history of Civil Service. The enactment of major legislation 
transforming the personnel systems of the Government's two 
largest agencies, DOD and DHS, has broken the back of a Civil 
Service that is grounded in the fair and equitable treatment of 
employees.
    Proponents of these changes argue that the current system 
is cumbersome and inflexible. But are agencies that are being 
granted exemptions from Title V fixing what is cumbersome and 
inefficient with the system, or simply what is inconvenient? 
Regrettably, the fixes imposed are radical, undermining the 
rights of workers, while empowering management in a 
disproportionate, unbalanced manner.
    This ad hoc and non-transparent approach to reform will not 
serve us well. I suspect it will make it more difficult to 
maintain stability within our work force. I am concerned that 
productivity and customer service may suffer as a result.
    The title of this hearing has it almost right, the Congress 
and this administration have thrown out the key protections 
that employees relied upon to ensure fair treatment and a 
stable work environment, their appeal and collective bargaining 
rights. This was done, the proponents say, for the sake of 
homeland and national security. I greatly doubt, however, that 
the record will reflect that this sacrifice has made America 
any more of a homeland or any more secure.
    I thank the witnesses for coming and look forward to 
hearing the rest of their testimony, and thank you, Madam 
Chairwoman, for holding this hearing.
    [The prepared statement of Hon. Danny K. Davis follows:]

    [GRAPHIC] [TIFF OMITTED] T5409.014
    
    Mrs. Davis of Virginia. Thank you, Mr. Davis.
    Again, I'd like to say thank you for your patience to all 
of our witnesses who are here today.
    I'd like to start out with an opening question to, I guess 
this would be to Admiral Loy. What do you believe to be the 
most significant improvements to managing your employees that 
would result from implementing your proposed new personnel 
system?
    Admiral Loy. Madam Chairwoman, I think the sort of general 
notion of why we think this undertaking is so important 
probably goes back really to the dialog that was part and 
parcel of the Congress' deliberations that resulted in the 
Homeland Security Act. This world we are living in post-
September 11 is just a dramatically different security 
environment than we have ever lived in before. For several 
hundred years, we took great comfort in these wonderful moats 
called oceans on either side of us that precluded, we felt, 
literally up to September 10, 2001, an opportunity for this 
impenetrable superpower to be challenged in ways that all of a 
sudden manifested themselves on September 11.
    And in the midst of that mission that has been offered to 
this Department to take on for the Nation, that is to secure 
homeland and its citizens against those kinds of attacks, we 
need the attributes of agility and quickness and adaptability 
that are not necessary part of a system that requires so much 
conversation in advance of action.
    We want very much to hold onto what was at the heart of the 
1978 legislation. As you go through our recommended package, 
you will find attention and devotion to those principles from 
the beginning to the end. So the notions of merit and whether 
it's about the end, the boards that currently define our lives, 
even things like the EEOC and others, we are fundamentally 
supportive that those notions continue as support elements for 
our work force.
    But we also want in this very new security environment to 
attract and retain high performers. We want to reflect on 
what's different about a locale in Portland or Chicago or Los 
Angeles that could make us competitive with local folks in the 
hiring process, to make sure we get the best employees there. 
We want to reward and incentivize performance rather than 
longevity in the process of due course of business. We want to 
induce timeliness and efficiency in everything we do. And most 
of this often occurs in the pre-event world that we live in 
today.
    So as we are in the prevention and protection business of 
our security conscious Nation, those attributes in an HR system 
are fundamental to the foundation of being able to do those 
things well.
    Mrs. Davis of Virginia. Your regulations, your plans that 
we've seen, they have a lot of changes for Federal employees. 
And I know they're very nervous. How can you assure our 
employees that they are going to be treated fairly when it 
comes to the pay system?
    Admiral Loy. I think there absolutely must be a marketing 
dimension, a training dimension and education dimension to our 
effort over time. It's a matter of not being ready to turn the 
switch on, so to speak, until that education and marketing 
effort has been accomplished.
    We, if you look carefully in the President's budget request 
for 2005, a lot of dollars are being asked for that allow us to 
make an investment in the training required, so that 
supervisors are very good at the performance and appraisal 
systems that we are considering putting into motion through 
this new system. We want very much to hold on to those aspects 
of the Civil Service system at the moment that has sort of 
served us so very well in protecting the interests of the 
Federal work force.
    Senator Lautenberg's comments were right on track, the 
heroism of Federal employees on September 11 or on any other 
day is not in question here. I have found myself either in 
uniform or in public service for almost 45 years. I have yet to 
find a Federal worker who comes to work in the morning with the 
intention of not doing a good job. They come with the intention 
of doing all that they can to do what we need to do.
    So there's never a question in any of the design work about 
whether we mistrust or whether there is some challenge 
associated with why we're doing what we're doing. We're doing 
this because the new security environment, which is largely 
resident in the Homeland Security Department, requires aspects 
of work from employees that we cannot hope are there any more, 
we must mandate that they be there.
    Mrs. Davis of Virginia. My time is up, but I want to 
followup with one quick question on the pay, because I think 
that's one of the things that is probably worrying the 
employees more than anything. Verbal communications can be used 
as a basis for performance. Can you give me an instance of when 
a supervisor or manager would use a verbal communication for a 
performance expectation as opposed to a written communication, 
and then that verbal communication be used toward their 
performance? I think I have that right.
    Admiral Loy. I think it is right on to one of the sensitive 
foundation blocks of how we deal with performance appraisal on 
one hand, then hold accountability in terms of performance to 
that. I think there are probably countless examples of where a 
supervisor in the thrust of crisis or the notion of preventing 
a crisis from coming on would deliver verbal direction to an 
employee to do things that perhaps are outside the mainstream 
of the 24 by 7 kind of work that employee does.
    Holding that person accountable thereafter to the kinds of 
things that truly make a difference to whether or not this 
Nation handles the upcoming crisis well or poorly is along the 
line of what you're talking about, Madam Chairwoman. And the 
ability that we have to have that agility within the system, 
such that whatever the written performance process is can be 
adapted, can be made agile by verbal instructions to get work 
done that absolutely must make a difference in our ability to 
secure America are the kind of things we need to go to.
    Mrs. Davis of Virginia. My time has expired. I'm going to 
go on to one of my colleagues, but we may have a chance for a 
few more questions.
    Admiral Loy. If I may, just a couple globals. No jobs lost, 
no pay loss as we enter this new system, and an opportunity 
over time to effect a sort of pay process that recognizes 
across the board increases on an annual basis, very much a part 
of what we listened carefully and heard from union 
representatives during our debates. Discussions associated with 
local differences between categories of work in one corner of 
the country or another, the opportunity to reflect that on a 
fair and equitable basis to Federal employees with their local 
competitors for those same kinds of jobs.
    And then last, the idea that superior performance can be 
incentivized by yet additional dollars coming your way as both 
a reward and incentive for continued high performance. That 
notion, as a pay for performance which still holds onto the 
basic principles of satisfactory performance yielding pay 
raises on an annual basis is a systemic notion that we have to 
educate and sell to our employees.
    Mrs. Davis of Virginia. Thank you, Admiral Loy. I might say 
on the process, I was delighted to hear that you included so 
many people for the input on that process.
    I'd like to yield now to Ms. Holmes Norton for questions.
    Ms. Norton. Thank you, Madam Chairwoman.
    This is an important hearing. I can only hope that the good 
oversight, Madam Chairwoman, that you're offering, has some 
effect on OPM. I regret that we seem to be on a kind of 2 day 
week, which is a 1-day week, I have another hearing at 11 
o'clock, I'm the ranking member and may have to run back and 
forth.
    Let me say that what I look for when there's a change is 
evidence of best practices. Because frankly, I sympathize with 
what you're having to do in designing a new department, making 
sure that personnel, along with everything else, comports with 
what we need in the new era of global terrorism.
    But I have to tell you, I was a member of three corporate 
boards before I became a Member of Congress. I was also a 
member of a UAW appeal board. I got to see on both sides how 
corporations, these were magnificent corporations, some were 
organized and some were not, and I got to see how unions go 
with things, up close. I also taught labor law.
    So when I look, I come at it with eyes that go in several 
different directions. The first thing it seems to me you do 
when you're faced with your kind of problem, which is to take a 
whole personnel system, turn it on its head and think, what 
effect will this have on the people who are going to work here, 
particularly if they're dealing with homeland security. Because 
you can mess with the morale and the way people do their jobs 
in a number of agencies. You mess with this, you're messing 
with us.
    So I'm really looking for evidence of best practices. My 
question is, where did all of this come from? Because I don't 
see in this much that indicates what I understand to be best 
practices. You will see that employees think, well, what's 
happening there are excuses to do the kinds of changes that 
management has always wanted to do. I have problems with 
consultation. I have problems with changes that seem to me to 
be truly gratuitous.
    Let me give you an example. I can understand the reduction 
of bargaining on some matters, we're talking about the Homeland 
Security Department. But here you've come forward with 
permissive subjects, now, permissive subjects, are no longer 
subject to bargaining, even at the agency's discretion. Well, 
then agency might decide, I may be able to implement this 
matter more easily if I sit down and negotiate with my 
employees. And management is going to say, I don't even want 
that discretion. And you're telling me that a Fortune 500 
company would in fact do that.
    Another example of gratuitous changes, why in the world 
would you want to eliminate the post-implementation bargaining? 
I mean, you've already done it. Bargaining doesn't mean that 
you have to do what the other side says. Why in the world 
eliminate that? And have you thought about the effect you're 
having on your employees? I want answers to both of those 
questions. Why you have eliminated those, and what factor has 
gone into the fact that you are fooling with folks who have 
undergone the most humongous change in their work life, and 
what effect is this going to have, not on how they feel, but on 
whether they do the job they do have to do in a sensitive 
agency charged with protecting the residents of the District of 
Columbia and the United States of America?
    Admiral Loy. Let me take a stab at it first, Ms. Norton. 
Absolutely we are sensitive to the impact this would have on 
our work force. That is largely why the design process was so 
inclusive, to hear from thousands of them in the due course of 
the design work undertaken. Beyond that, we had at the table at 
our design team and at the senior review committee consultants 
from, I don't know if it was those specific Fortune 500 
companies that you were part of, but we reached into corporate 
America, we reached into all those corners you describe, 
whether it was academic, consultative expertise, to get the 
best practices, as you describe them.
    Ms. Norton. So the bargaining at an agency's discretion, 
when management says, I want to be able to bargain, you're 
telling me that Fortune 500 companies have said, that's a best 
practice, that's how to get the most out of your employees?
    Admiral Loy. What you asked me for, ma'am, was a 
description----
    Ms. Norton. I gave you an example. I really gave you an 
example so you wouldn't be talking in abstractions. I gave you 
a concrete examples of what, that I regard, because I don't 
think everything you've done here is wrong. I gave you a 
concrete example of something that I believe no Fortune 500 
company that looks at its bottom line would do. And I want to 
know where that came from.
    Admiral Loy. It came from the dialog of the debate that we 
took on over the course of this 9 months. The discretion at DHS 
about bargaining is arrived at the Department. So our challenge 
in that regard was to build a system that recognized that 
discretion. And it has to do--every moment of this goes back to 
the----
    Ms. Norton. This is at the discretion, Admiral Loy, this at 
the agency's discretion. I want you to tell me why, if the 
agency in its discretion wants to bargain about certain issues 
because it believes that is the best way to get the maximum 
from its employees, how that hurts management.
    Admiral Loy. We just feel that the discretion of that 
bargaining should be at the Secretary's level at DHS, ma'am, 
given the mission that we have to conduct for the country.
    Ms. Norton. So this agency is going to be run from the top 
up by somebody who has nothing to do with folks at the 
management level, and even if the agency wants to decide that 
on certain issues the best way to get this done. That's what 
I'm talking about, to get this done is in fact to operate in a 
consultative way with employees. You say the top of the agency 
should make that decision.
    Admiral Loy. We believe so.
    Ms. James. I would just add as another factor, at the 
discretion of the Secretary, because of the unique mission of 
the Department of Homeland Security, with the information that 
may exist at the Secretarial level that may not exist at the 
agency level, that it certainly would be important to have the 
input of the Secretary to make those determinations.
    Ms. Norton. I have no problem with input. What I'm asking 
is, suppose there's input and the agency and the Secretary have 
a discussion, and the Secretary gets, it looks as though this 
is a Secretary's decision period, like it's not up for 
discussion because there is no discretion.
    Ms. James. I'm sure that there would be that kind of give 
and take. But at the end of the day, that kind of discretion 
needs to rest with the Secretary, because of the unique mission 
of that Department.
    Ms. Norton. But there is no discretion. So I take it that 
the Secretary doesn't even have the discretion.
    Admiral Loy. But he does, ma'am. The Secretary has that 
discretion to make the choice as to whether or not he wants to 
do that at the agency level.
    Ms. Norton. So you're telling me that the Secretary then--
--
    Admiral Loy. Can make that judgment.
    Ms. Norton [continuing]. Can decide that there will be 
bargaining on permissive subjects and that is your intent here?
    Admiral Loy. Yes, ma'am.
    Ms. Norton. Thank you very much, Madam Chairwoman.
    Mrs. Davis of Virginia. Thank you, Ms. Norton.
    I'd now like to yield to our distinguished co-chair, 
Senator Voinovich.
    Senator Voinovich. I apologize for having to skip out. In 
examining the proposal, it's clear there are still many details 
to be worked out. If any of these questions are redundant, just 
say we've answered it already and I'll look at the record.
    When do you plan to have all the details of this new 
personnel system worked out? Will there be additional 
regulations issued? Will additional rules be issued as 
directives as opposed to regulations? Is this being done 
intentionally so as not to cast anything in stone, so to speak?
    Ms. James. Let me just speak a minute to the process. We 
are now in the comment period, and I believe this is one of the 
most important periods in the entire process. For those who 
watch these things carefully, we have gotten to the point where 
we have issued the regulations, they are out there in a very 
transparent way.
    When Secretary Ridge met with the union presidents, he 
encouraged them to keep the dialog open, and at the end of that 
period, we will sit down, this has been a collaborative process 
from the very beginning. We are in a period where we still have 
the opportunity to refine, if necessary, to receive input from 
Members of Congress as well as from our union presidents, as 
well as from employees within the Department. And we are 
listening to and incorporating their ideas and comments as 
well.
    I would add to what Admiral Loy said in terms of the 
admonition that we look at best practices. I can assure you 
that we did, that we had some of the best subject matter and 
technical experts in the country, as well as from the Academy, 
as well as from good government organizations. And this is the 
culmination of that process.
    Senator Voinovich. The point I'm making is, after this is 
over with, are there going to be any additional rules issued as 
directive as opposed to regulations? In other words, are the 
regs going to be comprehensive so that we can pretty well say 
that's it, and not have some new directives coming out later 
on?
    Ms. James. I think the regulations will be very 
comprehensive. But for those who have been at this a long time, 
they know that the implementation and how this gets interpreted 
is as important as well. For that reason, the Secretary and his 
staff, have come up with a very comprehensive implementation 
strategy, which is inclusive as well. So those individuals who 
have been at the table for the development of the regs will be 
at the table for the implementation as well.
    Senator Voinovich. That's what I'm getting at.
    I'm also concerned about parity between the classification 
and compensation systems of law enforcement personnel. As you 
know, GAO noted in a study published last year that TSA, which 
was given great personnel flexibility, drew away hundreds of 
uniformed officers from Capitol Hill Police, the Uniformed 
Secret Service and the Park Police. While this was beneficial 
to TSA, it was detrimental to these other police forces that 
are facing the same challenges of greatly increased security in 
the face of possible terrorist attacks against national 
leaders, facilities and monuments.
    What did your design team do to avoid similar unintended 
consequences with this personnel system? As you know, I've 
asked OPM to conduct a study of Federal law enforcement pay and 
classification. That study is due on April 30th of this year. 
What I'm getting at is, what have you done to recognize that's 
a problem, so that once this is over we just don't have various 
agencies cherry picking other agencies because of the better 
pay that's being provided?
    Ms. James. I think that's one of the reasons why it's 
important Congress did what it did by including OPM in the 
process. Because we do have that Government-wide eye and have 
the opportunity to say, if something happens over here, what is 
the implication and the impact over here. We want to make sure 
that the Department of Homeland Security has the best personnel 
systems that will meet their mission.
    But we also have an obligation and an ability to look 
Government-wide. So we always had one eye to that.
    What I would say is that in the process of designing their 
pay systems and their classification systems, and they sort of 
go hand in hand, that the simplified structure and the 
increased flexibility that they have will give them the freedom 
to make sure that those very issues that you addressed are 
looked at, and with an eye toward what the implications are 
going to be across Government. We've got to bring some, and if 
the Senator gets to the larger question of the flexibilites 
that we grant at the individual level for the departments and 
the unintended consequences that they have Government-wide.
    And I think as we designed these systems within the 
Department of Homeland Security, our desire was to make sure 
that even within the Department there was not the opportunity 
to cherry pick between the various agencies. And Admiral Loy 
may want to talk about how they're going to address that 
internally.
    Admiral Loy. Just a moment, sir. First of all, I have to 
confess to being the cherry picker at TSA when much of that was 
going on with the immediate crisis of staffing that agency and 
getting the job done that the Congress demanded and the very 
aggressive deadlines that were offered in that earlier 
legislation, the Aviation Transportation Security Act.
    I think there is work to be done here, sir, and I think 
there is also congressional opportunity for participation. As 
you know, we can touch pay but not benefits. So we're in the 
algorithm of total compensation, the adjustments that might be 
going on locally or might be going on elsewhere in the Federal 
service, have a different benefit package than--we can't go 
there. So the inconsistences may be more than in just pay 
itself. That will take the consciousness of the Committee to be 
helpful, perhaps, with respect to sorting those kinds of things 
out when appropriate.
    One initiative, for example, sir, that we've undertaken in 
the Department is the new CBP officer, this new organization 
agency that has been created by a combination of what 
heretofore has been INS functionality and Customs 
functionality, and even the Agriculture piece that has come 
over into the Department. The new Customs and Border Patrol 
officer will have one uniform, one package, one set of pay 
benefits and that will have already begun the process of 
eliminating that internal cherry picking, if that is the term 
of art we're using today, within the Department, and as an 
example for where we can do things better, if you will, across 
the board.
    I also think Kay's comment about OPM's role in our 
collective design work, she brings to the table concerns across 
Government in other agencies that make sure that we are not 
designing something that ends up being problematic elsewhere.
    Senator Voinovich. I'd appreciate a memo from you on how 
Congress can get into that. If you're looking at a benefits 
package, you've got to compare the whole thing.
    Admiral Loy. Yes, sir. Uniformed services, Secret Service 
pay package is established in law. There are other elements of 
other agencies' forces that are established in law. So we are 
bound by those as we deal with making an effort toward 
consolidating our notions across the board for the Department.
    Senator Voinovich. Is my time up?
    Mrs. Davis of Virginia. You can take as much time as you'd 
like, Senator.
    Senator Voinovich. Admiral Loy, in your opening statement, 
you made reference to the regulations removing the requirement 
for collective bargaining over the impact and implementation of 
core management rights, including deployment of personnel, 
assignment of work and use of new technology. Can you provide 
specific examples of actual situations in the past where 
collective bargaining over these types of activities prevented 
management from meeting mission needs?
    Admiral Loy. I think there are, I use the phrase 
prevention, on the prevention side of a God forbid event, in 
order to make certain that we have transformed the force and 
the authorities associated with using the Federal force to get 
people in places that we need them immediately without, and 
when I say immediately, it's sort of whatever the intelligence 
stream is telling us at the moment. It's about the idea of 
taking a product that has just been perfected by our science 
and technology work in the Department and instantly getting it 
into the force so it's a usable sensor wherever it might be 
necessary.
    So the notions of deployment, the notions of assignment, 
the notions of technology to be used as efficiently and as 
quickly as possible broaches the requirements that we have 
offered in the bill.
    There's a number of things in the past where the idea of 
new national procedures, for example, if the agency determines 
that we can use U.S. Visit, the new program, in a manner 
different than we have heretofore used it, because we've 
uncovered a new protocol, or uncovered a better way to do it, 
and there are people implications to it, we need to be able to 
take advantage of those kinds of things immediately. The idea 
associated with technology, if the VACA system in our ports all 
of a sudden has dimension to it that allows us to be more 
sensitive to bio and chemical threats to the Nation and it is a 
requirement that our people be so trained to use it 
immediately, we don't want to wait over time until those kinds 
of things can be put into place.
    Senator Voinovich. Are you saying that the examples that 
you gave me are all subject to collective bargaining and would 
slow the process down?
    Admiral Loy. At the moment, many of them could be, yes, 
sir. And we believe in the interest of mission, which is always 
where our least common denominator goes back to, we want to 
make absolutely certain that mission is served first in this 
new Department.
    Senator Voinovich. I'll just ask one more. I'm sure this is 
on a lot of people's minds. The power of the Secretary to 
remove members of various boards described in the regulations 
may cause employees to question their independence. How do you 
plan to ensure the independence of members on the labor 
relations board and the mandatory removal panel?
    Admiral Loy. I'll let Kay join me in the answer. The bottom 
line is, we imagine terms to those boards, so that it's not a 
situation where the Secretary can appoint today, unappoint 
tomorrow, rather that the terms associated with the 
appointments to those boards would be such that the opportunity 
for mischief, as someone had termed it earlier, is simply 
minimized or eliminated, we would like to think.
    The real notion here is those boards must be sensitive to 
the mission of this Department as it is being driven by the 
Secretary. That requires a sensitivity to the work to be done 
and therefore requires a sensitivity to how the kinds of appeal 
process things might come forward to it.
    There is a notion in the regs that has prompted a number of 
comments with respect to those mandatory removal offenses, and 
what that inventory might be and how does the Secretary appoint 
at the moment a board to review an appeal from an adverse 
action associated with that process. In that instance, I would 
offer first of all, we imagine a very, very small number of 
those kinds of things. They are enormously egregious notions.
    For example, on the line as a CBP employee at the portals 
of our country taking a bribe to allow someone to go through 
the system without being tested, without being dealt with as 
appropriately as the protocols call for. The notion of 
intentional abrogation of classified material to sources that 
we simply don't want to have them, it's that kind of egregious 
offense that would cause the Secretary to have concerns and 
nationalized mandatory removal as a penalty for such 
activities.
    That list, I think, will be enormously short. It is still 
to be developed. And I reinforce the notion that Director James 
has from the very beginning here today: this remains a work in 
progress for us and the comment period that has just begun on 
Friday is our last best chance to get the best ideas on the 
table that we can. But those kinds of notions, sir, I think go 
directly to your question.
    Senator Voinovich. It's really important that these boards 
are looked upon as being independent.
    Admiral Loy. Independent and objective, yes, sir.
    Ms. James. Madam Chairwoman, can I just state the obvious 
in answer to that question? That is, for those boards to be 
effective at all, they must be credible. And they must be 
credible to the employees. So the Secretary, of course, in 
making his selections for who would serve on those boards, 
would have to identify individuals that pass the straight face 
test in terms of credibility.
    I believe that with the integrity of the Secretary and the 
people that he could draw from, you can put together boards 
like that. I'm confident that he will, that employees will feel 
comfortable going before them.
    Senator Voinovich. I've been involved with lots of boards, 
at the State level and the local level. If we put some 
provisions in there that they have to be composed of so many 
Republicans, so many Democrats, we balance it and try to get 
good people. The fact that we go through that process adds 
credibility to those boards and commissions. If you're going to 
replace a familiar system with a new one, it's really important 
that it be considered legitimate, and as you say, pass the 
straight face test.
    Admiral Loy. Yes, sir, I could not agree more. In fact, 
it's one of the things that we received an enormous amount of 
commentary from our own work force on, was not so much the 
makeup and getting the right answer at the other end, which of 
course goes without saying, but the timelines associated with 
getting those questions resolved quickly is very, very 
important to the work force at large. They want those answers 
back quickly so they can get on with their lives.
    Senator Voinovich. Thank you.
    Mrs. Davis of Virginia. Thank you, Senator. I just want to, 
on this point, clarify something. The credibility of who the 
Secretary appoints wouldn't concern me so much as, and I just 
want to make sure that I heard your answer correctly, Admiral, 
to clarify. In there I think it says that the Secretary can, 
they're appointed for fixed terms, they can be removed for 
inefficiency and some other nebulous sorts of words. But if I 
heard you correctly, there is going to be something prepared 
that will specify what is inefficient, exactly for what reason 
the Secretary could remove the person from the Board.
    But what I'm getting at is, what would keep the Secretary 
from saying someone is inefficient just to remove someone that 
he doesn't care for and he doesn't like the way they've been 
handling the problem?
    Admiral Loy. I think that's a very, very good point and we 
must be very specific in the terms associated with both 
appointment and potential causes for removal.
    Mrs. Davis of Virginia. So you'll be doing that, because 
it's a work in progress?
    Admiral Loy. Yes, ma'am.
    Mrs. Davis of Virginia. Thank you.
    I would now like to recognize the gentleman from Maryland, 
Mr. Van Hollen.
    Mr. Van Hollen. Thank you very much, Madam Chairwoman.
    I would like to get an update on where you are, I just 
wanted to focus on the questions of rights in these 
regulations. As I understand it now, there are certain types of 
so-called infractions that would result in an in-house panel as 
opposed to the Merit Systems Protection Board, is that right?
    Admiral Loy. That's right, sir. And a singular source that 
would be dealing both with performance and conduct kinds of 
things, rather than multiple sources, as indicates today.
    Mr. Van Hollen. How would the members of that internal 
review board be chosen? The question is, if we're going to 
substitute this internal review board for what is clearly an 
independent board, we want to make sure that it is perceived to 
be fairly selected by the employees who could conceivably be 
coming before the Board. What is the plan for that?
    Admiral Loy. The plan is largely as we have just been 
discussing, sir, which would offer the Secretary the 
opportunity to make credible appointments to that internal 
board that face the music, so to speak, of objectivity and 
credibility in the fashion we were just describing.
    Mr. Van Hollen. Will you be consulting with the 
representatives of employees in making that selection?
    Admiral Loy. Absolutely, those conversations would in fact 
take place.
    Mr. Van Hollen. As I understand it, with respect to appeals 
that do go to the Merit Systems Protection Board, the new 
regulations eliminate the MSPB's current authority to modify 
agency imposed penalties. Why would we do that in these 
situations?
    Admiral Loy. Well, it's conditioned on the notion that 
charges are sustained by the board and on the occasion of the 
sustainment by the MSPB on the chargee that would come to it, 
the system as designed would not permit the MSPB to make 
adjustments. They can make recommendations to adjusting, but 
the Secretary would have the final say on the results of that 
deliberative process.
    Mr. Van Hollen. Is that different than appeals that take 
place in other agencies throughout the Government?
    Admiral Loy. At the moment, the MSPB can in fact make 
adjustments downward, for example, in the penalty process, if 
you will, that would be forthcoming.
    Mr. Van Hollen. I mean, the idea of having an appeal, 
obviously, to the MSPB to have this independent authority, if 
they conclude that the penalties applied by the Department are 
unfair, at this independent body, why wouldn't we want to allow 
them to adjust the penalties for what they consider to be a 
just outcome? I mean, this is an independent body. Why wouldn't 
we want to allow them to do that?
    Admiral Loy. Yes, sir, I understand your question. And the 
notion as constructed in the efforts so far that is in the regs 
would offer the MSPB every opportunity to make recommendations 
to modifications.
    Mr. Van Hollen. I understand that. Why would we want to 
take away from the MSPB in this instance the rights they have 
to address grievances for employees in any other department of 
the Government? Why is that necessary?
    Admiral Loy. We just feel that in order to be sensitive to 
the unique mission of this Department, the Secretary's 
prerogative is the more appropriate choice.
    Mr. Van Hollen. And I understand you're also changing the 
burden of proof with respect to claims made to MSPB. Is that 
correct? In other words, the preponderance of evidence 
standard, which is applied throughout the Federal Government, 
which applies in courts of law throughout this country in civil 
cases, you want to change that, you want to reduce the burden 
of proof with respect to the appeals made from the Department 
of Homeland Security?
    Admiral Loy. Yes, sir. At the moment in our work, on the 
performance side of the house, the burden of proof is at a 
substantial level. And for conduct offenses or appeals it's 
associated with preponderance of evidence, as you describe. The 
standard of proof that is being offered in the construct in the 
regs is that substantial is adequate for both performance and 
conduct paths.
    Mr. Van Hollen. Well, let me ask you this. If someone's 
accused of a certain infraction, the preponderance of the 
evidence standard means when the fact finders look at the 
evidence, they conclude that it's more likely than not that the 
infraction occurred, right?
    Admiral Loy. Stronger than substantial, yes, sir.
    Mr. Van Hollen. More likely than not?
    Admiral Loy. More likely than not.
    Mr. Van Hollen. The preponderance of the evidence, the 
scales adjust to say, looking at the evidence as a fact finder, 
why would we want to say, even where we don't find that it's 
more likely that this infraction occurred, that we can still 
punish the individual, even though the evidence doesn't show 
that it's more likely that an infraction occurred than it 
didn't, why would we want to do that?
    Admiral Loy. We just feel that in the interests of 
supporting the mission of this Department, in supporting the 
general notions of simpler, faster, fairer processes----
    Mr. Van Hollen. Well, how is that fairer? How is that 
fairer, to be able to punish an individual, even though the 
evidence, the preponderance of the evidence, the weight of the 
evidence doesn't show they committed a violation? How is that 
fairer?
    Admiral Loy. These are simply, sir, just to legal, 
technical mechanics. We believe the substantial standard is 
adequate to the test.
    Mr. Van Hollen. Well, I wouldn't call these technical. 
They're substantive changes. And that's obviously why they were 
made. And it's a departure from the standard that we apply 
throughout the rest of the Federal Government. I would hope 
that in the process, as we continue to review these 
regulations, you take a serious look at what clearly, I don't 
think can be defended. I don't think you can defend changing 
the rules of evidence, essentially, on the basis of national 
security in this case. It's just a matter of fairness.
    Thank you, Madam Chairwoman.
    Admiral Loy. We look forward to that discussion, sir.
    Mrs. Davis of Virginia. Thank you, Mr. Van Hollen. Now I'd 
like to recognize Mr. Mica.
    Mr. Mica. Thank you. I'd have to disagree with my colleague 
on that last issue. I think in the instance of protecting the 
homeland that these positions are different. Substantial should 
be adequate.
    In that regard, let me just ask a couple of questions. You 
have, regulations are silent on judicial review of decisions of 
Homeland Security Labor Relations Board or the panel that will 
decide on mandatory removal offenses. When would you have such 
a list compiled and what would you anticipate would be 
considered mandatory removal offenses, and would be criminal 
acts and things of that nature?
    Admiral Loy. Yes, sir. Mr. Mica, as you know, having worked 
together with us over the last couple of years on the aviation 
side of the House a lot, the whole idea of this work that we're 
involved in offers forward some notions of mandatory removal 
from this work. If we find ourselves doing things such as 
uncovering folks who have with fraud or bribe accepted personal 
gain and turned their backs, so to speak, on their 
responsibilities as securers of the homeland. The whole notion 
of the kinds of material that we work with day after day, if an 
employee would breach classification boundaries and turn 
material over or look the other way when those kinds of things 
are possible. Those are the kinds of egregious things that will 
find their way onto what I think will be a very short list of 
these----
    Mr. Mica. It would be your intent, though, to not have 
appeal, those offenses eligible for appeal?
    Admiral Loy. There would be an appeal to a board of the 
moment established by the Secretary to hear it.
    Mr. Mica. But not to the Merit Systems Protection Board?
    Admiral Loy. Judicial review, sir?
    Mr. Mica. Or to the merits.
    Admiral Loy. I think we have work to be done on the 
judicial review of, but it would not be to the MSPB. It would 
be to in the cites that you're giving me.
    Mr. Mica. When we created Homeland Security, one of the 
things we wanted was a performance based organization and the 
ability to fire non-performers.
    Admiral Loy. Yes, sir.
    Mr. Mica. You've made some improvement, I see, in adverse 
personnel action, speeding up the process. Having chaired Civil 
Service for 4 years, one of the problems I found is you 
couldn't get--well, first you couldn't get performance based 
standards, and second, you couldn't get rid of poor performers. 
You have some of that process here, and you've shortened that 
and I commend you for that.
    But my concern is that we allow people in one of our most 
critical areas, that's homeland defense operations, to game the 
system, to not be able to fire them, one for bad performance, 
I've looked at your pass-fail, which you don't do, you have a 
different system in place. But we should have the ability to 
clearly fire poor performers without a lengthy appeal and 
gaming the system.
    The second, and I see you speed up that process, but they 
still game it. I see gaming possibilities in the appeal 
process. You can appeal an adverse personnel action, you can 
also appeal pay banding. Do people get two bites, can they get 
two bites at the apple?
    Admiral Loy. No, sir. Under the designed reg, there would 
be only one bite at the apple.
    Mr. Mica. And then finally, this stuff gets to the Merit 
Systems Protection Board. What's your current backlog time of 
processing actions before the board, Ms. James?
    Ms. James. I don't have authority over the MSPB.
    Mr. Mica. I know, but do you have any idea?
    Ms. James. I'm not entirely sure. I know that they do have 
a backlog, and I know that they have been very helpful in 
working with us in this design process to streamline the 
process and to be sensitive to the mission.
    Mr. Mica. I'd like for the record the time of the current 
backlog before these various boards and then the process. It 
was years, I mean, nobody ever got fired, everyone gamed the 
system. The other game that's played is either poor performers 
or people who would have some action taken against them, 
adverse personnel action, then turn around and they're put in 
sort of a limbo or moved to another position while they're 
gaming the system. Is there any prohibition in what you're 
proposing on gaming the system for poor performers?
    Ms. James. Let me just say a couple of things about what 
the Department did that I think are creative and innovative. 
They did in fact look at ways of streamlining the system. The 
Department of Homeland Security had the opportunity to 
completely take out the MSPB, they did not. But what they did 
is sat down and worked with them and said, how can you work 
with us to streamline the process so that you can be sensitive 
to our mission and make sure that there is an appeal process in 
place.
    Mr. Mica. And you streamlined that on the short end. I'm 
concerned about the long end judicial merit protection and EEOC 
cases that went on and on.
    Ms. James. I think we want to make sure that, being 
sensitive to the mission of the Department and balancing that 
against the opportunity to protect employees' due processes, 
that they have done a good job of maintaining both and in 
working with them. So while people may not be entirely 
satisfied that we have these independent boards appointed by 
the Secretary, they are there. They will be transparent. They 
will be available as a process for employees.
    While there have been opportunities for many bites at the 
apple, we have taken that and streamlined that so that it will 
no longer be an issue. And this is a work in progress. There 
will be opportunities to tweak it even further.
    Mr. Mica. Just a couple of quick questions. There are 
180,000 employees plus or minus, and many are excluded TSA, 
military----
    Ms. James. About 70,000.
    Mr. Mica. So 70,000 is what we end up with.
    Admiral Loy. About 110,000 that will be impacted, sir.
    Mr. Mica. OK, that's my question. How many are impacted 
total?
    Admiral Loy. I was trying to add that up last night. I 
think it's about 110,000.
    Mr. Mica. Admiral Loy, did you say that when we 
consolidated these positions, there was not one position 
eliminated out of the 80,000 or whatever we consolidated?
    Admiral Loy. With our Customs officers, sir?
    Mr. Mica. With any of them. Did we eliminate any position?
    Admiral Loy. I don't know that we have eliminated positions 
in the course of this design work. I'm not sure I'm following 
your question.
    Mr. Mica. That was just a general question. In this whole 
consolidation, we considered the reform and homeland security 
and there was testimony from that table before this committee 
that there would be some consolidation, possibly. If you know 
of any, I'd love that for the record.
    Then just finally, the cost to implement. I saw $130 
million. Is that the cost to implement this new system one 
time, over a period of time, or does that include operational, 
with a new HR system? What are the estimates for implementation 
and then cost to run, and can you compare that with any of the 
current HR systems we have or we're eliminating? Maybe you 
can't answer here, but could you supply and make that part of 
the record.
    Admiral Loy. I'll happily do that, sir. I can give you at 
least a snapshot up front. There will be, without doubt, a 
significant up front investment in order for us to do the 
training, mostly, appropriate to make sure our supervisors and 
managers are adequate to the task of the performance appraisals 
that are the cornerstone of doing what we need to do with pay 
and personnel decisions down the road.
    Mr. Mica. But the long term is?
    Admiral Loy. Longer term, I will get that back to you, sir. 
I don't know the comparative piece between an HR system now and 
then.
    In the 2005 budget, we have asked for about $100 million to 
get on with this initial investment point. Then we've also 
asked for I think $12.5 million for the pay pool for fiscal 
year 2005. Because this will be a phased-in over time effort to 
reach those 110,000 at the other end of several budget cycles.
    Mr. Mica. Thank you, Madam Chairwoman.
    Mrs. Davis of Virginia. Thank you, Mr. Mica. And just for 
clarification, before the gentlewoman from Tennessee who has 
been so patient, you didn't lose any jobs, but you didn't 
increase the size of the Federal Government and add jobs, did 
you?
    Admiral Loy. No, ma'am.
    Mrs. Davis of Virginia. Now I'd like to recognize the 
gentlewoman from Tennessee, Ms. Blackburn, and thank you for 
your patience.
    Ms. Blackburn. Thank you, Madam Chairwoman, and thank you 
to you all for taking the time to come. We are interested in 
this and in the agency reorganization and homeland security and 
appreciate your mission and the mission that you all accept in 
securing our country.
    I want to followup, let's go back and talk about this 
implementing the pay for performance. Because I appreciate the 
flexibility that you all need and that you desire. I support 
that.
    I do want to look at this implementation on the pay for 
performance. One thing I have not heard, and I did not find in 
your testimony is what your timeframe is for your 
implementation, when you feel like you will move everybody into 
this new system.
    And then also, one thing that I've not seen, and Admiral 
Loy, you may have just started to touch on that, your financial 
systems, the DHS financial systems, to track the pay for 
performance. Do you have your, the architecture in place for 
that? Who is handling that, and what kind of transition do you 
expect? If each of you would address that, that would be great.
    Admiral Loy. Yes, ma'am. As far as initial implementation, 
our goal is in 2005 to have covered all of the headquarters 
work force, the one major directorate, if not two major 
directorates at headquarters to include the information 
awareness and infrastructure protection directorate and the 
science and technology directorate. We are choosing those so 
that we can sample across the board of occupation categories so 
we can make sure we're dealing with effectiveness at a variety 
of occupational categories.
    Then we have chosen the Coast Guard civilian work force to 
be the agency's first effort out of the box, so to speak. 
That's about 5,000 civilian work force elements in the Coast 
Guard. We're trying to make that a turn-on by fiscal year 2005. 
We have asked in the President's budget as it came forward for 
the resources to do that.
    Then onward through 2006 and the Congress, of course, gave 
us about 5 years, as I recall, in HSA, to get this accomplished 
over time, we would press on then in 2006 and 2007 to complete 
that reach to the 110,000 that Congressman Mica asked about, 
that number.
    Ms. Blackburn. Admiral Loy, may I interrupt you for just 
one moment on that? If you would go back and speak within that, 
the groups, the headquarters, the different groups you're 
planning to implement in 2005, how are you planning to 
stairstep these in? Will this be a few each month? Is it going 
to be on a quarterly basis? How are you going to work that?
    Admiral Loy. We would like to think that we will design the 
system to the point that we can turn it on for that wedge of 
people in the Department at the same time in fiscal year 2005 
and then press on, as I say, to 2006 for other elements of both 
the Department and the agencies within the Department.
    The design work associated with the construction of that 
pay system in order to do that remains a work in progress, and 
we continue to work on that diligently and look forward to 
working with the committee and anyone else that would be 
helpful for us in that process. So as I sit here toady, it is 
not a finished product. It is something that we are still in 
the design work to get right at the other end of the day.
    Ms. Blackburn. Estimated costs?
    Admiral Loy. I'd have to get you that for the record, 
ma'am, in terms of the design work necessary for that financial 
system to support it. I don't have that number off the top of 
my head.
    Ms. Blackburn. I would appreciate having that. Ms. James, 
anything to add?
    Ms. James. No, except that I was pleased that as the 
Department looked at their implementation that they recognized 
the importance of doing it over a staggered period of time and 
have a substantial investment that they have asked for in the 
budget to make sure that the appropriate training and the 
information and education of the work force takes place. I 
think those are vital elements, and very often when 
transformation takes place in a department, the department 
either doesn't take enough time or put enough investment in 
dollars to make sure that it is a smooth transition. I think 
the Department has done both.
    Admiral Loy. We're trying to be very sensitive to what 
several members of the committee have mentioned this morning, 
and that is the potential for however our system comes out that 
it becomes a model of sorts that potentially could go wider 
across Government. We're very sensitive to that. Director James 
and her staff have held our feet to the fire, so to speak, on 
that, day after day after day in the design process. It's 
exactly the right thing to do.
    We know to a limited degree what's going on in DOD. We are 
concentrating on this system to be best for DHS, but there 
clearly are implications for across Government best practices 
over time and we want to be very sensitive to that.
    Ms. Blackburn. Thank you.
    Mrs. Davis of Virginia. Thank you, Ms. Blackburn.
    Director James, let me just throw this out. One of the 
things I've heard is that the managers will be trained. And in 
speaking to a group of about 50 managers yesterday, the one 
thing I heard the most, in fact I think it was unanimous in the 
room, they would like to have a standard for all managers, 
required training. I would just suggest that OPM take a real 
strong look at that. That might help across the board with some 
of these concerns.
    Admiral Loy. Yes, ma'am, absolutely it will. We started 
last week, I conducted with the Under Secretary for Management 
and our Assistant Secretary for Human Capital in the 
Department, we had a radio broadcast, TV broadcasted meeting, 
an electronic town meeting with the senior leadership in the 
Department country-wide, giving them an opportunity to converse 
with us initially and open the gates, if you will, to dialog 
with the work force and especially the senior leaders.
    As we speak, we are in the middle of a 3-day session of 
gathered senior executive service members from the Department 
out at Westfields in Chantilly. I gave a keynote with them 
yesterday, they spent virtually all day yesterday and today 
grappling through their responsibilities in the HR system and 
giving us additional feedback.
    They're now at a point where it's no longer a notion or 
somebody's idea, it's upon them and they understand their 
obligations in the system. The Secretary spent several hours 
with them last night personally to hear them out.
    So then the show we take on the road, so to speak, with a 
kit that will be consistent for every member of that leadership 
cadre in the Department will hopefully provide that constancy 
and consistency across the Nation that you just spoke of.
    Ms. James. Madam Chairwoman, I heard you and we will take 
on that responsibility. I think it's important that as we 
educate people about the new system and we bring them all on 
board and we inform them, that it's also important that we give 
them the tools to train them. Some of this is very technical 
and it's very complex. And as it filters down to those who 
actually have to implement it and operate it on a daily basis, 
they need very specific training to make sure that this happens 
in a very smooth way. So we will respond to that and take that 
on.
    Mrs. Davis of Virginia. You may want to take it a step 
further and train all managers throughout the whole Federal 
work force.
    Admiral Loy. One other mention I would make, Madam 
Chairwoman, just as a point of reference, it's enormously 
important that we complete one of our performance appraisal 
cycles before we pretend we can use those information elements 
to make pay decisions. So that cycle is enormously important 
for us to get right as well, ma'am.
    Mrs. Davis of Virginia. I'd just like to say that we will, 
I know I've got some questions I would like to have submitted 
for the record. If any other Members have additional questions 
of our witnesses today, they can certainly submit them for the 
record, then we'd ask you to get that to us.
    Ms. Norton. Madam Chairwoman, can I ask for a clarification 
of something?
    Mrs. Davis of Virginia. Yes, ma'am.
    Ms. Norton. Because I asked Admiral Loy a question about 
the agency having no discretion, even on its own, to bargain. 
And you said that decision could be made at the Secretary's 
level. So I went and had them get me your explanation for these 
regulations. And if, as I recall your answer, it was that the 
Secretary would hold the discretion.
    But don't you think this language needs to be clarified? It 
said the Department will not be required to bargain over the 
Department's exercise of these rights over most of the other 
rights enumerated in chapter 71. That doesn't leave the 
impression that----
    Admiral Loy. There's discretion involved.
    Ms. Norton. Right.
    Admiral Loy. Let me take that one, Ms. Norton, back, and 
we'll look at that real carefully.
    Ms. Norton. I'd appreciate that. Thank you, Admiral Loy.
    Mrs. Davis of Virginia. Again, I'd like to thank both of 
our witnesses for being here today and just reiterate that I'm 
a firm believer in collaboration, as I said to both of you 
before the hearing. I hope that the effort that's been put into 
this human resources system pays off in the creation of 
personnel rules that not only help the Department achieve its 
mission but are seen as credible by the employees and the 
managers.
    I want to thank both Secretary Ridge and Director James and 
your respective staff for a very thoughtful proposal. And 
again, I'm glad to hear that you are keeping everyone involved 
in this. And now, if my distinguished co-chair has anything to 
say? If not, we will dismiss the panel.
    Senator Voinovich. Thank you for coming.
    Mrs. Davis of Virginia. With that, again I thank you today, 
and we'll move on to panel two.
    We're very fortunate to have on our second panel today Mr. 
David Walker, the Comptroller General of the United States from 
the General Accounting Office. He has a lot of expertise in 
Federal personnel reform, and we're very glad to have him here 
with us today.
    Mr. Walker, it's our pleasure to have you here today. And 
as is our custom in this committee, we do swear in our 
witnesses. I understand only the first panel was sworn in. If 
you would please raise your right hand, I'll administer the 
oath.
    [Witness sworn.]
    Mrs. Davis of Virginia. Let the record reflect that the 
witness has answered in the affirmative. You may be seated.
    Mr. Walker, we want to again thank you and thank you for 
your patience. I'm sorry we've kept you so long here. I'll now 
recognize you for 5 minutes for your opening statement.

STATEMENT OF DAVID M. WALKER, COMPTROLLER GENERAL, U.S. GENERAL 
                       ACCOUNTING OFFICE

    Mr. Walker. Thank you, Madam Chairwoman Davis, and also 
Chairman Voinovich, other members of the subcommittees. Let me 
first thank you for the opportunity to appear on this important 
topic. Second, let me also commend you on your bipartisan and 
bicameral approach to addressing this important issue. And 
third, let me thank you this morning for shepherding GAO's bill 
to unanimous passage this morning. Let me also thank Senator 
Voinovich for his efforts in the past. We might need you one 
more time, Senator, it might bounce back to the Senate now.
    Mrs. Davis of Virginia. To correct the record, it hasn't 
passed yet. It's up for a recorded vote this afternoon.
    Mr. Walker. OK, well, I'm confident with your leadership 
what the outcome will be.
    I have an extensive statement that hopefully can be 
included in the record and I'll just end up summarizing very 
quickly.
    Mrs. Davis of Virginia. That will be fine.
    Mr. Walker. First, we're dealing with proposed regulations, 
as you know, that were just promulgated this past Friday. And 
so my testimony and our statement for the record is based on 
our preliminary review of those proposed regulations. Second, 
clearly these regulations have significant precedential 
implications that go far beyond the Department of Homeland 
Security. They could potentially serve as a framework for 
action outside the Department of Homeland Security.
    Third, the process that has been employed to date is one I 
think the Department should be commended for. It has involved a 
number of parties, including management, organized labor and a 
variety of others, and process is very important when you're 
dealing with something as important as basic human capital 
policies.
    In addition, we know that proposals are always going to be 
controversial, so it's important that you have an appropriate 
process, because you know that there will be some degree of 
controversy no matter what proposals come out of that process, 
as is the case here.
    In addition, I think it's important to note that many of 
the framework proposals in these proposed regulations are 
consistent with best practices, some of which frankly were 
pioneered by the GAO. So there are a lot of good things in here 
that I think the Department should be commended on. But again, 
they need to hear public comment.
    At the same time, there are at least four areas that I 
think are deserving of additional attention. Not to say that 
others aren't, but there are four areas that, based on a 
preliminary review, really jumped out at me. First, we know 
that the past process has been a very inclusive one and a very 
open one. We don't know what the future processes will be. 
Because right now we have the framework, but there are a lot of 
details that have to be worked out, and those details are very 
important. So it's important to have a very inclusive and a 
transparent process going forward.
    Second, the performance management system safeguards, we 
believe, need to incorporate the best practices that are in the 
report that I'm holding in my right hand, which is being 
released today. These represent the best practices for 
performance management systems, especially those systems that 
are intended to incorporate more modern, effective and credible 
pay for performance approaches.
    Third, we think it's important to take a hard look at the 
appeal standard, structure and scope. What's the standard for 
appeals, who would be on these appeal boards, what's the basis 
for appointment, for removal, and also what would be the scope 
of their authorities.
    And last but not least, obviously, there are likely to be 
some discussions and debates about the scope of bargaining, 
what issues should be bargained or not. But bottom line, we 
believe that they undertook a concerted, good faith effort 
involving an inclusive process to come up with a set of 
proposed regulations. They are now out for notice and comment. 
Obviously they will help to inform whatever the final 
regulations are. We think there are a lot of best
practices that are incorporated in here, but there are areas 
that deserve additional review and consideration.
    I'd be happy to answer any questions that any of you may 
have. Thank you.
    [The prepared statement of Mr. Walker follows:]

    [GRAPHIC] [TIFF OMITTED] T5409.015
    
    [GRAPHIC] [TIFF OMITTED] T5409.016
    
    [GRAPHIC] [TIFF OMITTED] T5409.017
    
    [GRAPHIC] [TIFF OMITTED] T5409.018
    
    [GRAPHIC] [TIFF OMITTED] T5409.019
    
    [GRAPHIC] [TIFF OMITTED] T5409.020
    
    [GRAPHIC] [TIFF OMITTED] T5409.021
    
    [GRAPHIC] [TIFF OMITTED] T5409.022
    
    [GRAPHIC] [TIFF OMITTED] T5409.023
    
    [GRAPHIC] [TIFF OMITTED] T5409.024
    
    [GRAPHIC] [TIFF OMITTED] T5409.025
    
    [GRAPHIC] [TIFF OMITTED] T5409.026
    
    [GRAPHIC] [TIFF OMITTED] T5409.027
    
    [GRAPHIC] [TIFF OMITTED] T5409.028
    
    [GRAPHIC] [TIFF OMITTED] T5409.029
    
    [GRAPHIC] [TIFF OMITTED] T5409.030
    
    [GRAPHIC] [TIFF OMITTED] T5409.031
    
    [GRAPHIC] [TIFF OMITTED] T5409.032
    
    [GRAPHIC] [TIFF OMITTED] T5409.033
    
    [GRAPHIC] [TIFF OMITTED] T5409.034
    
    [GRAPHIC] [TIFF OMITTED] T5409.035
    
    [GRAPHIC] [TIFF OMITTED] T5409.036
    
    [GRAPHIC] [TIFF OMITTED] T5409.037
    
    [GRAPHIC] [TIFF OMITTED] T5409.038
    
    [GRAPHIC] [TIFF OMITTED] T5409.039
    
    Mrs. Davis of Virginia. Thank you, Mr. Walker.
    I just want to followup with the last comment that I made 
to the witnesses talking about training for the managers. In my 
view, the training that's arising out of this changeover that 
we're doing is going to be just huge. I was wondering, based on 
your experience, how much training on the new pay 
classification and performance management system do you think 
would be needed. It seems almost overwhelming.
    Mr. Walker. We have had a broad banding system at GAO for a 
number of years. We are ahead of the curve in implementing pay 
for performance systems at GAO. We've modified ours recently, 
within the last couple of years. Training is absolutely of 
critical importance. In fact, it is not a one time event. We, 
in going to a new state-of-the-art competency based performance 
appraisal system that has linked our strategic plan and linked 
our pay and promotion decisions, we had extensive training in 
year one. But quite frankly, we've had additional training in 
year two and anticipate additional training in year three.
    I think it is critically important in order to maximize 
this chance that you get it right, that it's consistently 
applied within and between units and that it's viewed as 
credible, equitable and non-discriminatory.
    Mrs. Davis of Virginia. Thank you, Mr. Walker. I'm going to 
give time now to my colleagues to ask questions. I'm going to 
be called for a vote here in one of my committees in probably 1 
minute.
    I'm going to yield to Ms. Holmes Norton for questions.
    Ms. Norton. Thank you very much, Madam Chairwoman. I think 
you, Mr. Walker, pointed out the categories of concern that any 
agency undergoing this kind of extraordinary change, someone 
has, when you're dealing with 170,000 employees, you somehow 
mesh them all together for the first time, it's a very delicate 
task. Someone has compared it to repairing an airplane while 
it's in the air. I just want to make sure that some of the 
passengers don't get lost in the process.
    The notion of performance based accountability is of course 
the rationale for this change, and it's why this change is 
occurring. I'm very concerned about how you get accountability 
on the part of employees rather than wholesale problems between 
supervisors and managers when the regulations do not require, 
as they do now, that written performance, the elements of what 
is required, be written down, so that standards will be known 
and standards set out.
    I want to know on three scores, I have problems with this 
on three scores. One, how is the employee to know what's 
expected of the employee if it's not written down somewhere? I 
thought that was kind of the ABCs of accountability. Won't that 
result in a he said, she said, you should have known, I wasn't 
sure problem? Why in the world would anybody not want to write 
what you want people to do, especially when you have a whole 
bunch of employees? That's the first thing. How do you get 
accountability if nobody has communicated what that is?
    I'm particularly concerned, as a former chair of the EEOC, 
how one will ever bring an EEO complaint. And one of the things 
that we're, the entire Congressional Black Caucus, the entire 
Congressional Hispanic Caucus and many Members of this Congress 
are going to be looking at is whether or not you are, they are, 
dismantling what it took our country 100 years to get, which is 
accountability for racial discrimination and gender 
discrimination. Well, I don't see how there can be any 
accountability or how you can even bring a complaint to the 
EEOC when there's no documentation as to what was expected of 
you.
    And finally, how in the world are you going to hold 
managers accountable? If a manager hasn't had to write down 
what it is that the managers expect of their employees, this is 
what I meant when I asked the prior panel whether they had 
looked at best practices. Their answers were entirely 
unsatisfactory. So yes, we have.
    But I certainly can tell you this, I don't think anybody in 
the private sector would say, at least in a big operation, that 
we're not going to write down, and don't even ask us to write 
down, because it's an administrative burden. Don't ask us to 
write down what is expected of you. I don't know what the view 
of that is, whether you think it's a best practice or whether 
you have any recommendations with respect to not writing down 
or having the discretion not to write down what you expect from 
your employees.
    Mr. Walker. Ms. Holmes Norton, as you know, these are 
proposed regulations. My view would be that it is critically 
important that performance standards be documented in order to 
have a clear understanding between the individual and their 
superiors as to what they are expected to do in order to make 
sure they are focusing their energy and efforts on those items 
and in order to be able to assess their performance and in 
order for them to be able to hold themselves accountable for 
their performance. I think it's critically important that it be 
documented.
    Now how you go about doing that can vary. For example, at 
GAO, we have adopted a modern, effective and credible 
competency based performance appraisal system which was 
validated, the competencies were validated by our employees, 
not only to gain acceptance but also to minimize litigation 
risk, quite frankly. So I think how you go about doing that can 
vary----
    Ms. Norton. How many employees did you have?
    Mr. Walker. We only have about 3,300. We have a number of 
occupations----
    Ms. Norton. Well, let's----
    Mr. Walker. It's a difference.
    Ms. Norton. But it's a terrible challenge. What we've done 
to this agency is we've put all these folks together and we've 
given this agency really a challenge that I don't think any 
agency in the world has had. This is a Constitutional system, 
this is State action. The response on preponderance of the 
evidence bordered on the unconstitutional, when the answer was, 
well, we need to do this and--but the Constitution requires due 
process of a Federal employer.
    I don't believe this can withstand Constitutional scrutiny. 
I don't think it can withstand Constitutional scrutiny to say 
that you can fire somebody from his job without even telling 
him what his job is. And you tell me, well, there are lots of 
ways to do it. I want to ask you, is there any other way to do 
it if you have 170,000 employees, other than writing it down?
    Mr. Walker. I think it needs to be documented. I think the 
standards need to be documented. I also think that you need to 
have an appropriate safeguard within the Department, outside of 
the line, to review for consistency and non-discrimination. I 
think that you need to have alternative dispute resolution 
procedures, and you need to have qualified, independent appeal 
bodies available to employees in the event they believe that 
they somehow have not been treated fairly. I think all those 
elements are critical components.
    Ms. Norton. Would you agree, then, that they haven't begun 
to do any of the things you just named?
    Mr. Walker. I think they've started, but I think more work 
is necessary. And in the four items that I mentioned, some of 
the issues that you've talked about are some of the ones that I 
think are deserving of additional attention and scrutiny. 
Hopefully we'll get it as a result of this comment period and 
oversight by the Congress.
    Ms. Norton. Thank you, Chairman Voinovich.
    Senator Voinovich [assuming Chair]. Following up on 
Congresswoman Norton's question, you've been involved in 
performance evaluation now for some time. Do you believe that 
if you dot the Is and cross the Ts and do the things that are 
necessary that performance evaluation can work in the Federal 
system?
    Mr. Walker. Oh, absolutely. I believe it's critically 
important that we move to more of a pay for performance system. 
And where we're paying for skills, knowledge and performance, 
rather than the passage of time and the rate of inflation.
    Senator Voinovich. I think this committee would be 
interested in having you identify, benchmark examples of where 
pay for performance is working, not only at the General 
Accounting Office, but other places, and what were the 
ingredients that were in place to make that successful.
    Mr. Walker. A number of them are in the document that is 
being released today and I would recommend it to you and the 
other Members.
    Senator Voinovich. Thank you. We're in the position right 
now of listening to comments about the proposed regulations. 
The fact that we're meeting here today and giving people an 
opportunity to express themselves publicly is important.
    Could you briefly, give us your thoughts on what are the 
strongest elements of the proposed regulations and then share 
with us where you think there is some real work that needs to 
be done? You've done that in your opening statement, but could 
you expand on that?
    Mr. Walker. I think conceptually broad banding makes sense, 
provided you do a good job of setting up those bands by major 
occupational categories, also to potentially consider what some 
have referred to as speed bumps, to make sure that you have a 
situation to control, to make sure that people don't 
automatically get to go to the top of whatever the band is for 
compensation purposes irrespective of their performance.
    Second, I think the concept of moving more toward a pay 
system that compensates people based upon skills, knowledge and 
performance, and also an alternative way of looking at locality 
based pay has strong conceptual merit. I believe the areas that 
require further attention are the ones that I mentioned, and 
that is, what are the future processes going to be.
    I think it's important that if they're going to go for a 
pay for performance system they need to incorporate these 
safeguards and best practices. I believe they need to look at 
the standard for appeal, the structure for appeals and the 
scope of those appeals, are the primary issues. I'm sure that 
the next panel will talk about whatever issues they have with 
regard to the proposed scope of bargaining as well.
    Senator Voinovich. You mentioned the issue of locality. I'm 
interested in a proposal to base annual pay raises on, among 
other items, market related adjustments. The Federal Government 
has had a difficult time comparing certain Federal occupations 
across the Government's 32 locality areas, because some of the 
occupations don't exist in the private sector.
    How do you think this will work for fields such as law 
enforcement, and do you think that market related adjustments 
will close the pay gap for DHS law enforcement officers in high 
cost of living cities?
    Mr. Walker. I would hope so. But the fact is, one of the 
things we can take some comfort in is that there are benchmarks 
for law enforcement all across the United States. Every State 
and locality has law enforcement personnel. So that's an area 
where I think we should be able to get appropriate compensation 
information.
    One of the things that was referred to earlier was that 
when TSA was set up, because of the additional flexibilities 
that they attained, quite frankly, they ended up hiring a bunch 
of people from GAO, the Capitol Police and many other 
departments and agencies, because they had more pay flexibility 
than those other entities did.
    So yes, I do believe it's appropriate and possible to come 
up with some competitive compensation studies that will do a 
much better job of determining appropriate pay by locality than 
our current one size fits all approach.
    Senator Voinovich. Do you see any changes in the personnel 
system that might require additional legislation?
    Mr. Walker. My understanding, Mr. Chairman, is that there 
are certain restrictions in dealing with the Secret Service and 
the TSA, and that they are not covered by all or part of these 
proposed regulations. So Congress would have to determine 
whether and to what extent it would want to allow them to make 
changes dealing with those two particular entities.
    Second, I think if I recall correctly, Mr. Chairman, the 
safeguards that we came up with, the proposed statutory 
safeguards that are included in the GAO bill, that we 
recommended be included in the DOD bill. I'm not sure that 
they're in this bill.
    So to the extent that you would want to think about doing 
that, I don't recall whether we were able to get them in or 
not, because I think this bill passed well before we worked 
those out. So that's something you may want to think about. 
Because I think this is precedential across the Government. And 
I think that while management needs to have reasonable 
flexibility to design different systems, given their missions 
and work forces, there ought to be some principles and 
safeguards that apply universally throughout the Federal 
Government to protect employees and to assure a reasonable 
degree of consistency.
    Senator Voinovich. I was very much involved in trying to 
negotiate some of those human resource provisions for the 
Department of Defense. Did those safeguards get into that?
    Mr. Walker. Some of them did. But let me just say that the 
DHS process is night and day different than the DOD process. I 
think DOD could learn a lot from DHS, and hopefully they will.
    Senator Voinovich. Some of those that are here today ought 
to know that some of us feel that if we can work out a decent 
system with DHS, perhaps we might suggest that some of the 
things we incorporate in the DHS Personnel System could be 
followed over at the Department of Defense. It's going to be 
interesting to see as we move down the road which is the more 
successful way of getting the job done.
    Mr. Walker. Well, there's a big difference in process 
already. The other thing that really candidly troubled me 
recently is the announced intention of the Department of 
Defense to implement a new system for 300,000 people by the end 
of this year. But I'm going to speak with Under Secretary Chu 
and others within the next week or so to hear more about that.
    Senator Voinovich. I would have felt much better if 
Secretary Chu and Secretary Rumsfeld had spent some time with 
the members of the Governmental Affairs Committee in the U.S. 
Senate, talking to us and working on this issue before they 
went forward with their program. But again, time will tell.
    Regarding TSA, what would be wrong with giving TSA the 
authority to give their workers a right to collective 
bargaining?
    Mr. Walker. That's obviously a decision for the Congress. I 
will tell you from a personal standpoint, I believe in 
collective bargaining. There may be some limitations in 
appropriate circumstances due to national security as to what 
issues ought to be bargained. But from a conceptual standpoint, 
I think that's something, I believe in it from a conceptual 
standpoint, subject to certain limitations. But that's 
ultimately a decision for the Congress.
    I think whether or not you have bargaining, it's critically 
important that you have active and ongoing employee 
participation, whether it be through their representatives, the 
bargaining units and the leaders of the bargaining units, or 
whether, if they are not a member of a union, appropriate 
representative employees. If you take GAO, for example, we 
don't have a union or unions, but we actively partner with our 
employees through a democratically elected employee advisory 
council and treat them with the same status as our top 
executives in defining and rolling out new proposals that deal 
with all our employees.
    Ms. Norton. I have just one question. I wonder if I could 
get Mr. Walker on record here. Senator Voinovich, this is a 
matter that's going to be coming to the Senate, as I 
understand, soon. It has to do with the so-called 10 deadly 
sins. You may be aware of these 10 deadly sins. In any case, 
they were mandatory removal offenses that the IRS could remove 
peremptorily.
    Now, it is interesting to note that H.R. 1528 has passed 
the House that would remove that ability from the IRS. That's 
just what that experience has shown us. Nevertheless, mandatory 
removal offenses have now popped up in the DHS regulations. At 
least at the IRS there was an independent, there was instant 
removal but there was independent review, whereas any review 
here would be internal and nobody even pretends that's the same 
kind of review as is normally thought to be independent.
    And the IRS offenses that you could be removed for were 
written in statute. So again, we weren't, collecting money is 
very important, just as our security is very important, but 
somehow, some balance had been found. And yet the experience 
had been so faulty that a bipartisan bill repealed this section 
of IRS, this IRS provision. Do you believe that mandatory 
removal is something that should be written into these 
regulations, given the experience we have already had, which 
has caused something that seldom happens in this House, which 
is the repeal of something that we put into law?
    Mr. Walker. First, I believe in my full statement I have 
some reference to the fact that I think it's important that 
lessons learned from the IRS experience be considered in 
determining what should be done with the Department of Homeland 
Security. Second, I do think there are certain circumstances 
where certain actions should result in removal. At the same 
point in time, I think it's important that there be an 
appropriate due process, involving qualified and independent 
players as a check and balance when you are talking about 
somebody losing their job.
    So I would be happy to provide additional information for 
the record if you would like on that.
    Ms. Norton. You think they should be put in law, at least, 
or regulations, as the IRS was? We put them in statute. They're 
not even in regulations here in DHS. It's at the discretion. 
This is the first time I think even anybody thought about this. 
At the discretion of the Secretary, without anything written 
down, you can be instantly removed.
    Mr. Walker. My personal opinion is it should be in either 
law or regulation, because both of those will result in some 
type of due process consideration of what they are. Then 
second, after that ends up happening, then you have to 
determine what type of appeal process there might be, if there 
is a perceived inequity in the application of whatever the law 
or the regulations lay out.
    Ms. Norton. Thank you very much, Mr. Walker.
    Mr. Walker. Thank you.
    Mrs. Davis of Virginia [resuming Chair]. Mr. Walker, as 
always, it's been a pleasure having you here. Thank you for 
coming to testify. I'm sure some of our members may have 
additional questions they want to submit for the record.
    Mr. Walker. Thank you, and good luck this afternoon for 
both of our sakes.
    Mrs. Davis of Virginia. Thank you very much, and thanks for 
your patience.
    We will now move on to panel three, and I'm sorry to keep 
you all waiting. I have some other not so great news for you. 
I've just been told we have to be out of the room at 1:15 
because the room has been booked for another hearing. So we 
need to move on to panel three, and we're very fortunate to 
have on our third panel representatives from the three largest 
unions at DHS.
    First of all, we'll hear from Mr. John Gage, National 
President of the American Federation of Government Employees. 
Then as always, we're pleased to have back Ms. Colleen Kelley, 
national president of the National Treasury Employees Union. 
And last but not least, we'll hear from Mike Randall, president 
of the National Association of Agriculture Employees.
    Again, thank you all very much for being here today and 
thank you for your patience. As always, it is the policy of 
this committee to swear in our witnesses. So if you would all 
please stand and raise your right hands.
    [Witnesses sworn.]
    Mrs. Davis of Virginia. Let the record reflect that the 
witnesses answered in the affirmative.
    You may be seated.
    Mr. Gage, again, thank you for being here today. You are 
now recognized for 5 minutes.

     STATEMENTS OF JOHN GAGE, NATIONAL PRESIDENT, AMERICAN 
FEDERATION OF GOVERNMENT EMPLOYEES; COLLEEN M. KELLEY, NATIONAL 
PRESIDENT, NATIONAL TREASURY EMPLOYEES UNION; AND MIKE RANDALL, 
   PRESIDENT, NATIONAL ASSOCIATION OF AGRICULTURAL EMPLOYEES

    Mr. Gage. Thank you, Madam Chairwoman.
    We have a detailed statement that we submitted with some of 
our concerns and recommendations to the overall plan. I wanted 
to talk, and of course we met with Secretary Ridge, had a good 
discussion with him. I really hope that further discussion with 
Secretary Ridge is going to enable us to correct some pretty 
glaring problems with the DHS personnel system.
    It's just a couple of observations. I mean, getting the 
details right on this new personnel system is going to be very, 
very difficult. When we see the Department coming out of the 
box, intentionally excluding from the system fair checks and 
balances to correct mistakes and to safeguard against abuses, I 
am pretty shocked about that. And I know your questions about 
training, and I think training is going to be a huge issue.
    But now that we have all these trained and various degrees 
of trained supervisors to start the system off with taking 
employees' rights away, where they can contest problems or 
abuses or mistakes that these supervisors make is just not the 
way it should be. If this system is so good, and when you hear 
the personnelists talk about it, well, if it's so good, it 
should welcome scrutiny. Slanting the standards of evidence, 
minimizing collective bargaining, setting up management as the 
sole judge and jury on discipline and pay, employees' sense of 
fairness and credibility that they should have in this system, 
it's just not going to happen.
    When they talk about all the inclusiveness that the DHS 
system process went through, it did. It talked with 2,000 
employees. Just about all those 2,000 employees said, don't 
take our rights away, there's no reason for that, it's not 
mission oriented. Almost all of those 2,000 employees said, my 
supervisor is going to rate me and determine my base pay and 
that concept is very foreign to what we currently have in the 
supervisor/employee relationship. And the ability to put up an 
appraisal system for 175,000 employees that is going to be done 
fairly hasn't been done yet.
    Now, to put the extra added attraction that these 
supervisors can also determine employees' pay, when in the past 
whether they could rate a person fairly at all was in question, 
and to take away the employee's right to any appeal or to any 
scrutiny, employees are very distraught about this. They are 
very concerned about it.
    Senator Voinovich asked Admiral Loy, and I've asked him the 
same question, give me an example where collective bargaining 
stops this agency from doing anything. There are no examples. 
When we talk about deployment, that it's a mission issue of 
deployment, yes, it very well could be. But it also could be a 
supervisor in San Diego re-deploying a border patrol agent or 
officer to Texas.
    Now, shouldn't there be at least a post-bargaining 
discussion, a post-implementation discussion of those types of 
arbitrary moves? This isn't Secretary Ridge making these moves. 
These are very low level supervisors who can have all kinds of 
different agendas going on. And to take employees' rights away 
or the union's rights away to at least scrutinize some of these 
decisions is really overkill.
    I want to make just one other observation. The fact that 
TSA employees, these baggage screeners, cannot have any appeal 
rights, any collective bargaining rights, is shameful. These 
employees are calling us daily with things that are going on in 
work sites in airports across the country. You can see the 
turnover rates of these folks. We could do a lot, I think, in 
stabilizing that work force. I think they're doing a fine job. 
I think they're doing a better job than has ever been done at 
our airports.
    But to say that they have no rights whatsoever and no 
collective bargaining rights, and that's some type of a 
mission, that nexus hasn't been established. And I think in 
this country, when you say that someone has to lose a right, 
you'd better well express very clearly how that mission 
abrogates those rights. That test hasn't been made for TSA 
employees, and we're going to continue fighting to get them the 
rights that they deserve.
    Thank you, Madam Chairwoman.
    [The prepared statement of Mr. Gage follows:]

    [GRAPHIC] [TIFF OMITTED] T5409.040
    
    [GRAPHIC] [TIFF OMITTED] T5409.041
    
    [GRAPHIC] [TIFF OMITTED] T5409.042
    
    [GRAPHIC] [TIFF OMITTED] T5409.043
    
    [GRAPHIC] [TIFF OMITTED] T5409.044
    
    [GRAPHIC] [TIFF OMITTED] T5409.045
    
    [GRAPHIC] [TIFF OMITTED] T5409.046
    
    [GRAPHIC] [TIFF OMITTED] T5409.047
    
    [GRAPHIC] [TIFF OMITTED] T5409.048
    
    [GRAPHIC] [TIFF OMITTED] T5409.049
    
    [GRAPHIC] [TIFF OMITTED] T5409.050
    
    [GRAPHIC] [TIFF OMITTED] T5409.051
    
    [GRAPHIC] [TIFF OMITTED] T5409.052
    
    [GRAPHIC] [TIFF OMITTED] T5409.053
    
    [GRAPHIC] [TIFF OMITTED] T5409.054
    
    [GRAPHIC] [TIFF OMITTED] T5409.055
    
    [GRAPHIC] [TIFF OMITTED] T5409.056
    
    [GRAPHIC] [TIFF OMITTED] T5409.057
    
    [GRAPHIC] [TIFF OMITTED] T5409.058
    
    [GRAPHIC] [TIFF OMITTED] T5409.059
    
    [GRAPHIC] [TIFF OMITTED] T5409.060
    
    [GRAPHIC] [TIFF OMITTED] T5409.061
    
    [GRAPHIC] [TIFF OMITTED] T5409.062
    
    [GRAPHIC] [TIFF OMITTED] T5409.063
    
    [GRAPHIC] [TIFF OMITTED] T5409.064
    
    [GRAPHIC] [TIFF OMITTED] T5409.065
    
    [GRAPHIC] [TIFF OMITTED] T5409.066
    
    [GRAPHIC] [TIFF OMITTED] T5409.067
    
    [GRAPHIC] [TIFF OMITTED] T5409.068
    
    [GRAPHIC] [TIFF OMITTED] T5409.069
    
    [GRAPHIC] [TIFF OMITTED] T5409.070
    
    [GRAPHIC] [TIFF OMITTED] T5409.071
    
    [GRAPHIC] [TIFF OMITTED] T5409.072
    
    Mrs. Davis of Virginia. Thank you, Mr. Gage, as always.
    Ms. Kelley, you're now recognized for 5 minutes.
    Ms. Kelley. Thank you very much, Chairwoman Davis, Chairman 
Voinovich.
    I appreciate your having this hearing today for the 
subcommittees and having the opportunity to testify on behalf 
of the 13,000 employees in the Department of Homeland Security 
that NTEU represents.
    To assist in the creation of a new HR system, the Secretary 
and the new OPM Director assembled a design team that did 
include NTEU representatives. While I believe that the 
collaborative process worked well in allowing NTEU to offer our 
options, to address personnel issues that the Department 
identified, I am extremely disappointed with the lack of 
inclusion of our or other employee representatives options in 
the proposed personnel regulations.
    To be successful from NTEU's perspective, any new HR system 
must be seen as fair, transparent and credible to employees, or 
it will fail. By these standards, the proposed regulations as 
written fail in many areas. I will focus my comments today on 
three areas, pay, labor relations and due process rights.
    NTEU believes that any changes to the pay, performance and 
classification systems must be justified by mission needs and 
designed to minimize administrative burdens on managers, 
supervisors and employees. NTEU does not believe that the pay 
system in the proposed regulations meets these tests. During 
the research and design process, most employees reported that 
they were generally satisfied with the current GS system and 
that problems were cited related to the application and 
administration of the system by managers, rather than to the 
design of the system itself.
    Unfortunately, the proposed DHS regs abandon the GS basic 
rate system and will provide employees with a radically 
different and unproven pay banding system based almost entirely 
on management discretion. The plan appears to eliminate even 
across the board annual raises, allowing employees in some 
locations and occupations to be paid significantly less than 
others. The pay band ranges will be set by an extremely 
complicated formula based on mission requirements, local labor 
market conditions, availability of funds and pay adjustments 
received by other Federal employees.
    In addition, the President's budget for 2005 request $100 
million to design this new system. This money could be put to 
much better use by hiring more front line personnel.
    On labor relations, the Homeland Security Act requires that 
any new human resource management system ``ensure that 
employees may organize, bargain collectively and participate 
through labor organizations of their own choosing in decisions 
which affect them.'' NTEU believes that the proposed 
regulations do not meet that statutory requirement. Collective 
bargaining disputes will not be subject to independent third 
party resolution, but will be resolved by an internal DHS 
board. This internal DHS board will replace the independent 
FLRA in determining what constitutes an appropriate bargaining 
unit for the purposes of union elections. And the scope of 
collective bargaining is so dramatically limited that the 
requirement that employees be allowed to ``participate through 
labor organizations'' is not met.
    Under current law, the subjects of collective bargaining 
for the most part fall into three categories: management 
rights, permissive subjects of bargaining and mandatory 
subjects of bargaining. Management rights are now non-
negotiable on the substance, but subject to impact and 
implementation bargaining. Permissive subjects bargaining would 
be redefined under the proposed regs as management rights, and 
again, not subject to bargaining even on impact and 
implementation, and as we read the regs, even at the agency's 
discretion.
    So I'm glad to hear that will be looked at by the 
Department, based on Admiral Loy's comments. But even post-
implementation bargaining will not be required on any of these 
issues.
    Finally, any bargaining left will likely be dramatically 
curtailed by a new standard that states, ``proposals that do 
not significantly impact a substantial portion of the 
bargaining unit are outside the duty to bargain.'' There is no 
definition of these terms provided and should there be a 
dispute as to whether this standard is met, it will not be 
resolved by an independent third party, but by the DHS internal 
labor relations board.
    On due process, the proposed DHS regs would allow the 
Secretary, as we've heard, to define an unlimited number of 
offenses requiring mandatory termination without any 
independent review of the charges. Now, these DHS mandatory 
removal offenses are even more draconian actually than the IRS 
deadly sins which have been discussed. At least the IRS deadly 
sins are subject to independent review and are set by statute, 
not subject to the whim of a current or future Secretary.
    It is important to note that President Bush supports 
repealing this mandatory termination provision that is in 
effect at the IRS. And as Ms. Norton mentioned, this has 
currently already passed the House. Now, under the proposed 
regs, we've heard that the MSPB appeals process has changed. I 
would offer that it has been gutted. The fairness of the MSPB 
appeals process is undercut as proposed, with the MSPB not 
having the authority to modify agency-imposed penalties and 
also changing the burden of proof standard.
    In conclusion, NTEU supports the mission and the personnel 
of the Department of Homeland Security. NTEU wants the same 
thing that I believe everyone who has been involved with the 
creation of the Department wants. We want a work place where 
employees can be successful and do quality work in an 
environment where they will be treated with dignity and 
respect, and of course, where the Department can act swiftly 
and decisively to protect our country.
    Changes in these proposed regulations are needed if the 
agency's goal to build a DHS work force capable of 
accomplishing its critically important missions is to be 
successful. As drafted, these regulations do not provide for a 
fair, transparent and credible HR system. And it will fail if 
implemented as written.
    As I have heard many high ranking DHS officials say on many 
occasions, failure is not an option for the Department of 
Homeland Security. NTEU looks forward to continuing to work 
with Congress, with the administration and the Department to 
change these pro-
posed regs and to help the Department design and implement an 
HR system that can be successful for the Department, for the 
country and for the employees.
    Thank you.
    [The prepared statement of Ms. Kelley follows:]

    [GRAPHIC] [TIFF OMITTED] T5409.073
    
    [GRAPHIC] [TIFF OMITTED] T5409.074
    
    [GRAPHIC] [TIFF OMITTED] T5409.075
    
    [GRAPHIC] [TIFF OMITTED] T5409.076
    
    [GRAPHIC] [TIFF OMITTED] T5409.077
    
    [GRAPHIC] [TIFF OMITTED] T5409.078
    
    [GRAPHIC] [TIFF OMITTED] T5409.079
    
    [GRAPHIC] [TIFF OMITTED] T5409.080
    
    [GRAPHIC] [TIFF OMITTED] T5409.081
    
    [GRAPHIC] [TIFF OMITTED] T5409.082
    
    [GRAPHIC] [TIFF OMITTED] T5409.083
    
    [GRAPHIC] [TIFF OMITTED] T5409.084
    
    [GRAPHIC] [TIFF OMITTED] T5409.085
    
    [GRAPHIC] [TIFF OMITTED] T5409.086
    
    [GRAPHIC] [TIFF OMITTED] T5409.087
    
    Mrs. Davis of Virginia. Thank you, Ms. Kelley.
    And all the way from Honolulu, we have Mr. Randall. Mr. 
Randall, you're recognized for 5 minutes.
    Mr. Randall. Thank you, Chairwoman Davis, Chairman 
Voinovich. I'd like to thank you for the opportunity to come 
out and testify out here, even if it's such a long way. I thank 
the subcommittee.
    I'm Mike Randall, president of the National Association of 
Agriculture Employees. Besides being the president of the 
National Association of Agriculture Employees, I work for USDA 
Plant Protection and Quarantine in Honolulu as a plant 
protection and quarantine officer.
    We represent the Legacy-Agriculture bargaining unit split 
between DHS and USDA in March 2003. We continue to represent 
employees in both. We can make comparisons of the two 
communications systems and management styles between APHIS-PPQ 
and CBP. We can see the before and the after.
    Agriculture inspectors perform regulatory compliance work. 
They need to make on the spot decisions. They have to take 
educated, supportable risks without consulting their 
supervisors. They need to have enough authority and not be in 
fear of losing their jobs.
    Who would think of regulating a walking stick unless it had 
insect exit holes, was made of citrus wood or had mud on the 
tip? These are all reasons to regulate a walking stick. The 
customer is not going to be happy about having his walking 
stick regulated. We can try to explain our actions.
    Our union collaborated with DHS and the other labor 
organizations in the development of the personnel system prior 
to the agency making its decision upon the regulation 
proposals. We were obviously not in at the decision phase. DHS 
and OPM need to materially modify the proposal if they intend 
to provide a humane system and an environment that will address 
the needs of our specialty in the Department's mission and be 
fair to our bargaining unit employees.
    The proposed DHS personnel system proposals are designed 
for a police or military organization, not at all appropriate 
for the civilian labor force. They are not designed to advance 
unique missions and goals of protecting American agriculture. 
They discourage necessary communication and feedback essential 
in the scientific program and instead encourage silence and a 
management retaliation. They will not attract and maintain a 
highly skilled and motivated work force for performing homeland 
security functions and agriculture quarantine inspection 
functions. That presages disaster for DHS's mission to the 
extent it encompasses protecting American agriculture and food 
supply.
    In order to make sweeping changes in the personnel system 
and be successful in accomplishing DHS's missions, the 
Department will need buy-in from the employees. Unfortunately, 
given Customs' and Border Protection's refusal to adhere to the 
personnel system by which it has been obligated to abide by 
March 2003, and its evident lack of desire to improve the lot 
of our agriculture bargaining unit employees through purely 
administrative actions it could have taken, we do not, and we 
cannot trust CBP or DHS in their roll-out of the new personnel 
system.
    On pay, it's hard to have trust. The changes in pay require 
trust. Countless management actions or inactions during the 
past year have caused distrust. There have been continuing pay 
fiascos where employees have gone up to a month with no pay or 
the wrong pay. CBP has imposed shift changes and canceled 
overtime, leaving agriculture quarantine work undone. This has 
resulted in decrease in pay for most agriculture inspectors.
    DHS's pay banding proposal has a component based upon 
performance evaluation. Legacy-Agriculture employees are 
fearful of this performance component. CBP has inserted other 
Legacy agency managers from INS and customers into the front 
line agriculture reporting chain. Many Legacy agency managers 
from other agencies have demonstrated and continued to show 
disdain and disregard for the agriculture protection mission. 
These managers are now in our performance evaluation food 
chain. As agriculture inspectors know, a bit of bad food in the 
food chain can cause Mad Cow.
    Labor management relations, no communication is the 
apparent goal of DHS. This starts with prohibitions on union 
presence at formal meetings and negotiations. Prohibitions 
extend to the employee deployment and new technology. These 
prohibitions in bargaining are so expansive in scope they 
effectively preclude any meaningful negotiations including 
anything classified as work or any item that an employee 
touches. Bars on negotiations over deployment exclude most 
actions employers could perform involving a verb, any verb. 
What is not classifiable as a deployment? Not much, if 
anything.
    The new technology prohibition could preclude negotiations 
about safety issues arising from an introduction of a new 
technology. Shame. During our first year with CBP, CBP 
management showed little to no interest in complying with 
existing law and regulations regarding labor relations. CBP 
continually violated an FLRA mediated settlement agreement we 
reached previously with USDA, an agreement that required 
negotiations. They violated a memo issued by Under Secretary 
Janet Hill that clearly states that this and other pre-DHS 
agreements were binding upon DHS management.
    Nevertheless, CBP insisted upon implementing without 
negotiation and offered only post-implementation bargaining. 
Negotiations have yet to occur, despite numerous requests.
    Often, CBP wrongfully claims national security. An example 
is a refusal to provide the union a list of the employees we 
represent in their work locations, a contract requirement 
ignored. I guess they just don't want us to know who we 
represent and where they're at.
    Even when CBP does not assert national security, it 
implements countless changes without negotiating, occasionally 
offering post-implementation bargaining. This is another way to 
say, we really don't want to negotiate with labor and the 
employees it represents. We spit on your contracts and 
agreements. It does not please the king.
    CBP, a law enforcement agency, should observe the law, not 
flaunt it. Now, DHS would change the rules to legalize all 
CBP's transgressions. Where are we going with this personnel 
system? Many of these proposed personnel system changes will 
cement the foundation of an authoritarian law enforcement work 
place. Agriculture work is regulatory enforcement compliance 
from the public as sought, not extracted. Agriculture work 
requires that input be taken from the field.
    Changes in a scientifically sound program must be 
suggested, observed and tested from the field from the front 
line. These things cannot be dictated from central control, top 
down management, particularly from CBP management, dominated by 
former Customs managers, who have zero training, experience or 
understanding of the agriculture mission and no desire to 
learn.
    Mrs. Davis of Virginia. Mr. Randall, I don't mean to be 
rude and interrupt you here, but we have your full statement in 
the record. Could you summarize it? I know that Senator 
Voinovich has to leave, and we have to be out of the room. We'd 
like to have time for questions.
    Mr. Randall. DHS needs professional, experienced, 
scientifically schooled agriculture inspectors to continue the 
agriculture mission. It will not succeed should DHS-CBP decide 
to replace these inspectors with generic law enforcement types. 
Many agriculture inspectors have been offended by the CBP 
management style, they are being chased away from the agency. 
Career change is at the center of discussion with many long 
term employees not yet at the retirement threshold.
    With communication, trust can be built. Without 
communication, there is no trust and the system fails. There 
are a number of good ideas in the proposal; however, there is 
too much in the proposal that thwarts communication and kills 
mutual respect and trust. These proposals do not meet the 
standards and values the collaborative groups set. Diversity is 
another one of these values.
    Thank you, Chairwoman Davis and Chairman Voinovich. Thank 
you for the opportunity to fly all the way out here from 
Honolulu and I hope everybody has a good lunch.
    [The prepared statement of Mr. Randall follows:]

    [GRAPHIC] [TIFF OMITTED] T5409.088
    
    [GRAPHIC] [TIFF OMITTED] T5409.089
    
    [GRAPHIC] [TIFF OMITTED] T5409.090
    
    [GRAPHIC] [TIFF OMITTED] T5409.091
    
    [GRAPHIC] [TIFF OMITTED] T5409.092
    
    [GRAPHIC] [TIFF OMITTED] T5409.093
    
    [GRAPHIC] [TIFF OMITTED] T5409.094
    
    [GRAPHIC] [TIFF OMITTED] T5409.095
    
    [GRAPHIC] [TIFF OMITTED] T5409.096
    
    [GRAPHIC] [TIFF OMITTED] T5409.097
    
    [GRAPHIC] [TIFF OMITTED] T5409.098
    
    Mrs. Davis of Virginia. Thank you, Mr. Randall, and I 
appreciate your flying all the way out here from Honolulu, and 
sorry you had to come from warm weather to cold weather. And I 
hope I get lunch today. I'm not sure I'm going to. And I doubt 
Senator Voinovich is, either.
    Senator Voinovich, I'm going to go to you first, because I 
know you have to leave.
    Senator Voinovich. First of all, I want to thank you for 
being here. I also want to thank you for the input that you've 
had in this, I think it was 10 months of dialog between the 
unions and the people in the Department. I'm a little 
disappointed, Mr. Gage, that you feel that some of the 
observations that your folks had were ignored in terms of some 
of the final regulations.
    One of the reasons why we're having this hearing is to give 
you a chance, as I mentioned earlier, to air your concerns 
publicly about this in hopes that we can see some changes made 
during this period. And I welcome, and I know you've got them 
it in your statement, your thoughts as to what are the key 
issues that you really think need to be addressed for this to 
be a successful operation.
    Second, Mr. Randall, it appears from what I can glean from 
your testimony that part of your concern about these new regs 
is the very bad experience that your people have had who have 
been transferred over to this new department, is that correct?
    Mr. Randall. Absolutely. Our structure, anybody above GS-13 
has been removed from our working environment in agriculture, 
shipped off to admin, to enforcement, to intelligence. Very few 
times has anybody from Agriculture been selected to command an 
overall operation in a port situation. Those people are gone, 
our organization has just been slipped into the Customs 
organization that is insensitive to the agriculture mission.
    We have important homeland work to do, we're willing to do 
it, we have to continue doing the agriculture work 24 hours a 
day. It cannot stop being done for a moment, because the 
chances of letting in something agricultural, you can weigh 
that against the terrorism risk. It's ever-present. It's just 
as bad.
    Senator Voinovich. That's something that I'm going to look 
into. One of the concerns that I think all of us had was that 
if you integrated various agencies into this new department, 
what kind of an experience would it be for them. Obviously 
yours hasn't been very good, and I think you've raised some 
legitimate concerns here.
    One of the things that I was worried about in the beginning 
was the collaborative process. Many of you may know I would 
have liked to have seen mandatory arbitration, because I felt 
that arbitration might lead to more openness and 
responsiveness. Could you share with me your observations about 
the process and what was good about it? What part of it most 
bothered you?
    Ms. Kelley. Well, I would say, Senator, that the process 
was good, as far as it went. It just did not go far enough. Our 
involvement was around data collection, information gathering 
and information sharing, all of which was wide open and shared 
with all the members of the design team.
    But the inclusion and collaboration stopped there. There 
was no collaboration on prioritizing the options presented to 
solve the problems, talking about which pieces could be used 
from different options to come up with a solution. And in most 
areas where there were a range of options identified to solve a 
problem the Department identified that was a valid issue, they 
seemed to have always chosen the extreme solution, rather than 
one that would solve the problem they identified.
    So we were not involved at all in decisionmaking leading up 
to these proposed regs. I mean, it stopped with information 
sharing. And then of course, we did have the SRC meeting, the 
open hearing. But it was, the things that are in these 
regulations were a surprise. They do not reflect NTEU's work as 
a part of this design team. And no explanation----
    Senator Voinovich. The point is that you were on the design 
team, but that design team dealt with the issues you just 
mentioned?
    Ms. Kelley. It was fact gathering, data collection, 
information sharing.
    Senator Voinovich. Information sharing. But then who made 
the recommendations for the regulations?
    Ms. Kelley. We had no role in that. DHS and OPM did that.
    Senator Voinovich. What was the steering committee?
    Ms. Kelley. The senior review committee, we had a 3-day 
hearing where we talked about issues as a result of 
presentations of the design team, and from there, the 
Department and OPM went off to write the regulations.
    Senator Voinovich. I think Director James and Admiral Loy 
mentioned the ``senior design team.''
    Ms. Kelley. The senior review committee.
    Senator Voinovich. Were you on the senior review committee?
    Ms. Kelley. I was. We all were. That was the 3-day meeting.
    Senator Voinovich. So that was the senior review committee.
    Ms. Kelley. Yes.
    Senator Voinovich. They heard from you during that 3 day 
period. And then after that was over, you're not sure who got 
in the room and decided on----
    Ms. Kelley. I know it wasn't us. Now, there has been 
ongoing access and communication. I mean, if we need to talk to 
the Secretary or OPM, we have those opportunities to ask 
questions and they're clarifying questions. But I have never 
received an explanation as to why the most extreme solutions to 
the issues were put in these proposed regs versus other options 
that had been put forth that would have addressed the 
Department's issues.
    Senator Voinovich. All right. Was it more open than you 
expected it would be? I know we talked before about what was 
going to happen. I was concerned that they would go off and 
quickly make decisions, and Director James indicated to me that 
she wasn't going to do that, they were going to try to get as 
much input as possible.
    Ms. Kelley. I think the information sharing and data 
collection was wide open and it was transparent and it was all 
inclusive. That part of it was. But at one point, we had asked 
that the 52 options that were being presented to the senior 
design committee, that the design team would do more to 
prioritize them, to perhaps pare them down and present the top 
8 or 10 to the senior review committee. And those 
recommendations were declined.
    Senator Voinovich. So what happened was that they developed 
the recommendations, you got the information and then they met 
with you in that 3 day period and talked about the 52 options?
    Ms. Kelley. Yes.
    Senator Voinovich. And the 52 options were related to the 6 
areas that they were looking at?
    Ms. Kelley. Yes.
    Senator Voinovich. OK. What you're saying is that those 
were discussed during the 3-days, and that you feel some of the 
options that were more palatable to your way of thinking were 
ignored and that the ones that you considered more extreme were 
the ones that got preference, is that right?
    Ms. Kelley. Yes. And I would add, not only that were more 
palatable to NTEU, but that solved the problem the Department 
identified. For example, the speed with which appeals are heard 
and resolved, the speed with which bargaining is conducted. We 
proposed and were willing to come up with solutions that would 
have addressed those issues as defined.
    So I wouldn't even say it was just about palatable. We 
provided options and supported options that solved the problem 
they identified.
    Senator Voinovich. In your opinion, they did what fulfilled 
the mission they were trying to accomplish?
    Ms. Kelley. Yes.
    Senator Voinovich. Have you compared the proposed 
regulations side by side with your preferences?
    Ms. Kelley. We are in that process now, of course, with the 
167 pages. We are doing exactly that, and we will be responding 
to all of them, even much more than what you heard from us 
today. Because there are single words in those 167 pages that 
make a big difference that we didn't even have the opportunity 
to talk about today.
    But yes, we will be aligning those and show what solutions 
could be implemented that solve the Department's problems and 
are appropriate solutions that are not extreme. We will be 
doing that.
    Senator Voinovich. I think that the members of our 
committee would be interested in your views on those options. 
That would be very helpful to us, and perhaps we can also weigh 
in and share those with the Director and Mr. Loy and Secretary 
Ridge.
    Ms. Kelley. That would be great, thank you.
    Senator Voinovich. Mr. Gage.
    Mr. Gage. The concern I have on the design team, and 
especially the 3-day meeting is that there was a disconnect 
between HR types and operational managers. And I think in our 
debate, and when we were talking about these things, I thought 
there was somewhat of a movement among the operational managers 
that when you discussed these things from a practitioner's 
point of view on behalf of employees that they really didn't 
understand what a lot of these things would do, and the time 
and money and what a huge change it was going to entail on the 
work site, in the middle of this critical mission.
    That's the thing I'm still concerned about with Homeland 
Security. Going into some really radical moves here at a time 
when the agency is new and when there's strain on the 
management anyway. I'm really hoping that Secretary Ridge will 
look at this from not the theoretical abstract HR point of 
view, but from a real operational one, and see that some of the 
things we're saying really make sense from an operational point 
of view.
    Senator Voinovich. So your observation is that the human 
resources people prevailed over the operational people?
    Mr. Gage. Yes, at this point. Hopefully it's not over yet.
    Senator Voinovich. Well, one of the things we've been 
trying to do is to bring HR people up and give them more input 
into the process. But what you're saying is, they've come up 
with a lot of ideas, but from a practical point of view, you 
don't think some of them make sense.
    Mr. Gage. I would hope their input period is over. 
[Laughter.]
    Senator Voinovich. I would like, if you feel comfortable, 
for you to share with me some of the complaints that you have 
received from TSA employees. I must tell you that since I've 
had my pacemaker installed, I've really gotten to know some of 
the people in TSA quite well. [Laughter.]
    I've been all over the country, and I really go out of the 
way to stop and talk to TSA employees and you're right, there's 
a lot of unhappiness. But I'd say it's 50-50. Some say things 
are fine, others say we've got problems. One thing that I have 
observed, though, is that the managers really have not had the 
training that they need to do the job that they're supposed to 
do.
    And the difference from one place to another is absolutely 
astounding. It is my understanding that TSA may eventually be 
merged into the new personnel system. It seems to me that if 
they're going to do that, then it might make sense to give the 
opportunity to TSA employees to bargain collectively.
    Mr. Gage. It's so incredible that they know that there's 
all these problems, but the No. 1 thing is, you can't give an 
employee the right to contest anything. And that just doesn't 
add up to me. When you know there's things going wrong, and 
employees really have nowhere to turn, that's the thing that 
breaks your heart about this and I think really causes a great 
sense of frustration in our work force there.
    Senator Voinovich. Well, again, I'm interested in getting 
your best information on the options and what you think the 
alternatives could be.
    Mr. Gage. Thank you, Senator.
    Senator Voinovich. I'm going to excuse myself. I apologize 
for running out. But again, thank you for all of the work that 
you have done, and I hope to continue to work with you in the 
future. There's a whole lot more on the table. One of these 
days I'd like to have a hearing on the Defense Department.
    Mrs. Davis of Virginia. When you do, I think I might like 
to join you.
    Thank you, Senator.
    Senator Voinovich. Madam Chairwoman, thank you very much. 
I've enjoyed working with you, and I look forward to working 
with you in the future. Hopefully this afternoon we'll get GAO.
    Mrs. Davis of Virginia. I hope so. Thank you, sir.
    And again, I apologize to our panel. They have scheduled 
this room for another hearing, so we're being pushed out. But I 
do want to, Mr. Gage and Ms. Kelley, ask you this. I was real 
pleased to hear Director James and Admiral Loy talk about the 
collaboration and the openness and thought that you all were 
going to be happy about that.
    But I'm really disappointed to hear that the openness was 
basically just for fact finding information. And in that 
regard, I assume you had the ability to give some 
recommendations. And if so, were any of your recommendations, 
Mr. Gage or Ms. Kelley, were any of your recommendations, even 
1 minute one, were any of them used?
    Mr. Gage. Well, in the key area of employee appeals, 
collective bargaining, no.
    Ms. Kelley. And in pay, I would also add no. What I would 
say about the openness of the process on the information 
gathering is that was a very positive experience for me and for 
NTEU. Because very often in dealing with agencies, even in a 
bargaining environment, we are constantly chasing information 
and trying to get the facts upon which they are relying. In 
this case, I do feel that we have all the information that they 
are looking at. But we were excluded from any impact on the 
decisionmaking process.
    We did put forth options that, as I said, as we put them up 
in the design process, I will put them up tomorrow, send them 
to you and to Senator Voinovich as he requested, to show that 
the options we put forth solved the problems that the 
Department identified. And yet they were not adopted.
    Mrs. Davis of Virginia. Did the Department give you any 
reason why they did not use your options, the ones you 
preferred?
    Ms. Kelley. No. In fact, probably the one thing I haven't 
said about the process that needs to be said is, what was 
missing from what I describe as a true collaboration is, at the 
point of where data collection was over, there was no give or 
take. There has been no response, at least to me, and I don't 
know about John or Mike.
    But I have had no response as to why our options were not 
adopted. We have just seen what it is they proposed and without 
exception, I would define it as, they chose the extreme 
solution to the problem rather than other viable solutions that 
met their needs and were better decisions for the Department 
and for employees.
    Mrs. Davis of Virginia. But now they have to go back, you 
go back and you write down what you don't like. Do they then 
not have to come back to us and tell us why? Is that not 
correct? They have to come back to us and explain why they did 
what they did?
    Ms. Kelley. Yes.
    Mr. Gage. What we don't agree to. But the thing that is in 
these things, I mean, OK, they set up a board and they say, 
we're going to have collective bargaining. But then they get 
cute and we talked about gamesmanship, I heard Congressman Mica 
talking about it. All right, let's not have gamesmanship on 
either side, and you don't define collective bargaining in a 
way that really neutralizes it, or you don't tell the MSPB that 
they can't mitigate an action. That's ridiculous when it comes 
to due process.
    And I think if we get some of those things out, well, I 
just hope Secretary Ridge, when we can sit down and explain 
exactly what these things mean, and how they will hurt the 
employees, and they really don't put any type of fairness into 
the system, that he's going to be, we're going to be able to, a 
little more than tinkering, but just putting fair definitions 
to some of these due press issues would help me along in this 
process a whole bunch.
    Mrs. Davis of Virginia. Well, I certainly understand why 
DHS and DOD have to have a streamlined process, especially with 
some of the cases, with the collective bargaining. And you both 
know I don't have a problem with that.
    Mr. Gage. Neither do we.
    Ms. Kelley. We offered streamlined processes. Very, very 
streamlined processes in our options. And you did not see them 
in these proposed regulations.
    Mrs. Davis of Virginia. I'm not asking some of the 
questions that I need to have on record, but let me go to that 
again. How quickly would your streamlined process work?
    Ms. Kelley. I believe there were two different options. One 
offered 15 days, one offered 7. And neither of those are 
included, and in fact, post-implementation bargaining is not 
included in these proposed regulations, not even after the 
fact.
    Mrs. Davis of Virginia. I think that goes to one of my 
questions I had for you, Ms. Kelley. Can you elaborate on that 
post-implementation bargaining, how would it work and was it a 
proposal that you put forward during the consultations and 
rejected?
    Ms. Kelley. Yes. It definitely was a proposal.
    Mrs. Davis of Virginia. Can you elaborate on it, so I'll 
understand it?
    Ms. Kelley. This will be one of the best examples. At ports 
across the country, new shifts are created every day, because 
of whatever information or intelligence are received. And we 
accept the Department's need at times to put the shift in place 
today, to staff it with eight people, eight employees who meet 
certain qualifications.
    In the cases where they would do that for emergency reasons 
without even a streamlined bargaining process, once they 
establish it and everything has been taken care of and we're 
safe, then a post-implementation process would allow us to 
bargain over the procedures used to staff these shifts in the 
future, so that if employees have child care issues, elder 
care, working spouses where they prefer a night shift versus a 
day shift, they would have an opportunity through the processes 
we would negotiate to express their preferences, perhaps 
received those assignments, we would suggest probably by 
seniority.
    But the Department gets to describe and define the 
qualifications of the employees who can even bid on those 
shifts. So all of their controls from a business perspective is 
there. They define the shift they need covered, the number of 
employees, the qualifications of the employees. And what we 
would have the opportunity to bargain after the fact and for in 
the future, for the long run is how that shift is staffed, so 
employees can express a preference and have some say as they do 
today, and as they have done for years.
    Mrs. Davis of Virginia. But it doesn't stop the Department 
from accomplishing the mission that they had at that particular 
moment.
    Ms. Kelley. No, it does not. They act, they do what they 
need to do, and they assign the eight people. And then after 
the fact, on the assumption, our assumption is this will 
continue whether it's for 30, 60, 90 days or a year, so let's 
talk about the assignment, how that happens in the future with 
employee involvement. That's what post-implementation 
bargaining would be. And that scenario plays out day after day 
in port after port across this country, throughout CBP.
    Mrs. Davis of Virginia. I'm going to be interested in 
hearing from DHS why they rejected that particular proposal.
    Let me see if I have any other quick questions I can ask. 
I'm sure I'm going to have some for the record, if I could get 
you all to respond back. Just out of curiosity, Mr. Gage, how 
many of the 50,000 employees at DHS who are represented by 
AFGE, how many are dues-paying members, do you know?
    Mr. Gage. In the Border Patrol, we are very heavily 
organized. We have over, I think we have about 9,000 or 10,000. 
We're probably at about 65 or 70 percent ratio in the Border 
Patrol. In INS, it's lower than that. But I'm trying to think, 
in the new CBP, for instance, we have, it's probably more of 
like a 40 percent ratio of union members, 35, 40 percent in the 
Legacy-INS area. Then we have a lot of small, we have some 
attorneys and the membership there is a little lower. But it 
really depends on the group. The Border Patrol is probably the 
most highly organized.
    Mrs. Davis of Virginia. Is there any way for you to get 
back to me on a number?
    Mr. Gage. Sure.
    Mrs. Davis of Virginia. If you could, overall. Don't break 
it down in agencies, but overall of the 50,000, just so we'll 
have it. It would give me some idea of what we're looking at.
    Mr. Gage. OK.
    Mrs. Davis of Virginia. And I have one last question, and 
then we're going to have to dismiss. Ms. Kelley, the 
regulations as you've said cut back on collective bargaining. 
But the statement by the Department insists that they're 
willing to work collaboratively with the unions, even in areas 
where bargaining is not required. Do you see that as an 
opportunity to work with them?
    Ms. Kelley. I know that's what they say. I don't believe 
that it will happen. I believe there will be enough leeway in 
the advice that is given that it will not be encouraged, 
supported, that managers won't be held accountable to do it, 
and because there is not bargaining, it will be an excuse to 
not discuss, collaborate, share information or do anything.
    In our experience, over the past year, as a lot of new 
issues have come forward, because of the combination of so many 
employees into CBP, for example, we have seen exactly that, 
that they have run roughshod over the process even that is in 
place today.
    Mrs. Davis of Virginia. I think we all agree, and you all 
shook your heads and agreed with me earlier that there does 
need to be some changes. As with anything, and I'm one of the 
first ones guilty of it, change is scary. It makes people 
nervous, especially when you're talking about their livelihood. 
I'm hoping that we can all work together and come up with 
something that's good for our Federal employees. Because you 
are an asset to us.
    The one thing that I have been very pleased with AFGE in, 
and with NTEU, is that the times I've spoken to you, we haven't 
always agree, but we've always been open and discussed the 
issues. I'm hoping we can continue that process.
    And as always, I thank you all for coming and for being 
witnesses today for us. Hopefully we can work through this and 
get some sort of model that will be good for our Federal 
employees down the road. We're going to have some bumps, and we 
all know that. I'm hoping that these hearings will make it open 
and we can get over those bumps without too many injuries along 
the way.
    Anything else?
    [No response.]
    Mrs. Davis of Virginia. I thank you all for coming, and 
again thank you for your patience. With that, the hearing is 
adjourned.
    [Whereupon, at 1:05 p.m., the subcommittee was adjourned, 
to reconvene at the call of the Chair.]
    [Additional information submitted for the hearing record 
follows:]

[GRAPHIC] [TIFF OMITTED] T5409.099

[GRAPHIC] [TIFF OMITTED] T5409.100

[GRAPHIC] [TIFF OMITTED] T5409.101

[GRAPHIC] [TIFF OMITTED] T5409.102

[GRAPHIC] [TIFF OMITTED] T5409.103

[GRAPHIC] [TIFF OMITTED] T5409.104

[GRAPHIC] [TIFF OMITTED] T5409.132

[GRAPHIC] [TIFF OMITTED] T5409.133

[GRAPHIC] [TIFF OMITTED] T5409.134

[GRAPHIC] [TIFF OMITTED] T5409.135

[GRAPHIC] [TIFF OMITTED] T5409.136

[GRAPHIC] [TIFF OMITTED] T5409.137

[GRAPHIC] [TIFF OMITTED] T5409.138

[GRAPHIC] [TIFF OMITTED] T5409.139

[GRAPHIC] [TIFF OMITTED] T5409.140

[GRAPHIC] [TIFF OMITTED] T5409.141

[GRAPHIC] [TIFF OMITTED] T5409.142

[GRAPHIC] [TIFF OMITTED] T5409.143

[GRAPHIC] [TIFF OMITTED] T5409.144

[GRAPHIC] [TIFF OMITTED] T5409.145

[GRAPHIC] [TIFF OMITTED] T5409.146

[GRAPHIC] [TIFF OMITTED] T5409.147

[GRAPHIC] [TIFF OMITTED] T5409.148

[GRAPHIC] [TIFF OMITTED] T5409.149

[GRAPHIC] [TIFF OMITTED] T5409.150

[GRAPHIC] [TIFF OMITTED] T5409.151

[GRAPHIC] [TIFF OMITTED] T5409.152

[GRAPHIC] [TIFF OMITTED] T5409.153

[GRAPHIC] [TIFF OMITTED] T5409.154

[GRAPHIC] [TIFF OMITTED] T5409.155

[GRAPHIC] [TIFF OMITTED] T5409.105

[GRAPHIC] [TIFF OMITTED] T5409.106

[GRAPHIC] [TIFF OMITTED] T5409.107

[GRAPHIC] [TIFF OMITTED] T5409.108

[GRAPHIC] [TIFF OMITTED] T5409.109

[GRAPHIC] [TIFF OMITTED] T5409.110

[GRAPHIC] [TIFF OMITTED] T5409.111

[GRAPHIC] [TIFF OMITTED] T5409.112

[GRAPHIC] [TIFF OMITTED] T5409.113

[GRAPHIC] [TIFF OMITTED] T5409.114

[GRAPHIC] [TIFF OMITTED] T5409.115

[GRAPHIC] [TIFF OMITTED] T5409.116

[GRAPHIC] [TIFF OMITTED] T5409.117

[GRAPHIC] [TIFF OMITTED] T5409.118

[GRAPHIC] [TIFF OMITTED] T5409.119

[GRAPHIC] [TIFF OMITTED] T5409.120

[GRAPHIC] [TIFF OMITTED] T5409.121

[GRAPHIC] [TIFF OMITTED] T5409.122

[GRAPHIC] [TIFF OMITTED] T5409.123

[GRAPHIC] [TIFF OMITTED] T5409.124

[GRAPHIC] [TIFF OMITTED] T5409.125

[GRAPHIC] [TIFF OMITTED] T5409.126

[GRAPHIC] [TIFF OMITTED] T5409.127

[GRAPHIC] [TIFF OMITTED] T5409.128

[GRAPHIC] [TIFF OMITTED] T5409.129

[GRAPHIC] [TIFF OMITTED] T5409.130

[GRAPHIC] [TIFF OMITTED] T5409.131

[GRAPHIC] [TIFF OMITTED] T5409.156

[GRAPHIC] [TIFF OMITTED] T5409.157

[GRAPHIC] [TIFF OMITTED] T5409.158

[GRAPHIC] [TIFF OMITTED] T5409.159

[GRAPHIC] [TIFF OMITTED] T5409.160

[GRAPHIC] [TIFF OMITTED] T5409.161

[GRAPHIC] [TIFF OMITTED] T5409.162

[GRAPHIC] [TIFF OMITTED] T5409.163

[GRAPHIC] [TIFF OMITTED] T5409.164

[GRAPHIC] [TIFF OMITTED] T5409.165

[GRAPHIC] [TIFF OMITTED] T5409.166

[GRAPHIC] [TIFF OMITTED] T5409.167

[GRAPHIC] [TIFF OMITTED] T5409.168

[GRAPHIC] [TIFF OMITTED] T5409.169

[GRAPHIC] [TIFF OMITTED] T5409.170

[GRAPHIC] [TIFF OMITTED] T5409.171

[GRAPHIC] [TIFF OMITTED] T5409.172

[GRAPHIC] [TIFF OMITTED] T5409.173

[GRAPHIC] [TIFF OMITTED] T5409.174

[GRAPHIC] [TIFF OMITTED] T5409.175

[GRAPHIC] [TIFF OMITTED] T5409.176

[GRAPHIC] [TIFF OMITTED] T5409.177

[GRAPHIC] [TIFF OMITTED] T5409.178

[GRAPHIC] [TIFF OMITTED] T5409.179

[GRAPHIC] [TIFF OMITTED] T5409.180

[GRAPHIC] [TIFF OMITTED] T5409.181

[GRAPHIC] [TIFF OMITTED] T5409.182

[GRAPHIC] [TIFF OMITTED] T5409.183

[GRAPHIC] [TIFF OMITTED] T5409.184

[GRAPHIC] [TIFF OMITTED] T5409.185

[GRAPHIC] [TIFF OMITTED] T5409.186

[GRAPHIC] [TIFF OMITTED] T5409.187

[GRAPHIC] [TIFF OMITTED] T5409.188

[GRAPHIC] [TIFF OMITTED] T5409.189

[GRAPHIC] [TIFF OMITTED] T5409.190

[GRAPHIC] [TIFF OMITTED] T5409.191

[GRAPHIC] [TIFF OMITTED] T5409.192

[GRAPHIC] [TIFF OMITTED] T5409.193

[GRAPHIC] [TIFF OMITTED] T5409.194

[GRAPHIC] [TIFF OMITTED] T5409.195

[GRAPHIC] [TIFF OMITTED] T5409.196

[GRAPHIC] [TIFF OMITTED] T5409.197

[GRAPHIC] [TIFF OMITTED] T5409.198

[GRAPHIC] [TIFF OMITTED] T5409.199

[GRAPHIC] [TIFF OMITTED] T5409.200

[GRAPHIC] [TIFF OMITTED] T5409.201

[GRAPHIC] [TIFF OMITTED] T5409.202

[GRAPHIC] [TIFF OMITTED] T5409.203

[GRAPHIC] [TIFF OMITTED] T5409.204

[GRAPHIC] [TIFF OMITTED] T5409.205

[GRAPHIC] [TIFF OMITTED] T5409.206

[GRAPHIC] [TIFF OMITTED] T5409.207

[GRAPHIC] [TIFF OMITTED] T5409.208

[GRAPHIC] [TIFF OMITTED] T5409.209

[GRAPHIC] [TIFF OMITTED] T5409.210

[GRAPHIC] [TIFF OMITTED] T5409.211

[GRAPHIC] [TIFF OMITTED] T5409.212

[GRAPHIC] [TIFF OMITTED] T5409.213

[GRAPHIC] [TIFF OMITTED] T5409.214

[GRAPHIC] [TIFF OMITTED] T5409.215

[GRAPHIC] [TIFF OMITTED] T5409.216

[GRAPHIC] [TIFF OMITTED] T5409.217

[GRAPHIC] [TIFF OMITTED] T5409.218

[GRAPHIC] [TIFF OMITTED] T5409.219

[GRAPHIC] [TIFF OMITTED] T5409.220

[GRAPHIC] [TIFF OMITTED] T5409.221

[GRAPHIC] [TIFF OMITTED] T5409.222

[GRAPHIC] [TIFF OMITTED] T5409.223

[GRAPHIC] [TIFF OMITTED] T5409.224

[GRAPHIC] [TIFF OMITTED] T5409.225

[GRAPHIC] [TIFF OMITTED] T5409.226

[GRAPHIC] [TIFF OMITTED] T5409.227

[GRAPHIC] [TIFF OMITTED] T5409.228

[GRAPHIC] [TIFF OMITTED] T5409.229

[GRAPHIC] [TIFF OMITTED] T5409.230

[GRAPHIC] [TIFF OMITTED] T5409.231

[GRAPHIC] [TIFF OMITTED] T5409.232

[GRAPHIC] [TIFF OMITTED] T5409.233

[GRAPHIC] [TIFF OMITTED] T5409.234

[GRAPHIC] [TIFF OMITTED] T5409.235

[GRAPHIC] [TIFF OMITTED] T5409.236

[GRAPHIC] [TIFF OMITTED] T5409.237

[GRAPHIC] [TIFF OMITTED] T5409.238

[GRAPHIC] [TIFF OMITTED] T5409.239

[GRAPHIC] [TIFF OMITTED] T5409.240

[GRAPHIC] [TIFF OMITTED] T5409.241

[GRAPHIC] [TIFF OMITTED] T5409.242

[GRAPHIC] [TIFF OMITTED] T5409.243

[GRAPHIC] [TIFF OMITTED] T5409.244

[GRAPHIC] [TIFF OMITTED] T5409.245

[GRAPHIC] [TIFF OMITTED] T5409.246

[GRAPHIC] [TIFF OMITTED] T5409.247

[GRAPHIC] [TIFF OMITTED] T5409.248

[GRAPHIC] [TIFF OMITTED] T5409.249

[GRAPHIC] [TIFF OMITTED] T5409.250

[GRAPHIC] [TIFF OMITTED] T5409.251

[GRAPHIC] [TIFF OMITTED] T5409.252

[GRAPHIC] [TIFF OMITTED] T5409.253

[GRAPHIC] [TIFF OMITTED] T5409.254

[GRAPHIC] [TIFF OMITTED] T5409.255

[GRAPHIC] [TIFF OMITTED] T5409.256

[GRAPHIC] [TIFF OMITTED] T5409.257

[GRAPHIC] [TIFF OMITTED] T5409.258

[GRAPHIC] [TIFF OMITTED] T5409.259

[GRAPHIC] [TIFF OMITTED] T5409.260

[GRAPHIC] [TIFF OMITTED] T5409.261

[GRAPHIC] [TIFF OMITTED] T5409.262

[GRAPHIC] [TIFF OMITTED] T5409.263

[GRAPHIC] [TIFF OMITTED] T5409.264

[GRAPHIC] [TIFF OMITTED] T5409.265

[GRAPHIC] [TIFF OMITTED] T5409.266

[GRAPHIC] [TIFF OMITTED] T5409.267

[GRAPHIC] [TIFF OMITTED] T5409.268

[GRAPHIC] [TIFF OMITTED] T5409.269

[GRAPHIC] [TIFF OMITTED] T5409.270

[GRAPHIC] [TIFF OMITTED] T5409.271

[GRAPHIC] [TIFF OMITTED] T5409.272

[GRAPHIC] [TIFF OMITTED] T5409.273

[GRAPHIC] [TIFF OMITTED] T5409.274

[GRAPHIC] [TIFF OMITTED] T5409.275

[GRAPHIC] [TIFF OMITTED] T5409.276

                                 
