[Senate Hearing 108-100]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-100

          AN OVERLOOKED ASSET: THE DEFENSE CIVILIAN WORKFORCE

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

                                HEARING

                               before the

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

                                 of the

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                       FIELD HEARING HELD AT THE
             WRIGHT-PATTERSON AIR FORCE BASE, DAYTON, OHIO

                               __________

                              MAY 12, 2003

                               __________

      Printed for the use of the Committee on Governmental Affairs


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                   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 Rechtschaffen, Minority Staff Director and Chief Counsel
                     Darla D. Cassell, 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
                      Cynthia Simmons, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator Voinovich............................................     1

                               WITNESSES
                          Monday, May 17, 2003

Hon. David S.C. Chu, Under Secretary of Defense for Personnel and 
  Readiness, Department of Defense...............................     4
Hon. David M. Walker, Comptroller General of the United States, 
  U.S. General Accounting Office.................................     6
Michael L. Dominguez, Assistant Secretary of the Air Force 
  Manpower and Reserve Affairs, U.S. Air Force...................     8
General Lester L. Lyles, Commander, Air Force Materiel Command, 
  U.S. Air Force.................................................     9
Dr. Vincent J. Russo, Executive Director, Aeronautical Systems 
  Center, U.S. Air Force.........................................    11
Dr. Beth J. Asch, Senior Economist, RAND.........................    29
J. Scott Blanch, President, American Federation of Government 
  Employees, AFL-CIO Council 214.................................    31
Michael Druand, Deputy Treasurer, American Federation of 
  Government Employees Local 1138................................    33
J.P. Nauseef, Vice President, Aerospace Defense Technology, 
  Dayton Development Coalition on behalf of Ronald D. Wine, 
  President and CEO, Dayton Development Coalition................    35

                     Alphabetical List of Witnesses

Asch, Dr. Beth J.:
    Testimony....................................................    29
    Prepared statement...........................................   145
Blanch, J. Scott:
    Testimony....................................................    31
    Prepared statement...........................................   158
Chu, Hon. David S.C.:
    Testimony....................................................     4
    Prepared statement...........................................    51
Dominguez, Michael L.:
    Testimony....................................................     8
    Prepared statement...........................................    81
Durand, Michael:
    Testimony....................................................    33
    Prepared statement...........................................   175
Lyles, General Lester L.:
    Testimony....................................................     9
    Prepared statement with attachments..........................    92
Nauseef, J.P.:
    Testimony....................................................    35
    Prepared statement submitted for Ronald D. Wine..............   179
Russo, Dr. Vincent J.:
    Testimony....................................................    11
    Prepared statement with attachments..........................   127
Walker, Hon. David M.:
    Testimony....................................................     6
    Prepared statement...........................................    62

                                Appendix

James Mattice, Dayton Ohio, prepared statement...................   182
Letter dated November 19, 2002, to Hon. Donald H. Rumsfeld from 
  Senator Voinovich..............................................   185
Letter dated 2 DEC 2002, to Seantor Voinovich from Michael L. 
  Dominguez, Assistant Secretary (Manpower & Reserve Affairs) 
  Department of the Air Force....................................   187
Letter dated December 4, 2002, to Hon. James Roche, Secretary of 
  the Air Force, U.S. Department of Defense, from Senator 
  Voinovich......................................................   189
Letter dated 19 December 2002 to Senator Voinovich from Lester L. 
  Lyles, General USAF Commander..................................   191

 
          AN OVERLOOKED ASSET: THE DEFENSE CIVILIAN WORKFORCE

                              ----------                              


                          MONDAY, MAY 12, 2003

                                       U.S. Senate,
              Oversight of Government Management, the Federal      
            Workforce, and the District of Columbia Subcommittee,  
                        of the Committee on Governmental Affairs,  
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 12:35 p.m., in 
Philip E. Carney Auditorium, U.S. Air Force Museum, Wright-
Patterson Air Force Base, Dayton, Ohio, Hon. George V. 
Voinovich, Chairman of the Subcommittee, presiding.
    Present: Senator Voinovich.

             OPENING STATEMENT OF SENATOR VOINOVICH

    Senator Voinovich. The Subcommittee on the Oversight of 
Government Management and the Federal Workforce will come to 
order. Good afternoon, and thank you all for coming.
    First, I would like to thank General Charles Metcalf and 
the Air Force Museum for hosting this field hearing. I 
appreciate your hard work and cooperation. As many of you know, 
this hearing was originally scheduled to take place in 
February, but inclement weather in Washington and Ohio caused 
its postponement. I am pleased that we were able to reschedule 
the event for this spring.
    It's nice to be back in this facility. I visited many times 
when I was Governor of Ohio, and I understand that there is 
going to be another wing dedicated. Hopefully, we'll get a 
chance to come down for that also.
    Today's hearing is entitled ``An Overlooked Asset: The 
Defense Civilian Workforce.'' This is the thirteenth hearing 
that this Subcommittee has held on the formidable human capital 
challenges confronting the Federal Government. I suspect that 
13 hearings is unprecedented, and that this Subcommittee has 
had more hearings on the Federal workforce since 1999 than it 
has at any time since 1978. Nineteen hundred seventy eight was 
when Congress really looked at the last comprehensive review of 
our personnel system in the Federal Government. And it's a 
subject that I made up my mind a long time ago that I was going 
to devote my attention to.
    One of the reasons I came to the Senate was to change the 
culture of the Federal workforce, along with balancing budgets 
and reducing the deficit, and I have tried to get a hold of 
this like a bull dog and don't intend to let it go. And I know 
David Walker, who has been my colleague in this effort, knows 
that we've been at it for a while, haven't we, David?
    Mr. Walker. We have, Senator.
    Senator Voinovich. Today we are examining a significant 
element of the Federal Government's 1.8 million employee 
workforce: The civilian staff of the Department of Defense, the 
almost 700,000 workers who stand behind our men and women in 
uniform each and every day. In other words, what we're talking 
about is having the right people with the right skills and 
knowledge in the right place at the right time.
    I mean this literally--in terms of what's happened right 
here at Wright-Patterson--in that these employees conduct vital 
research and development, administer bases, build and repair 
military equipment in arsenals and depots, operate the 
commissaries and exchanges that are so important to the morale 
of our servicemen and women, and countless other tasks.
    And, General Lyles, I remember when I was here when the 
President visited a couple weeks ago to meet with you and some 
of the others on your team, and how very proud you were of the 
role that Wright-Patterson Air Force Base and the labs had in 
our successful operation in Iraq. And I think so often people 
take for granted what's happening here and how influential you 
have been in terms of the modernization of our Air Force.
    General Lyles. Thank you, Senator.
    Senator Voinovich. Congress and the administration too 
often spend more time examining and trying to ensure the health 
of the uniformed services than the Defense civilian workforce. 
To some extent this is understandable. Military personnel are 
often sent into harm's way, and can expect long separations in 
harsh, isolated locations from their homes and families. These 
are just two aspects of serving in uniform that the vast 
majority of civil servants do not face.
    Nevertheless, we must stop overlooking the Defense civilian 
workforce, and instead ensure that it has the tools and 
resources it needs to perform its absolutely vital missions. We 
will ill serve the men and women on the front lines if the 
workforce designed to support them is inadequately manned and 
trained.
    I would note, however, that this year is different. The 
Bush Administration is working to address these issues, and 
Secretary Rumsfeld and his Defense Department team are to be 
commended for those efforts. And, Dr. Chu, we're very happy 
that you are here today as the Under Secretary for Personnel 
and Readiness.
    Mr. Chu. Thank you, sir.
    Senator Voinovich. In March 2001, the Subcommittee held a 
hearing entitled ``National Security Implications of the Human 
Capital Crisis.'' Among our panel of distinguished witnesses 
that day were former Defense Secretary James Schlesinger, who 
was a member of the U.S. Commission on National Security in the 
21st Century. Secretary Schlesinger discussed a comprehensive 
evaluation on national security strategy and structure that was 
undertaken by the commission. Regarding human capital, the 
commission's final report concluded, and this is very 
important, ``As it enters the 21st Century, the United States 
finds itself on the brink of an unprecedented crisis of 
competence in government. The maintenance of American power in 
the world depends on the quality of U.S. Government personnel, 
civil and military, at all levels. We must take immediate 
action in the personnel area to ensure that the United States 
can meet future challenges.''
    Secretary Schlesinger added further, ``It is the 
Commission's view that fixing the personnel problem is a 
precondition for fixing virtually everything else that needs 
repair in the institutional edifice of U.S. national security 
policy.''
    And it's interesting, I think, and in one of the statements 
that we're going to hear, that some 320,000 military 
individuals today are assigned a task that could be performed 
by civilians, and the reason why they are is because there is 
so much more flexibility in the military side of the Defense 
Department than in the civilian side.
    As I mentioned, since 1999 I have worked to express the 
urgency of the Federal Government's human capital challenges, 
and their impact on critically important government functions, 
such as national security, to my colleagues. I have championed 
a series of legislative reforms in Congress, which should have 
a significant impact on the way the Federal Government manages 
its people in the coming years.
    In fact, the first legislative solution I authored had its 
genesis right here at Wright-Patterson Air Force Base. So it's 
apropriate that we're having this hearing here today. Three 
years ago base leadership shared with me their concerns that 
the civilian workforce was not configured properly to achieve 
current and projected mission requirements.
    Working with my colleagues on the Governmental Affairs and 
Armed Services Committees, we drafted a measure to address 
these workforce shaping challenges. I was the primary sponsor 
of an amendment to the fiscal year 2000 Defense Authorization 
Act that authorized 9,000 voluntary early retirement and 
voluntary separation incentive payments through this fiscal 
year. Of those 9,000 slots, 365 have been used here at Wright-
Patterson Air Force Base, 101 of which were used by the 
Aeronautical Systems Center. I am interested in hearing more 
about how the Department of Defense, as well as the Air Force 
and Wright-Patterson Air Force Base, have used those 
authorities and what impact the announced cuts of 13,000 will 
have on their reshaping effort and the status of the proposed 
reductions to the civilian workforce in the coming years and, 
quite frankly, what's the rationale behind the reductions. Why 
did this come about?
    In addition, significant government-wide flexibilities, 
which I also authored, were included in the Homeland Security 
legislation that became law last year. I hope to learn today 
how the Department intends to use these authorities. For 
example, the rule of three, a statute which, in order to hire 
someone, requires managers to take the top three certified 
candidates, and if they don't like those three, to announce the 
vacancy again, and so on and so on and so forth. This was 
changed in our amendment to the Homeland Security Act. How is 
that going to impact on the Air Force's ability to move forward 
and get the people they need to get the job done?
    Last, but not least, the Department recently presented to 
Congress and requested enactment of the Defense Transformation 
for the 21st Century Act, which includes a proposed ``National 
Security Personnel System,'' NSPS, that would dramatically 
overhaul the way DOD manages its people. Although committees in 
the House of Representatives have examined and marked up NSPS 
in a series of hearings during the past 2 weeks, I am hoping 
today that our Senate Subcommittee may learn more of the 
details and justifications behind this major reform proposal 
and specifically, if possible, how it might impact right here 
at Wright-Patterson.
    I'm delighted now to introduce today's first panel of 
witnesses. Dr. David Chu is the Under Secretary of Defense for 
Personnel and Readiness. Dr. Chu and I have met and discussed 
the Department's workforce challenges on several occasions 
starting, I think, at Harvard University when Kennedy School of 
Government Dean Nye made human capital the topic of a series of 
executive sessions. I look forward to hearing you tell us about 
NSPS.
    Michael Dominguez is the Assistant Secretary of the Air 
Force for Manpower and Reserve Affairs. Mr. Dominguez has also 
been to my office and we've talked, and we appreciate you being 
here.
    Of course, my good friend, General Lester Lyles, is the 
commander of the Air Force Materiel Command, which is 
headquartered here at Wright-Patterson, and he is doing just an 
outstanding job.
    And probably the person that I have known the longest--I 
think the first time I met you was in 1978, when I was running 
for Lieutenant Governor of Ohio. Dr. Vince Russo is the 
Executive Director of the Aeronautical Systems Center, which is 
also based here at Wright-Patterson. We're so lucky to have 
people like Dr. Vince Russo in our civilian workforce who 
dedicated their lives to their country.
    I'd like to note that these four gentlemen will provide us 
both with a macro view of the Defense civilian workforce from 
the Defense Department and Military Department level, as well 
as the perspective from a major command and base activity.
    And rounding out our first panel is the Hon. David Walker, 
we can call him general too, Comptroller General Walker. He is 
a very proud Marine. I have worked closely with GAO on various 
issues during my time in the Senate. David, I appreciate, as I 
mentioned, your continuing assistance in our examination of the 
Federal Government's human capital challenges, and I'm grateful 
for your willingness to travel out to Ohio to be with us today.
    Thank you all for coming. It is the custom of this 
Subcommittee to swear in all witnesses. Therefore, I would ask 
you to stand and raise your right hands.
    [Witnesses sworn.]
    Senator Voinovich. Thank you. We'll start with you, Dr. 
Chu.

TESTIMONY OF HON. DAVID S.C. CHU,\1\ UNDER SECRETARY OF DEFENSE 
       FOR PERSONNEL AND READINESS, DEPARTMENT OF DEFENSE

    Mr. Chu. Thank you, Mr. Chairman. It's a great privilege to 
be here, and I very much value the chance to offer you the 
Department's thoughts on the crucial issues you have 
identified, and I do have a longer statement for the record, 
which I hope I may submit, but I briefly want to summarize some 
of its key points.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Chu appears in the Appendix on 
page 51.
---------------------------------------------------------------------------
    Civil servants, as you have already noted, are a crucial 
part of the total force that makes the Department of Defense 
effective. When I first came to work in this Department in 
1981, I was privileged to be associated with some of the people 
who came with our government in the great wave of Federal 
expansion during the Second World War, when Mike Huran was the 
acting general council of the Department of Defense. For a 
longer period of time there were more civil servants filling in 
for political appointees than they confirmed general office 
people in the 1960's when President Kennedy issued his famous 
call to public service and who had dedicated themselves to the 
business of government.
    When I returned to the Department in 2001, I discovered 
many of these people had either passed away or had retired or 
were in the process of retiring. They are gone. And I regret to 
say during the decade of the 1990's, we did not during this 
generation have a substitute for these great leaders who leave 
and from whom we have benefitted.
    You and the Comptroller General Walker have spoken 
eloquently on many occasions about the coming human capital 
crisis. I would argue that the human capital crisis is upon us, 
it has already begun with the departure of these valued civil 
servants. And we in the Department, in my judgment, I will come 
to arguments in just a second, need new tools if we're going to 
succeed in recruiting the replacement generation.
    You are probably aware, sir, of the recent review published 
by the Merit System Protection Board that takes a sample of 
Federal job vacancy job announcements and analyzes them for 
their effectiveness, and it gives us a failing grade. It makes 
the point that these do not make the positions that we are 
seeking filled to sound attractive to young Americans. It does 
say, and this may be the heart of the problem, that they do a 
great job of meeting legal requirements. Once that's finished, 
it's difficult to understand and it's amazing anybody gets 
through them.
    And indeed, that is a point that is made also by the survey 
that the Brookings Institution has just completed with the 2002 
college seniors who are graduating this year. They were asked 
about their career aspirations, and specifically about their 
views of public service. Students asked to describe the hiring 
process in each of the government, non-profit community and the 
private sector. They ranked the government first in confusion, 
first in slowness, and first in unfairness. Non-profits were 
seen the simplest and fairest while the private sector was seen 
as the fastest.
    It is not just the students who complain. The commander of 
tactical motor command recently provided me with a report from 
one of his program executive officers who said, ``We've 
encountered this problem when recruiting professional engineers 
at the GS-12 level and secretaries at the GS-6 and GS-7 levels. 
Generally, we have to sit the applicant down and explain 
exactly what to do in order to give them a chance of appearing 
on a certificate, because left on their own, they have no idea 
what to do and either apply incorrectly or give up.''
    And we see that, I think, going back to the Brookings 
survey just completed, in the attitude of the students 
graduating from America's colleges torn where they see the 
chance to offer public service. They see volunteering 82 
percent as being about public service, voting as being about 
public service, working for a non-profit being involved in 
public service, but working for the government, only 29 percent 
of the students see that as public service. And that is an 
image we need to change.
    That's one of the key reasons the Secretary of Defense 
developed the proposal for a National Security Personnel 
System. It is a set of proposals that benefits from more than 
two decades of experimental powers the Congress has given this 
department, which it expanded substantially during the decade 
of the 1990's.
    Although we have China Lake, which began around 1980, the 
Department was joined in this by my colleague, Mr. Dominguez, 
over the last year, really since March 2002, and has been 
engaged in a major review of the lessons we've learned from 
those demonstrations, which currently embrace about 30,000 
Department of Defense employees.
    And we do have authority within the Federal Government 
within the Department of Defense to expand those best practices 
to the laboratory and acquisition workforces, and first in the 
beginning that expansion was published in April 2000.
    The proposal for a National Security Personnel System would 
indeed take these same ideas and apply them to the Department's 
civilian workforce as a whole, and there are three key features 
that I would like to emphasize in my summary today.
    First, much more expeditious hiring practices so that we 
are seen as one of the best, not one of the worst, to apply to 
for young Americans. It takes the Department of Defense an 
average of about 90 days to hire someone. Today that's far too 
slow in competition with the private sector.
    Second, we would like to move to pay banding for our 
workforce as a whole, which includes a variety of important 
attributes, including emphasized work performance in 
determining someone's pay.
    And third, we would like to move to national bargaining 
with our union partners when it comes to human resource issues 
that cut across the Department, which currently under the 
present statute it has been bargained at the local level. It is 
to solve these hiring problems, it is to be able to convert 
some of the 320,000 positions we've identified as being 
possibly those which civilians could undertake to civil service 
status.
    Those are the important reasons for presenting this 
proposal at this time this year and for urging the Congress to 
consider this favorably. We look forward to working with you, 
Mr. Chairman, on this proposal and on your questions this 
afternoon.
    Senator Voinovich. Our next witness is Comptroller General 
Walker.

 TESTIMONY OF HON. DAVID M. WALKER,\1\ COMPTROLLER GENERAL OF 
       THE UNITED STATES, U.S. GENERAL ACCOUNTING OFFICE

    Mr. Walker. Thank you, Senator. It's a pleasure to be here. 
I must say that this is very impressive that you were able to 
get four presidential appointees with Senate confirmation to 
come to a field hearing. It's probably unprecedented, as far as 
I know. And I can say that I'm here for two reasons, first, the 
importance of the topic at hand, namely the human capital issue 
and, second, out of abundance out of respect for you and your 
ability, because I believe that you're one of the most 
outstanding members of the U.S. Senate, and it's a pleasure to 
be here to talk about this important topic.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Walker appears in the Appendix on 
page 62.
---------------------------------------------------------------------------
    As you know, Senator, I've been a long-standing supporter 
of government transformation, and human capital reform in 
particular. I've also had the privilege of being an observer, 
and still being an observer, on the Department of the Defense's 
business practices implementation board, so I know firsthand of 
Secretary Rumsfeld's, Secretary Chu's, and others at DOD's top 
leadership commitment to the need to transform the way the 
Department of Defense does business, and agree that fundamental 
change is necessary.
    At the same time DOD has 9 of 25 high-risk areas on GAO's 
high-risk list. DOD is No. 1 in the world for the standard of 
excellence in fighting and winning armed conflicts. It's an A 
plus. It's a D on economy, efficiency, transparency, and 
accountability. Part of that is the need for more 
administrative actions. Part of that is a need for some 
legislative flexibility. It's clear that management needs 
reasonable flexibility to deliver results with available 
resources. At the same time, it's also important that 
appropriate safeguards should be in place in order to maximize 
the chance for success and to minimize the chance of abuse.
    Current Federal hiring classification pay systems are 
outdated and in need of fundamental reform. Many of these 
challenges exist at DOD, and many, quite frankly, are 
government-wide challenges and not solely those experienced at 
DOD.
    Several of DOD's proposals are agency specific and merit 
serious consideration such as the military reforms and selected 
civilian reforms. Others are much broader with significant 
potential implications for the civil service system in general, 
and OPM in particular, the Office of Personnel Management, such 
as broad banding pay for performance and re-employment 
provisions.
    In our view, in GAO's view, it would be prudent and 
appropriate to consider these on a government-wide basis, not 
to slow down DOD reforms, but to broaden the opportunity for 
these reforms to be available to other parts of the government 
who can demonstrate that they are deserving and have an ability 
to properly implement these reforms.
    Irrespective of whether these reforms are pursued on a 
single agency or on a government-wide basis, we believe it is 
critically important to include appropriate safeguards to 
minimize the chance of abuse and to maximize the chance of 
success. This is particularly critical in connection with pay 
for performance and reduction in force provisions.
    In my statement I outline a number of suggested safeguards 
for consideration by you and the Congress, Mr. Chairman. I 
would respectfully ask that my statement be included in the 
record, although I may want to make a few minor modifications 
for the final version. I would also----
    Senator Voinovich. OK. It's without objection.
    Mr. Walker. Thank you, Mr. Chairman. I would also note the 
importance that DOD take a more comprehensive and integrated 
approach to strategic workforce planning. When I say 
integrated, I mean the uniformed workforce, the civilian 
workforce, and the contracting corps. All three are critically 
important to achieve the mission, and all too frequently, as 
has been noted before, the Federal Government has viewed its 
civilian workforce as a cost to be cut rather than an asset to 
be valued.
    In addition, I note the importance of giving consideration 
to adopting a chief operating officer concept, which I note in 
my testimony, and I won't elaborate on it at this point in time 
other than to say if we want to make transformation happen, and 
if we want it to stick, then I believe that this concept has 
particular merit at DOD in order to ensure continuity and 
continued effort, not only within this administration, but 
between administrations.
    In closing, GAO strongly supports both governmentwide and 
DOD transformation efforts and human capital reform 
initiatives. A number of DOD's proposals have merit and deserve 
serious consideration. Others have merit, but need additional 
safeguards. And still others have merit, but possibly should be 
considered on a broader basis. Doing so would help to 
accelerate overall progress in the human capital area 
governmentwide, while not slowing down DOD. It would maximize 
the chance of success, minimize the possibility of abuse, and 
avoid the further bulkenization of the civil service within the 
Executive Branch. Thank you, Mr. Chairman.
    Senator Voinovich. Thank you. Mr. Dominguez.

 TESTIMONY OF MICHAEL L. DOMINGUEZ,\1\ ASSISTANT SECRETARY OF 
   THE AIR FORCE MANPOWER AND RESERVE AFFAIRS, U.S. AIR FORCE

    Mr. Dominguez. Yes, sir, Senator. Thank you for inviting me 
to this hearing. I also have a prepared statement, which I'd 
like to be inserted into the record, and then I'll follow with 
these oral comments.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Dominguez appears in the Appendix 
on page 81.
---------------------------------------------------------------------------
    Senator Voinovich. All of your statements will be inserted 
into the record.
    Mr. Dominguez. Thank you. I want to also----
    Senator Voinovich. It's very important that they do because 
my colleagues aren't here, and I want to make sure--and also 
the testimony of this will be shared with the staff and my 
colleagues on this Subcommittee so that they get the benefit of 
the testimony here today.
    Mr. Dominguez. Yes, sir. I want to say a special thank you 
to you for affording me an opportunity to return to Dayton, 
Ohio. I attended as an Air Force brat junior and much of senior 
high school here in Dayton, and it's a real joy to be back with 
the people of this city and this air base. I also want to thank 
you for the opportunity to participate in this important 
discussion of the challenges facing the Federal civilian 
workforce.
    My comments to you today, and my approach to the 
responsibilities of my office, have been and will be informed 
by my dual status as a presidential appointee and a career 
Federal civil servant. Like my colleagues on this panel, I 
share a deep and abiding respect for the contributions civil 
servants have made and will yet make to the DOD mission and the 
security of the Nation.
    Air Force people face two-entwined challenges. First, the 
workload since September 11 has grown enormously, and the 
second is demand for a different mix of skills than those we 
now possess. Both challenges must be faced simultaneously on 
five axes.
    First, DOD must adopt modern management practices, and I 
speak here of results-based government focused on performance 
outcomes, not resource inputs, and on replacing pay for 
longevity with pay for performance. We must also understand our 
core competencies and learn how that understanding ought to 
affect our management decisionmaking.
    The second, DOD must deploy modern IT systems organized 
around enterprise-wide information architectures. The DOD 
personnel community led by Dr. Chu is making good progress in 
this direction, and the DOD comptroller is spear heading the 
creation of the DOD enterprise architecture.
    Third, we have to re-engineer practices, processes, and 
organizations to take advantage of those modern management 
concepts and those modern IT systems. Re-engineering will strip 
work out of organizations, streamline staff, flatten 
hierarchies, compress cycle times and improve results, and no 
question about it, fundamentally alter jobs, which leads to the 
fourth axis. We have to invest in educating and developing our 
workforce to prepare them for these challenges. It may not be 
rocket science, but it is hard.
    Now, finally, the fifth axis is that the legislation 
enacted by the Congress must enable this transformation. The 
proposed changes to the civilian and military, both active and 
reserve, personnel systems submitted this spring by the 
Department, in my view, when matched with the advances along 
these other axes, will create a fast, flexible, agile workforce 
partnered and aligned with their military and civilian leaders; 
and to fast, flexible organizations pursuing specifically 
designed and precisely identified national security outcomes. 
In doing so, move at a pace of innovation and change that 
eviscerates any enemy's ability to threaten us. Thank you once 
again for this opportunity, and I look forward to your 
questions.
    Senator Voinovich. Thank you, Mr. Dominguez. General Lyles.

 TESTIMONY OF GENERAL LESTER L. LYLES,\1\ COMMANDER, AIR FORCE 
                MATERIEL COMMAND, U.S. AIR FORCE

    General Lyles. Mr. Chairman, Senator Voinovich, thank you 
again for the opportunity to address the state of the Air Force 
Materiel Command's civilian workforce before your Subcommittee. 
And as the hearing reaffirms, human capital strategic 
management is a critical aspect of our many transformation 
efforts. And, Senator, I'd like to let you know that I greatly 
appreciate the considerable support that you personally have 
given and provided in this arena, from your successful 
introduction of legislation to allow the Department of Defense 
to use separation incentives as a force shaping tool, to the 
personnel flexibilities you added to the bill creating the new 
Department of Homeland Security. All of us have benefitted from 
your tremendous efforts and those of your colleagues.
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    \1\ The prepared statement of General Lyles appears in the Appendix 
on page 92.
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    I'm pleased to report, Mr. Chairman, that the current state 
of our civilian workforce of 56,000 men and women strong in Air 
Force Materiel Command is first-rate, which allowed us to 
superbly provide the capabilities that were needed by our 
warfighters in size and technology, acquisition and 
development, logistics, maintenance and sustained testing. 
However, our real concern is not just with the current state. 
Our concern is with the future and whether or not the civilian 
workforce is properly shaped to meet the mission requirements 
and imperatives for the 21st Century.
    Let me call your attention, if I could, to a chart. I would 
like to illustrate the first chart, if someone could put that 
up, please.\1\ Next chart please. Today the average age of our 
civilian workforce is 46 years old, which is significantly 
above that of private industry. They average closer to the late 
30's. An older workforce, of course, is an experienced force, 
and that's helpful in the short term, however, we're concerned 
that 23 percent of our civilian employees are eligible to 
retire this year.
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    \1\ Charts referred to appears in the Appendix on page 119.
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    If you consider the employees eligible for early 
retirement, the figure jumps to more like 49 percent, and in 4 
years 67 percent of our force will be eligible for regular or 
early retirement. And our figures reflect that somewhere 
between 25 and 35 percent of employees retire within 1 year of 
that eligibility, and an additional 15 to 20 percent separate 
the following year. Hence, you can see one of the major 
concerns we have about managing the workforce that's so 
critically needed to meet our national security objectives.
    Clearly we foresee a great deal of employee turmoil over 
the next several years as seasoned employees retire and 
replacement candidates are hired.
    I might add, Mr. Chairman, that demographically 33 percent 
of our civilian force is female, 67 percent is male, while 
minority members represent 21.1 percent of our total force. And 
we are, in addition to everything else, committed to ensuring 
we have a diverse workforce, and that we have implemented a 
number of initiatives, including centralized engineer diversity 
recruitment programs for our command to help us to achieve this 
objective.
    Next chart, please. So, Mr. Chairman, we talked and are 
going to talk a lot about workforce shaping, the separation 
incentives that we currently have available, and those we may 
need for the future. Our command is extremely appreciative of 
the opportunity that you and others have afforded us and our 
centers to reshape our workforce with the passage of these 
workforce shaping separation incentives and initiatives.
    The need for this authority was a key element in our 
ground-breaking workforce study findings. And it has been 
particularly valuable to our product and test centers, Air 
Force research laboratories and in the past, when we closed two 
of our air logistics centers, to allow us to shape that 
workforce and shape it appropriately for the missions we have 
at hand today.
    Next chart, please. This chart documents the usage of the 
authorities that you provided us. In fiscal year 2001, the 
authority could only be used to incentivize employees currently 
eligible for optional retirement. This command used 147 of the 
total 175 allocations that the Air Force executed.
    In fiscal year 2002 we were given authority to use a daisy 
chain and to offer incentives to employees eligible for early 
and optional retirement and resignations. This command used 362 
quotas of the total Air Force allocation of 450.
    For fiscal year 2003, this fiscal year, we're authorized 
750 incentive authorizations. However, due to the unplanned 
reductions that our centers must absorb this year, it is 
unlikely that they will be able to use all of these 
authorizations. To date we've used 270, and I know for sure we 
will not be able to use the full 750 that are available to us.
    Mr. Chairman, these proposed reductions are affecting all 
of us in Air Force Materiel Command, just like the rest of the 
commands within the U.S. Air Force. There is no doubt that 
these workforce reductions are incompatible with workforce 
shaping for the most part.
    We're experiencing some setbacks in our objectives here, 
but we feel optimistic that we will still be able to make 
workforce shaping work for us and work for our command. As we 
become more efficient through transforming our processes, we're 
attempting to develop an attrition strategy that balances the 
need to realign and reduce the workforce with the need to 
ensure that adequate headroom exists for opportunity for 
replacement and replenishment strategies to meet the future.
    Mr. Chairman, there are lots of things that are currently 
under way to allow us to better align our workforce. The things 
that are being done through the proposed legislation and 
policies, what you've done through the Homeland Security Act, 
your proposed Federal Workforce Flexibility Act of 2003, and 
now the National Security Personnel System, we think, will 
allow us the kinds of attention and actions that are necessary 
to properly align and shape our workforce for the future.
    Mr. Chairman, I will close here, and I look forward to your 
questions and comments about these and other things we are 
doing today. Thank you very much.
    Senator Voinovich. Thank you, General Lyles. Dr. Russo.

   TESTIMONY OF DR. VINCENT J. RUSSO,\1\ EXECUTIVE DIRECTOR, 
          AERONAUTICAL SYSTEMS CENTER, U.S. AIR FORCE

    Dr. Russo. Mr. Chairman, let me welcome you to Wright-
Patterson Air Force Base. As you know, we call ourselves the 
birthplace, the home and the future of aerospace. As you also 
know, we could never say that without the people of the past, 
present, and the future of Wright-Patterson Air Force Base. The 
creed of Wright-Patterson was written in 1942, and it states 
that we will carry on the splendid vision and unswerving power 
of those great leaders and innovators, Orville and Wilbur 
Wright, so I'm here today to tell you we still believe in that 
creed. As a matter of fact, we have a book we give our 
distinguished visitors, and I believe I've given you one, has 
that as our title, is sharing that vision of the Wright 
brothers is our creed for Wright-Patterson Air Force Base.
---------------------------------------------------------------------------
    \1\ The prepared statement of Dr. Russo appears in the Appendix on 
page 127.
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    Now, let me take some of the demographics that you've heard 
about in my written testimony and bring them down to the base 
level. Can I have my first chart, please. Next please. Sir, 
this is Wright-Patterson Air Force Base's age demographics, and 
I would like to call your attention first to the green bars. 
Just look across there at the green bars. This was our 
demographics in the late 1980's. You notice they were fairly 
well evenly distributed, the kind of just demographics, I 
think, we would like to see.
    I call your attention to the first two green bars in 
particular. If you add the height of those two bars, you will 
note that 31 percent of our workforce was under the age of 35.
    If you now look forward to those light bars, which is our 
projection for 2007, you'll find our hope today is to exceed 7 
percent, which is a tremendously dramatic reduction from the 31 
percent under the age of 35 to a projection of maybe only 7 
percent.
    Now, a lot of people have asked me, sir, why do I do this 
with pessimism versus optimism, and my answer is it's a mixed 
bag. I am optimistic because it does give us the opportunity to 
bring on a new workforce trained in different ideas, trained 
with different skills than a person like myself may have, so it 
is a tremendous opportunity for us to revitalize our workforce. 
But I also temper that with a little pessimism because unless 
we do this quickly, we are going to lose this incredible wealth 
of experience.
    We are not here dealing with running a Wal-Mart or running 
a data processing center. We are dealing here at Wright-
Patterson with things that are a matter of safety of flight and 
safety of life. Those things are based on experience. A lot of 
experience, as we learn from one airplane to another, we pass 
that experience down to our people.
    As you notice, back in the 1980's we had a workforce that 
allowed us to do that. As we project it in the future, I've 
become increasingly concerned of our ability to pass that 
experience base to a new workforce. There are things that you 
just never learn in college, you have to learn through 
experience.
    May I have the next chart, please. The next chart just 
gives you the same data with regard to years of service. Next 
chart, please. So you asked us to talk a little bit about how 
we use the workforce shaping legislation we've had already. 
Here's the Wright-Patterson statistics. I broke it down one 
level below that for you to show the ASC statistics.
    The low numbers for fiscal year 2001 are very 
understandable to me. By the time we got all the implementing 
criteria it was pretty late. I actually remember getting phone 
calls at home on Christmas Eve from people asking me should I 
do this, Vince, or shouldn't I do this. So it's understandable 
we had a little trouble in the first year.
    The second year when we had plenty of notice, you notice 
the numbers went up dramatically. As General Walker pointed 
out, we also have that here, the ability to use the daisy 
chain. When we got to 2003, you see the numbers have fallen 
again. I think again that's most likely due to our inability to 
use the daisy chain for backfill of senior leaders.
    Next chart, please. So you heard a lot already about the 
legislation for bringing new workforce on. I would like to say 
something else. I would like to talk a minute about retention, 
because not only is it an issue of bringing people on, it's 
also an issue of keeping them here, so we have put a lot of 
attention in the last couple of years on the subject of 
retention. And with your permission, I would just like to 
highlight a few things just to show you that we believe it's 
not just bringing people here, but once you get them here, you 
got to keep them here.
    We have established something called a unified retention 
center where we have a single office for all of our junior 
enlisted, our officers and our civilians that could go to one 
place to get issues dealing with the junior workforce. We even 
gave our junior workforce their own communication devices, 
their own web pages, their own E-mail distributors, all managed 
by our own junior workforce.
    The sheer issues of that generation, which are clearly 
different than the issues of our generation. We're doing 
something I'm particularly proud of, providing probably for the 
first time that I can ever recall, a diversity training for 
22,000 people at Wright-Patterson Air Force Base. All 22,000 of 
us will go through the same diversity training put together by 
probably the greatest mind in that business in this country, a 
guy by the name of Dr. Samuel Papasis. It's an incredible 
ability to get our people more sensitive to the workforces of 
the future, which the demographics will be significantly 
different than those of the past.
    And finally, something we focused on is our supervisors. 
You can go to any HR organization in this country, and they 
will tell you people do not leave their company, they leave 
their supervisors. And so we have put an incredible increased 
attention on getting our supervisors properly trained and 
properly sensitive to the workforces of the future.
    Next chart, please. We have taken on abilities to try to 
train our leaders. I have a favorite saying of mine, I like to 
move a workforce from very efficient managers to very effective 
leaders of the future. So we have our senior leaders. I'm 
teaching leadership principles to our workforce.
    And finally, something that I think I'm equally proud of is 
our ability to have our workforce get master's degrees right 
here on base. We have had that capability in engineering 
through AFIT, and through DAGSI, the Dayton Area Graduate 
Studies Institute for quite a while. And University of Dayton 
has recently come on base to help provide lunchtime master's 
degrees for the engineering workforce.
    But just this year we have done the same thing for business 
people together with the University of Cincinnati, we have 
brought on board here an MBA program that you could get without 
ever leaving the base, all done at lunchtime.
    So I emphasize for my particular part of my verbal the 
retention issue. Now, all the issues that were talked about in 
terms of legislation we fully support. I think that every one 
of them will make life better for us. I am particularly 
interested in the ability to speed up the hiring process. I 
think that is critical.
    I also think that contribution compensation is the way to 
go. I've seen it work in the laboratory based on my laboratory 
experiences, and it works, it's a wonderful tool, and I really 
encourage us to do that.
    And so, Mr. Chairman, I hope you share with me the 
tremendous pride of accomplishment of all the employees here at 
Wright-Patterson Air Force Base. Every day we strive to make 
major contributions and do our best for our U.S. Air Force. We 
are powered by our mission statement that says we bring a 
warrior spirit to this operation. Thank you for this 
opportunity to express my views.
    Senator Voinovich. Thank you very much. I'd like to thank 
all the witnesses for their testimony. Dr. Russo, I really was 
pleased with the last comments that you made in terms of some 
of the things that you're doing to have a better workforce and 
the importance of providing employees additional training to 
help keep them on board.
    I kind of smiled because when I was Mayor of the City of 
Cleveland, all of my employees went to diversity training. When 
I was governor we trained three-quarters of the State 
workforce, and we found that was one of the best things that we 
could possibly do to improve our workforce. It helped them 
become better workers, it improved management and it aided in 
the workforce understanding each other.
    I think many of those employees go home to their own 
families and take the lessons they learned in diversity 
training back into their own households. Many of those 
households had never had diversity training.
    And we started DAGSI while I was governor. And I don't 
know, David, if you know about this or not, DAGSI, The Dayton 
Area Graduate Studies Institute, and this base were very 
concerned about whether or not they were going to be able to 
keep up with AFIT, Air Force Institute of Technology, because 
they were saying they wanted to be able to reach out to other 
places to get education.
    So as an economic development tool, we put together DAGSI, 
which allowed employees to use AFIT, Wright State University, 
the University of Cincinnati, the Ohio State University, and 
many graduate schools throughout the area so that at one same 
price people could go out and pick the courses that they 
wanted. And that was not only important to the people here on 
the base, but it was also important to the businesses in this 
area who were looking for graduates, for Ph.D. recipients to 
work for them. And, of course, we were pleased that the 
Secretary has re-emphasized the importance of the Air Force 
Institute of Technology.
    I'd like to start off my questions by addressing a local 
situation, then maybe move up to the big picture. General 
Lyles, in your testimony you indicated that this announcement 
on the number of people that you can hire is going to impact on 
this great challenge you have to reshape your workforce to take 
on the challenges of this century. That flexibility who granted 
and you used it. Now it's kind of in limbo.
    And I'd like to ask Mr. Dominguez or even you, Under 
Secretary Chu, on this whole issue of being able to have the 
workforce that we need, has the Air Force taken that into 
consideration? Here we are, we want to reshape the workforce, 
and one of the problems of that mindless downsizing in the 
1990's was that once the people left, they never were replaced. 
And the object of early separation and early retirement was to 
make those slots available so that the Department could bring 
in new people, even at the mid level, that had the necessary 
skills.
    Now I would ask you to comment on what can be done to make 
sure that we don't end up at the same time granting all kinds 
of new flexibilities and cutting our nose off to spite our 
face.
    Mr. Chu. I think here at Wright-Patterson you have a 
specific issue, particularly in this command, Mr. Dominguez' 
comment in terms of the civilian workforce size, is relatively 
one in which difficulty is being described for the Department 
as a whole, we plan to reallocate as many of the buyout spaces 
Congress has provided us to others who can use them in a 
particular installation when we cannot use them. That's one way 
we came very close to a 100 percent, in terms of the buyout 
usage in fiscal 2000.
    I think the challenge that you, however, identified cuts 
across the entire department, and that is that you've got 
several developments occurring at the same time. You have 
reconsideration of which functions are core in the Department 
of Defense and should be, therefore, performed by duty 
personnel, either military or civilian, or some mix of the 
same, as opposed to functions that ought to the performed by 
the private sector, and that's going to affect our workforce.
    We are at the same time, as you've noted, attempting to 
move from military to civilian status a large fraction of 
320,000 slots now in uniform that we believe could be performed 
by civilians, some by civil servants in particular.
    We need a more flexible set of rules under which to employ 
these new people, and I know for any individual command and 
individual installation, managing all those moving parts at the 
same time is going to be a significant task. We do think it's 
doable, however. I think we can make this come together in a 
way that's effective. I don't know if Mr. Dominguez wants to 
comment on Wright-Patterson.
    Senator Voinovich. The question I have is whether anybody 
has asked you to do an analysis of what is needed to reshape 
your workforce. What we decide to do is going to impact you, so 
how can we accommodate you to help get the people on board that 
you're going to need. These are frightening statistics here. 
And you're basically saying that it's frozen and you're going 
to lose these people from attrition and you're not going to be 
able to bring in these new people to take their place. Where 
will we be in 2007? We're in pretty bad shape if they don't 
have that ability to bring these folks in.
    Mr. Dominguez. Yes, sir. There is no question about it. And 
this issue for this year is actually now getting to the level 
where I can get engaged with Dr. Chu and his staff. I mean our 
approach in the Air Force has been to try to allow the person 
with the most knowledge and the clearest vision about where the 
problem is and where the solution lies to organize his attack, 
and that's General Les Lyles.
    And our approach also has been to try and enable them to 
use all of the policy tools that were enacted by the Congress 
to shape that workforce without second guessing or putting in 
rules that the Congress had not contemplated. Where we run into 
problems is from others' interpretations of those rules that 
infringe on General Lyles' ability to do something like allow 
early retirement for GS-15, promote some of those older people 
in the 55 and up demographics, and then restructure 
fundamentally an entry level position at the GS-12 to get in 
somebody from the private sector or right out of college. That 
seems to me to be an appropriate use of the kinds of 
authorities that the Congress provided us. That's the daisy 
chain that Vince spoke about.
    As you know, there are other views in the DOD, and we'll 
need to sort those out. I believe General Lyles knows best 
about how to shape this or how to deal with the problem and 
where he needs to go with it. And to the degree that I can, I 
will be his ally and advocate in creating the flexibility he 
needs to get this job done.
    Senator Voinovich. Well, I would specifically like, and I 
say this in front of Dr. Chu, to have in writing just exactly 
how this is all going to work out starting here at Wright-
Patterson and going through the other Air Force facilities. 
When I authorized the workforce reshaping legislation in the 
first place, we wanted to make it specific to Wright-Patterson, 
and I couldn't get the votes. So I talked to Senator Inhofe and 
a few other people who had the same kind of problem in their 
respective places, and we made these 9,000 slots available. I'd 
like to know now that everybody is under way, what's the plan 
in order to deal with the respective responsibilities they 
have.
    Are you going to, for example, reduce the workload or the 
challenges and restructure like Dr. Russo is doing or will you 
continue to have this challenge of not having the manpower or 
the flexibility to accomplish your mission? And I think that's 
the old business of dotting the I's and crossing the T's and 
really getting down into the guts of some of these issues to 
try and make sure that we can continue to shape this workforce 
and to deal with this problem that's looming in the Air Force 
and with these facilities.
    Mr. Chu. We would be delighted to provide that.
    General Lyles. Mr. Chairman, if I can add, the current 
reductions that we're looking at right now for our command, 
this is for the entire Air Force Materiel Command, not just 
Wright-Patterson, is 2,260 positions by fiscal year 2009. 
That's a thousand military and 1,260 civilians.
    And Secretary Dominguez is correct, we tried to use all the 
tools available to us by both Congress, OSD and the Air Force 
to ensure that we smartly try to address this problem.
    I was able to, with the great help of our tremendous 
personnel, people, some of whom are on the stage behind me that 
you've met, some who are in the audience, to figure out if we 
can use an attrition strategy for this fiscal year so we 
wouldn't have to send people out the door with a reduction in 
force sort of prospect. We're probably not going to be able to 
do that for all fiscal years between now and 2009. We're 
looking at a wide variety of things that might be available to 
us to try to address the problem.
    One of the initiatives in very simple terminology that Dr. 
Russo, General Reynolds, myself and all of my commanders are 
doing is looking at the issue of divestiture. We know there are 
tasks and jobs and things that we do today that perhaps are not 
value added, but yet they add to the workload and burdens of 
our people to be able to get the job done.
    So we're trying to get rid of unnecessary policies, 
procedures, paperwork, documentation, reporting, all of those 
things so that we can take workload that is of no value off our 
plates so they can do the many things that we're asking them to 
do as part of our mission and our national security objectives, 
those types of things, along with trying to work with the 
various tools in ways in which we're trying to address the 
manpower situation that we're in. And we look forward, of 
course, in the future, to having the additional legislation 
provided by you proposed by NSPS to give us even more 
flexibility to deal with the problems.
    Senator Voinovich. Well, I think the issue of getting rid 
of some of that stuff is part of what you ought to be doing 
anyway.
    General Lyles. Sometimes it's much harder than you might 
think, Senator.
    Senator Voinovich. I believe it was 2 years ago that I was 
here when we had a little session with college students. 
General, I'm not sure you were here for that, but I met with 
about a dozen students and asked them to share with me whether 
or not they were interested in going to work for the Department 
of Defense. It was very interesting. Some weren't interested at 
all, and others said they didn't know where to get information 
on it. It was just incredible how little they knew about what 
was available. And I'll never forget one of the young men, I 
think he was an electrical engineer, and I think, Dr. Russo, 
you have some kind of an internship or part-time work or 
something----
    Dr. Russo. Right.
    Senator Voinovich. And I recall the military official who 
was there that day told the student we need you and I want to 
have you come on board and so on and we want to talk to you. 
And I turned to him and he said, how long will it take for this 
young man to find out whether or not he can come to work here 
in this program that you have, and he said 6 months. And the 
bright smile on the student's face disappeared.
    And I just wonder with the changes that we put in the 
Homeland Security legislation eliminating the rule of three and 
going to categorical hiring, is that going to be able to be 
reduced down to some reasonable time frame.
    Mr. Chu. Yes, sir, I think it can. That's why we've 
included some of the provisions in the National Security 
Personnel System legislation. We have attempted to enlarge on 
them modestly relative to what you did in the Homeland Security 
Act for the government as a whole. We're very keen on getting 
exactly what you were hinting at, which is on-the-spot 
authority for situations like the college job fair.
    Obviously you have due diligence like this, checking their 
references and so on and so forth, but as we've started to do 
what I would congratulate Wright-Patterson doing at its level, 
which is reaching out to the colleges, to go to the campuses to 
recruit young people to tell them about these opportunities.
    We must solve the problem you've identified, which is it 
takes too long to give them an answer. And at that stage in 
their careers I can understand why they're going to take the 
offer from our competitor, whether it is General Electric or 
one that's a State or local government or one that's a non-
profit organization because it's here and now. We're going to 
put them through a several month process. We need to get beyond 
that. Categorical hiring will help, but we do need, as the 
national security personnel legislation proposes, expanded on-
the-spot hiring authority for certain situations like the 
college job market.
    Senator Voinovich. Well, the categorical hiring procedures 
should have an impact.
    Dr. Russo. Yes, we have to abide by the rule.
    Senator Voinovich. But you have the rule of three.
    Dr. Russo. Right.
    Senator Voinovich. I think the regs still haven't been 
published on that.
    Mr. Chu. That's correct, sir. Government regulations have 
not been written by OPM. We are in the process, however, of 
applying categorical ranking to elements of the defense 
workforce, where we currently possess legal authority, those 
are specifically the entire laboratory community and the 
acquisition workforce, which will eventually benefit Wright-
Patterson as well.
    We're big believers in categorical ranking. I think it 
speeds up the process. It also gives the manager a better 
ability to solve his or her problem. As you know, sir, it's 
very much modeled on the way military promotes junior officers 
to the next grade. There is a best qualified pool, which is 
what is first considered, then a highly qualified pool, a 
qualified pool, not qualified. You need to take each pool in 
sequence. It gives more range.
    The current system, the reason it takes so long, in my 
judgment, there is a tedious process of going down these small 
lists and deciding in excruciating detail whether you have met 
the mark or not. The practice that you've permitted the Federal 
Government to adopt that we are in the process of using at the 
Department of Defense will, I think, substantially improve 
that, but we still do need, I think, sir, broader on-the-spot 
hiring authority to deal with the college kind of situation you 
described.
    Senator Voinovich. And I would like to say we do have 
agencies today that are able to hire people with a 3.5 average 
on the spot, but when you pierce the veil and look into it, 
it's not what they say it is. Yes, I can hire you, and by the 
way, I will submit your name up to so-and-so to look at it and 
then the place you are interested in going looks at you and 
they also go through this interview process, and you lose a lot 
of applicants because it's too cumbersome of a process.
    Mr. Walker.
    Mr. Walker. Mr. Chairman, GAO prides itself of being in the 
vanguard of transformation, including in the human capital 
area. And some of the things that we've done that could be 
helpful here, some are administrative and some are legislative.
    On the administrative front, we've really used internships 
as a strategic recruiting device whereby we've tried to 
identify top talent, we've tried to hire people for 
internships. And what we've been able to do is by keeping them 
in a position for a minimum of 9 weeks, we can hire them 
competitively on a full-time basis when they come out.
    In addition to that, one of the things that, Senator, you 
may want to consider is, one of the things we have at GAO is we 
always have the ability to hire a certain number of critical 
occupations for--it's limited to number and it's limited to 
period of time on a non-competitive basis on the authority of 
the comptroller general to meet critical needs. That concept, 
frankly, may have merit in situations where you're dealing with 
critical occupations and you're dealing with critical needs.
    The last comment I would make is the Congress has provided 
additional authority for realignment authority, for buyouts and 
for voluntary early retirement. I would hope that much of that 
is being used based upon strategic workforce planning concepts 
to deal with some of the issues that the general mentioned, 
rather than position by position because in many cases it's 
trying to realign the overall workforce to deal with skills and 
balances, shaping issues and succession planning challenges, 
which is a broader perspective rather than a position by 
position basis because you're not going to be able to make a 
whole lot of progress if you look at it just on a position by 
position basis.
    Senator Voinovich. One other thing that came up at that 
student roundtable was from one of the young men. He was an 
engineering student from Poland, and because he wasn't a U.S. 
citizen could not go to work for one of these agencies.
    And it seems to me that if you look at the crisis we have 
in recruiting scientists and others, and if you go to the 
graduate schools today and look at the countries from where 
these young people come, you realize we're not producing them 
here in this country. It seems to me that the Defense 
Department ought to be looking at ways to attract these people 
because if you get someone really interested and they have a 
good background, we should put them to work. There is a good 
possibility they may decide to stay. And we need them.
    Mr. Chu. Absolutely. In fact, the issue has come up in 
terms of reconstruction of Iraq in which we would like to use 
individuals who have green card status. The irony as you know, 
sir, we could enlist them in the armed services of the United 
States as a non-citizen, they could even be appointed as a 
reserve officer as a non-citizen, but we cannot, at least under 
the rule we received from OPM, appoint them as a non-citizen 
without first going through a long competitive process to 
demonstrate that there were no American citizens available to 
take those positions. That's exactly the kind of flexibility 
that we're seeking in the National Security Personnel System, 
so we can deal in a common sense way with these urgent needs.
    Mr. Dominguez. Sir, if I may make one last point on this, I 
want to reiterate our support for the flexibility envisioned in 
the National Security Personnel System, but we're not waiting 
for that to happen. The Secretary of the Air Force about 2 
weeks ago directed a re-engineering of the civilian fill 
process across the U.S. Air Force with the objective of 
dramatically reducing cycle time, so we'll move whatever that 
we have to move to get this thing to work faster. That could 
envision technology, new ways of working, eliminating layers of 
review, deregulating classification authorities and those, so 
lots of things we're looking at to re-engineer that process 
within the next couple of months.
    Senator Voinovich. Mr. Dominguez, you're a career employee, 
aren't you?
    Mr. Dominguez. Yes, sir.
    Senator Voinovich. Can you go back into your career 
position after this administration? Are you allowed to do that?
    Mr. Dominguez. I am allowed to do that, yes, sir.
    Senator Voinovich. That's good. That gets back to what 
Comptroller General Walker was talking about. You have this 
terrific work that Dr. Chu is doing, and you're doing, and so 
forth, and we're reviewing personnel flexibilities, but the 
continuity of the career workforce is very important.
    So often a new group comes in and reinvents the wheel, and 
this concept of having a COO--like Comptroller General Walker 
has suggested, should be something we may want to consider.
    The other thing is, I think, it would lend itself to better 
recruiting if they knew what they were going to have. There has 
to be some certainty where people can look down the road and 
say these people are really committed and serious.
    And part of the problem that we identified at Harvard in 
talking to some of the students was that some would rather go 
to work for a non-profit or private firm than to go work for 
the government because, you know, who knows next year or the 
year after that they're going to outsource the work. If I were 
in their position, I would want some continuity at the agency 
I'm going to go to work for.
    Dr. Russo. Yes, sir. Last year when you had the first 
potential layoffs at Wright-Patterson, we did lose some people 
who were on the hook, so to speak, to come work for us, but the 
uncertainty did change their minds for us. So stability would 
be something I certainly would like to see, the ability to tell 
people what to expect. They may not all stay with us, that's 
OK, but at least they know what they bought into. And sometimes 
it's hard for us to do that. So stability is one of my issues.
    Mr. Dominguez. Sir, one of the things we're doing, we're 
very early in the stages of the dialog within the Department of 
Defense about this, but this is an area where thinking about 
core competencies can add some stability. There are things 
we're doing in the Department of Defense, that we have Federal 
employees doing, both military and civilian, that we really are 
not the world's greatest experts at. And the advantage of doing 
it is marginal at best, and maybe negative.
    If we can shift our workforce into those areas and those 
specialties where we have demonstrated competencies, and those 
competencies are clearly linked to where we're going 
strategically in the future, and our workforce moves into those 
areas, the areas we leave behind are the appropriate venues for 
the marketplace to deliver these services to us in a variety of 
different ways.
    Now, we will still need to put the heat on to stay on the 
step, innovating and delivering the products and services in 
our core competencies, faster, better, cheaper, but that's a 
wholly different thing. You know you're going to be in that 
business, you're going to be doing these things. Why? Because 
this is what we are and it's the Air Force.
    Senator Voinovich. It gets back to why I asked you to just 
take a look at these organizations like the one Dr. Russo heads 
up to see what is the plan, what is the vision.
    Mr. Dominguez. Right.
    Senator Voinovich. Can you say to them this is where we're 
going, this is what we want, and you have a career here.
    Mr. Dominguez. Yes, sir.
    Senator Voinovich. That's one aspect of going to work for 
the Federal Government today that is attractive to applicants. 
You know, there are not very many places you can go where they 
say you have a future. It's one of the things we have available 
to us that some other places do not.
    Mr. Dominguez. Right.
    Senator Voinovich. I think it's something that we should 
take advantage of. We should say to applicants one thing we can 
offer you is the opportunity to work your way up to Russo's job 
while doing exciting work and so forth. That's what it's all 
about, and do something for your country at the same time. And 
I know that you have the capability of being in the military 
and geting master's degree that the government pays for, and 
maybe going on to get a doctorate degree. You do that in the 
military.
    Mr. Chu. That's one of the reasons in the proposed National 
Security Personnel System we would like to have the authority 
to waive the current Title 5 restrictions on training. The 
irony, as you know, for civilians, unlike the military where we 
can pay to train you if you're a military person for a post, 
you don't now have that if you're a civilian. It's a much more 
highly constricted situation. And basically we're not supposed 
to be paying for civilians to be trained for a job they don't 
have, which is almost backwards in a way, if you think about 
it. If you have the job already, we can train you. If you don't 
have the job, we won't advance you to the next position. That's 
the place we can go.
    Senator Voinovich. OK. I think we've kind of exhausted 
that. I know that there is a great deal of emphasis on broad 
banding and on performance orientated compensation. And the 
President initially talked about $500 million to go to a 
performance-based pay system. And I'm not going to argue about 
the amount of money, I think it's unrealistic if you look back 
to see what Congress has done. But the real question, and it's 
one that I'd like you to comment on, and it's one that 
Comptroller General Walker and I have talked about on several 
occasions, is the capacity to do performance evaluations. That 
is a very time-consuming process. The people who do it need to 
be trained in writing performance evaluations.
    And one of my concerns is that if we go to broad banding, 
as suggested, and we don't make an effort to qualify people who 
have the capability of doing the performance evaluation, it 
could end up being a real detriment. In other words, it will 
not be successful. And I can tell you for sure when you get 
started with it, there are those who will say this is 
arbitrary, capricious, and personal bias gets involved in this, 
and so forth. And when we start this process, it must be done 
the right way.
    The question I have for you, Dr. Russo, is, do you think 
that you have the system in place in your shop to have pay-for-
performance?
    Dr. Russo. Not at ASC. We do have it in the laboratory. 
You're right on with your point. I lived through the first year 
of lab demonstrations here at Wright-Patterson. I was part of 
the first team that did this.
    Senator Voinovich. You did what?
    Dr. Russo. The first time we went to a compensation based, 
contribution based compensation in the laboratory.
    Senator Voinovich. How long ago was that?
    Dr. Russo. Five years, I think.
    Senator Voinovich. About 5 years ago?
    Dr. Russo. Five years ago. I was in the lab for the first 
year. You're right on. It was a tremendous education program 
for the workforce. It was hard. It took a lot of effort, but we 
did it, and I think it was well worth it. As a matter of fact, 
as I look back on it, I tell a lot of people I think the 
employees are better served by that system. It's more people 
looking at the evaluation, not just the supervisor in the 
chain. Our experience with that has been just tremendous.
    And too many people, I think, concentrate on the high end 
of that, how much is somebody going to be compensated for how 
much he is contributing. But we found one of the real values is 
with poorer performers who clearly understood what was expected 
of them because of the evaluation system; is that they either 
improved their performance or in some cases they left. And so 
it didn't matter. We were better off for it. So I'm a real 
advocate of it. But you are right, it takes a lot of training, 
it's not easy, especially the first couple years.
    But the lab has been in it 5 years, it's more routine, and 
I think it's broadly accepted. So I'm a strong advocate of 
that.
    General Lyles. Mr. Chairman, if I can add to that. As Vince 
said, we started off a little rough with the lab demo and 
acquisition demo, a similar thing we did at Edwards Air Force 
Base, but after the first brunt of concerns, it's worked very 
well. And I think we now have the process down that we can 
train people properly to do those performance evaluations, and 
we can't say enough about how much we like what we have in the 
lab demo, and I'm hoping NSPS will allow us to do that and more 
in terms of flexibility.
    Senator Voinovich. Well, the real issue is, don't you 
think, it would be wise to make sure that the agencies are in a 
position to do what it is that we're asking them to do. And one 
of the things, Dr. Chu, that bothers me is that the NSPS 
removes the Defense Department from the oversight of the Office 
of Personnel Management. There are some of us that are very 
concerned about that. Is there some compromise that could be 
worked out so that we know that the people who are going to be 
implementing this new system are ready? I mean I've heard 
testimony that if you tie the money in with it, if you go to 
pay banding then all of a sudden managers will engage in 
performance management and the reason why they don't do it 
today and the reason why they don't do it as well as they 
should is because there is no money connected with the process. 
And I can't believe that. I think that's not the case.
    Mr. Chu. Well, let me speak to the first issue you raised, 
which is the issue of OPM. For the President's proposed 
performance fund for fiscal 2004, that each agency must submit 
to OPM for its approval of the first National Security 
Personnel System that the policies and regulations would be 
jointly developed with OPM. So OPM is our partner in moving 
this forward.
    Many of our ideas, and what makes sense here, to come out 
of OPM's research and OPM's white papers, but I do think across 
the board, it's exactly what General Lyles and Dr. Russo have 
described, the advent of pay banding requires each component 
part of the defense to look at that type of evaluation system 
and restructure it, which includes re-educating everyone as to 
what their responsibilities are so, in fact, it can be 
successful.
    And I do think the fact the Department has done this in 
these various demonstrations, which now encompasses 30,000 of 
our employees, is some of the evidence you're looking for about 
our competence to do so. The other competence I will point to 
is what we do in the military side, it is the same department, 
while we have different kinds of construct in their promotion 
system, it is again one where the supervisor is charged with 
important authority, and the institution exercises significant 
authority about the advancement of people's careers that we 
have brought to a high state. And we saw some payoff just 
recently with the operations concluded in Iraq, so I think the 
competence is there.
    The challenge that both the President's performance fund 
and National Security Personnel System gives to the civil part 
of the Department is to bring that across the board to the same 
level. I think we've shown it in demonstration projects and I'm 
confident over the 2 years or so it would take actually to 
apply the National Security Personnel System to the entire 
department that we would indeed meet the kind of standards that 
you are describing, that I know David Walker is concerned with, 
be met as a precursor for gaining such discretion.
    Senator Voinovich. Comptroller General Walker.
    Mr. Walker. Well, first let me be clear that I individually 
and we institutionally at GAO strongly support broad band and 
pay for performance and government transformation, and a lot of 
conceptually what DOD is talking about. We've had broad banding 
for over 20 years. We've had pay for performance for about 20 
years, so we have real live experience. And we're making a 
number of changes to continuously improve that.
    There is no question that the demonstration projects that 
DOD has undertaken in the past can provide valuable lessons to 
help it go forward. At the same point in time I think we have 
to recognize there is a scale issue. Less than 5 percent of 
DOD's workforce has been involved in these demonstration 
projects, so you're going from 5 percent to a 100 percent, and 
obviously that's not something that's going to happen in one 
fell swoop or overnight.
    There is no question in my mind that the leadership at DOD 
has the commitment and that the Department has the ability for 
implementing broad banding and pay for performance on a broad 
basis. At the same point in time I think it's very important 
that before any such authority be operationalized now, that's 
different from authorized, one can authorize this authority, I 
would argue, not just for DOD, but potentially for many others 
as well, but before that authority would be operationalized, 
then I think that's when it's important to make sure they have 
certain systems and safeguards in place to maximize the chance 
of success, to minimize the possibility of abuse, to hopefully 
prevent a further bulkenization of the Executive Branch in this 
critical area.
    So I think there is a way, there is a sensible center that 
can, A, allow the Department of Defense to accomplish what it 
wants to accomplish but, quite frankly, could leap frog us to 
the future a lot quicker, a lot safer and a lot more 
consistently.
    Mr. Dominguez. I want to pick up on that point on the leap 
frog because at this same time while we're talking about 
expanding the pay-for-performance paradigm to the broader 
civilian workforce, the President and Secretary of Defense have 
been pushing very hard on changing our organizational 
management paradigm to a performance-based, results-based 
paradigm. So you begin to change the organizational focus and 
what leaders manage towards, and how they're evaluated at the 
same time. Then give them a personnel system that aligns and 
maps to that new form of management, and now you get some 
really powerful synergy to change the culture that you've 
talked about very early in this hearing.
    Senator Voinovich. I know we're probably going to be 
talking about this in a lot more detail in the next couple of 
weeks when the defense authorization bill is on the floor, but 
I'd like to talk about some compromise in this area or some 
type of standards that have to be met before this system 
becomes operational. Secretary Rumsfeld has been in the 
business world, but I can tell you that as someone who has been 
involved with government employees for a long time that if you 
want a new system like this one to be successful, you need to 
cascade it. I mean you just can't whip it into shape and expect 
it to happen because if you do, the thing will blow up right in 
your face. It will.
    When the State of Ohio implemented total quality 
management, it took us 5 years to go through over 50,000 
employees, and there were cultural things that needed to be 
changed. It's amazing how much of a challenge this is going to 
be at DOD. And I'd suggest that maybe even if you picked out 
certain portions of the proposal and looked at them, the 
Department might be better able to do it and move from there 
and learn from some of those experiences. Because to do it 
overnight or even in a year and a half or 2-year period, that's 
a mouthful.
    Mr. Chu. We recognize those challenges, we look forward to 
those conversations, sir. It is one of the reasons that we are 
so pleased we've gotten consistent ideas from the Department on 
how to proceed for the laboratories and acquisition workforce 
as a whole. Because that, as I indicated, is something which 
we're starting to publish Federal notices on, and this is a 
leading edge of this change, and will give us some of the 
experience that you're correctly pointing to.
    Senator Voinovich. OK. I know we're running out of time 
here because we have the other witnesses. This is great to be 
the only Senator to be asking questions. And under Senate 
hearings in Washington, as you know, the witness has 5 minutes, 
then we have 5 minutes and you just keep moving along.
    Dr. Chu, the proposed National Security Personnel System 
would waive significant portions of Title 5 for the Department 
of Defense. In some cases it seems DOD has requested waivers 
that are significantly broader than necessary to make the 
decided reforms to its personnel system.
    For example, the Department would like to be able to 
bargain collectively with unions at the national level, yet 
NSPS proposes to waive all of Chapter 71 of Title 5 which 
governs labor management relations. I'd like you to explain the 
Department's thinking behind these broad proposed waivers. And 
the reason I ask the question is I was very involved in the 
creation of the Department of Homeland Security and the 
legislation that waived major areas of Title 5.
    And in working with Congressman Rob Portman and others, 
they restored a lot of Title 5 to Homeland Security and then 
left out six areas to be negotiated, and at the present time 
those negotiations are under way. And we provided in those 
negotiations that, first of all, the unions would be involved, 
and when a 30-day period starts they can lay out the changes 
that they are going to make at the end of the 30-day period, 
then they must publish the differences of opinion in the next 
30 days and then the new system goes into place.
    And with that as a backdrop, to just move in the direction 
that DOD is going just ignores the fact that the DHS system is 
still being created, and I must tell you that one of the 
reasons why the unions were so concerned about it is they 
understood that what came out of those negotiations probably 
would be a model perhaps for the rest of the Federal 
Government. And I know that I'm concerned about that, I know 
that the Chairman of the Governmental Affairs Committee, Susan 
Collins, is also concerned about it in terms of the breadth of 
your moving out of Title 5 and coming up with a whole new 
system.
    Mr. Chu. Let me address that, sir, because, in fact, the 
actual proposed legislation of language very much takes 
Homeland Security as a template and then enlarges upon it. A 
number of the waivers are the same as Homeland Security, some 
are different, and let me specifically speak to the ones that 
are different.
    We do propose to waive Chapter 31, which is the authority 
for employment except for that section that deals with the 
senior executive service, that is specifically to deal with the 
speed of hiring issue. And I think that's one of the reasons, 
in our judgment, this will improve the kind of system we can 
construct if you were to give us that authority.
    Both legislative proposals waive Chapter 51 and Chapters 
53, we do propose to waive Chapters 55, 57, 59, which are not 
waived in the Homeland Security Act, but particularly Chapter 
55 on pay administration. And the reason for that is, I think, 
and your colleague, Joanne Davis, in the House has 
acknowledged, Homeland Security may ask for similar authority, 
is that the premium pay system in the government, including 
overtime pay, is so complex that, in fact, it is no longer 
having the kind of incentive effects that it was intended to 
create when the Congress and various other authorities are 
constructed over the years. It's a patchwork quilt.
    Among other ironies, if you are a higher grade employee, 
you actually make less on overtime than you do on straight time 
because of the limit in the law that says you cannot be a GS-10 
step one. Moreover, it's sufficiently complex that supervisors 
are making well-intentioned mistakes in terms of what people 
are being offered, and that also means that people are not 
feeling the kind of incentives that were intended. If no one 
can explain to them in a straight forward way what am I going 
to earn if I work on Sunday or work on a holiday or if I do 
this job under difficult conditions, so it's difficult to 
rationalize the reason behind the Chapter 55 waiver.
    We have requested, as I mentioned earlier, we do want the 
bridges for training, for which reasons I describe, in my 
judgment, we have the training machine backwards. It is not the 
same as the military model. I think the military model has been 
very successful. I think Mr. Dominguez spoke eloquently, we 
need to invest in our civil servants. We do not do the job we 
should in investing in human capital of our human personnel. We 
view the military outcome--not necessarily the way we do it--
but the outcome it produces as the model we want to follow, and 
we would like to be privileged to make those kinds of 
investments.
    Chapter 33 is waived by both bills, which has to do with 
competitive examinations that are conducted. Chapter 75 is 
waived by both bills, as is Chapter 43 by both bills.
    We do model our labor relations section on the Homeland 
Security model, but whereas Homeland Security models see it as 
something that is waived, we do have in our proposal 
specifically how we would propose to proceed as far as the 
beginning is concerned, and there would be a period of 
notification to Congress. If an impasse is reached, during 
which time mediation is to be invited to give the Congress a 
chance to comment that if, indeed, there is a difference of 
opinion between the Department and its employees.
    Senator Voinovich. And you're going to waive all of the 
Chapter 75?
    Mr. Chu. That is also, if I understand it correctly, a 
waiver that's in the Homeland Security law. The Homeland 
Security Act does have language concerning rights of employees 
to preserve collaboration and union relations, etc., and we 
have a somewhat different construct of how that's handled in 
this proposed statute, but the spirit is to see if we can get 
agreement to change the current situation, which is one more 
issue for the Department of Defense. It is all local union 
bargaining units.
    We have 1,366 locals, if I remember correctly. That means 
for department-wide human resources issues it can take a long 
time to reach a resolution. My favorite example is the issue of 
garnishing someone's wages. If he or she does not pay the 
travel card bill, the last administration, if I understand this 
correctly, began this negotiation procedure, it is 2\1/2\ years 
later, we still have 200 locals to go through, and in my 
judgment it's a very straight forward issue. I recognize how 
individual local leaders would like to bargain over it, but I 
think that's the kind of thing we should not bargain----
    Senator Voinovich. I can understand that. And we got into 
that too with Homeland Security in terms of how to go about 
doing these things, and we have a lot of people who are not in 
unions that are going to be affected.
    Mr. Chu. That's a very fair point. Half the workforce is 
union, half is not unionized.
    Senator Voinovich. Well, would anyone like to make a last 
comment or comment on anything that anyone else had to say? I 
really appreciate it. This has been a good day, and I think 
from the dialogue here I've learned a lot and I am looking 
forward to hearing from you about some of the information I've 
requested.
    Mr. Walker.
    Mr. Walker. In summary, Mr. Chairman, I think one of the 
things we have to keep in mind is that while there is probably 
broad based consensus on this panel of the need to transform, 
not only the Department of Defense, but also the government, 
and the critical element of the human capital, the people 
strategy has, as part of that, I think you have to recognize 
the difference between institutions and individuals. And by 
that I mean there is no question that Secretary Rumsfeld, Dr. 
Chu, and others are dedicated to doing the right thing here. I 
think we have to recognize, however, that whatever laws are 
passed are for all time until Congress decides to change them. 
Not just for the players that are here today, but the next 
Secretary of Defense, the next Under Secretary of Defense for 
Manpower Readiness.
    That leads me back to the issue that I mentioned before 
that you touched on with the chief operating officer, DOD has 9 
of 25 high-risk areas. I believe the primary reason that it has 
9 of 25 high-risk areas is because you don't have enough 
continuity of attention on the basic management issues that it 
takes to solve them over the average tenure of a typical 
political appointee.
    And I believe that whatever Congress decides to do with 
regard to legislative authority, that if the Department of 
Defense really wants to transform itself, it needs to consider 
a level two position, something like a 7-year term appointee 
who can be responsible for strategic planning and integration 
with the key players within the Department to focus on these 
basic management challenges to help transform the Department, 
no matter who the secretary is, no matter which administration 
is in charge.
    I think that's going to be critically important because, 
frankly, I don't know that you're ever going to solve these 
problems unless there is more continuity. This person could 
either be a civil servant who has a contract for 7 years, it 
could come from the private sector. It should be performance 
based. I think the time has come for that, Mr. Chairman.
    Mr. Chu. Mr. Chairman, I want to thank you for holding this 
hearing. I want to thank you for your leadership you've shown 
over many years, even often when an issue was unpopular and 
uninteresting to most, and for highlighting it. I do think that 
you and David Walker have repeatedly said we do face a crisis 
in human capital in the Department of Defense. We welcome to 
work with you on legislation to help with the crisis. I'm 
confident we can produce a good result.
    Senator Voinovich. Thank you. If I can make one comment 
about truth in lending, if you will, it perhaps relates to Mr. 
Walker's comment about the chief operating officer, the 
proposed legislation, acts and laws and authorizations are very 
much needed besides the ones that we have today.
    One of the continuing challenges we're always going to have 
is funding, to actually enact some of the flexibilities that 
are currently provided to us in statutory authorities or that 
will be provided in the future. That will continue to be a 
challenge for us. We're hoping, at least within the Air Force, 
that we can always make a balance between physical capital 
investments and human capital investments, and to make sure we 
don't overlook one at the expense of the other.
    Well, I'd like to suggest that the human capital has been 
neglected, and we have a great football coach, Woody Hayes, and 
I think Jim Tressel would probably confirm what Woody said, is 
that you win with people. And we must continue to make sure we 
got the very best people to get the job done. It gets to 
Secretary Schlesinger's report, and what you're doing came out 
of that report.
    Mr. Chu. Yes, sir.
    Senator Voinovich. Dr. Chu, that was the Hart-Rudman report 
that looked down the road and said the area where the Federal 
Government really has not done the work is in the area of 
personnel. It's been neglected, if we don't do something about 
it, we're going to have a tough time doing a lot of other 
things that need to be done to make sure that we guarantee our 
national security.
    Dr. Russo. Sir, we spent a lot of time this afternoon 
talking about the things we need to make it better. I would 
like to end by assuring you the workforce we have here today, 
at least within Wright-Patterson, and I believe within the Air 
Force and the DOD is still one of a bunch of marvelous, 
dedicated civilians, they go beyond the call of duty day in and 
day out.
    I think the things we witnessed over the last couple years 
in our Air Force's ability to support our country is a 
testament to a lot of civilians, as well as military that work 
with us, I'm pleased even though we have problems, we still 
survive pretty well.
    Senator Voinovich. They've done a good job because we have 
a lot of people like you, Vincent, that really care. You're 
dedicated people that really care about what you're doing and 
you care about your country, and I thank you and I thank the 
others that are here.
    Dr. Russo. There are a lot of us.
    Senator Voinovich. They all are back behind you and we 
thank you for what you do.
    Dr. Russo. Thank you, sir.
    Senator Voinovich. Thank you. I'm going to call a recess 
for about 5 minutes until the next panel can come in.
    [Recess.]
    Senator Voinovich. We're going to continue our hearing and 
hear from our second panel of witnesses that will offer us an 
outside perspective on the issues that we're considering here 
today. Dr. Beth Asch is a senior economist with RAND, who has 
conducted extensive research on Defense workforce reshaping 
authorities.
    Scott Blanch is the president of AFGE Council 214. And I'd 
like to say to you, Mr. Blanch, that we hear a lot from Bobby 
Harnage, who is a good friend of mine, and we spend a lot of 
time together. He is going to be in my office, I think, 
tomorrow morning.
    Mr. Blanch. Very good. It's very important.
    Senator Voinovich. Michael Durand, who is pitching in for 
Pamela McGinnis. Mr. Durand is the deputy treasurer of AFGE 
Local 1138 based here in Dayton.
    And J.P. Nauseef who is vice president of Aerospace Defense 
Technology of the Dayton Development Corporation, and he is 
pinch hitting here for Ron Wine who has a medical family 
situation that he is trying to take care of for his mom and 
dad. Please give Ron our very best and we appreciate your 
sharing the situation. As was the case with the other 
witnesses, I'd like you to stand and raise your right hand.
    [Witnesses sworn.]
    Senator Voinovich. Let the record show that all of the 
witnesses answered in the affirmative. Our first witness is Dr. 
Beth Asch, who is a senior economist with RAND. Again, thank 
you for being here, Dr. Asch.

    TESTIMONY OF DR. BETH J. ASCH,\1\ SENIOR ECONOMIST, RAND

    Dr. Asch. Mr. Chairman, thank you for this opportunity to 
provide input to DOD on civilian workforce management. I've 
prepared a written statement that's been submitted for the 
record, and at this time I'll just make a short statement and 
answer any questions you might have. In my statement this 
afternoon I'll briefly summarize RAND's research results on the 
effects of workforce shaping tools on the retirement behavior 
of Defense civilian employees.
---------------------------------------------------------------------------
    \1\ The prepared statement of Dr. Asch appears in the Appendix on 
page 145.
---------------------------------------------------------------------------
    Our research estimated the effects on the probability of 
retirement of the Voluntary Separation Incentive Program or 
VSIP, of the Voluntary Early Retirement Authority or VERA, and 
the retention allowance.
    The first two programs are intended to increase the 
financial incentives to voluntarily leave, while the third is 
intended to increase the financial incentives to stay in the 
civil service.
    Both VSIP and VERA were used during the 1990's by Federal 
agencies to reduce employment, but recently both have been 
identified as tools to help Federal managers shape the 
experience and skill mixes of their workforces. By providing 
Federal workers with an incentive to retire early or separate, 
it is hoped that managers will be better able to hire and 
possibly outsource replacement workers with different skills 
and experience levels.
    A key question is whether these flexibility-related tools 
are effective. Our study finds that if used, these tools could 
be highly effective in changing retirement behavior among 
Defense civilian employees.
    Our study focused on Defense civilians age 50 and older who 
participate in the civil service retirement system or CSRS. We 
found a large effect of retention allowances, offering an older 
employee the maximum retention allowance of 25 percent of pay 
over the rest of his or her career would reduce the probability 
of retirement by about 20 percent. VERA was estimated to more 
than double the separation and retirement rates for the civil 
service among those who would be eligible for that benefit. 
VSIP was estimated to increase separation retirement by about 
30 to 40 percent, depending on age.
    These estimated effects are very sizable, but at the same 
time are quite consistent with studies of private sector 
retirement behavior. There are two points that are noteworthy. 
First, these estimates are not an assessment of the past 
success of VERA and VSIP as tools to accomplish downsizing in 
the aftermath of the cold war. Rather they represent 
predictions of their effects on retirement behavior based on 
estimates of how Defense civilians generally respond to the 
financial incentives embedded in CSRS.
    Second, our study didn't consider the costs of offering 
these workforce shaping incentives, and so we can't draw any 
conclusion at this time about relative cost effectiveness.
    Now, so far the authority for VSIP and VERA for workforce 
shaping purposes has been limited in DOD. Currently, DOD has 
authorization for 9,000 VERA and/or VSIP payments. Given that 
the DOD has about 400,000 employees who would be eligible for 
either early or optional retirement, these authorities are 
really quite small relative to the size of the Defense civilian 
workforce that would be the target population for these tools.
    Available evidence also suggests that retention allowances 
have not been widely used in the past. The OPM estimated that 
retention allowances were given to less than 1 percent of all 
Executive Branch employees in 1998.
    So why don't civil service managers use the flexibility-
related pays that are available to them? One reason that's been 
put forward by the OPM is excessive bureaucracy in the approval 
process. Another reason put forward in the context of the 
Defense laboratories by the Naval Research Advisory Committee 
on Personnel Management in the Defense science and technology 
community was the absence of leadership. The committee stated 
in its report that in the absence of a sustained commitment to 
use flexibility-related tools aggressively in the Defense 
laboratories, most tools were unused or underutilized.
    Successful management of the Defense civilian workforce has 
become even more important in recent years, not only because of 
the changing national security environment and the war on 
terrorism, but also because of the aging of the Defense 
civilian workforce. Successfully responding to this aging will 
require that DOD actively manage the departure of retiring 
employees and the hiring of new workers or contractors to 
replace them, and must define its workforce requirements, and 
then develop a plan that coordinates the timing of retirements 
with the replacements.
    Importantly, it will also need to aggressively use 
workforce shaping tools to successfully implement the plan. 
Because of the potentially important role of these tools, the 
personnel managers in the DOD should be given expanded 
authority and expanded resources to use the flexibility-related 
policies extensively. Our estimates show that such policies 
would be effective if they were used.
    This concludes my oral statements here, but I'll say that 
in my written testimony I also talk about evidence on how the 
civil service personnel system has worked in the past in terms 
of workforce outcome, summarize some of the research on the 
effectiveness of the waiver programs, talk about what factors 
are related to the successful civilian personnel management. So 
I just wanted to let you know there are other topics, but I 
didn't want to take up too much time today. In any case, I'm 
happy to answer any questions that you have.
    Senator Voinovich. Thank you very much. Mr. Blanch.

TESTIMONY OF J. SCOTT BLANCH,\1\ PRESIDENT, AMERICAN FEDERATION 
         OF GOVERNMENT EMPLOYEES, COUNCIL 214, AFL-CIO

    Mr. Blanch. Senator Voinovich, my name is Jon Scott Blanch. 
I'm the president of the American Federation of Government 
Employees Council 214 AFL-CIO. Council 214 is the national 
consolidated bargaining unit that represents by far the 
majority of the bargaining employees employed by the U.S. Air 
Force in the Air Force Materiel Command (AFMC). Council 214 
consists of ten AFGE local unions at the following Air Force 
Materiel Command Air Force bases, Wright-Patterson; AFMETCAL 
Department in Heath, Ohio; Tinker Air Force Base in Oklahoma; 
Warner Robins Air Force Base in Georgia; Hill Air Force Base in 
Utah; Edwards Air Force Base in California; Kirtland Air Force 
Base in New Mexico; Eglin Air Force Base in Florida; Brooks Air 
Force Base in Texas; and Logistics Support Office in Michigan.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Blanch appears in the Appendix on 
page 158.
---------------------------------------------------------------------------
    In all, the Council 214 bargaining unit totals 
approximately 36,000 AFMC workers across the command. It is 
Council 214's role to address issues that have command-wide 
impact on bargaining unit employees the council represents. 
This is accomplished through negotiations and collaboration at 
the AFMC Council 214 level.
    For example, the master labor bargaining agreement between 
AFMC and AFGE Council 214 was negotiated at this level and is 
applied command-wide to Council 214's bargaining unit. Other 
examples of what we do here are Air Force instructions, DOD 
manuals, Air Force supplements to AFI's or DOD manuals, and 
AFMC policies that affect the working conditions of the 214 
unit command-wide or multiple bases over the command.
    With that in mind, I deeply appreciate the opportunity to 
testify on behalf of the thousands and thousands of AFMC 
bargaining unit employees AFGE Council 214 is proud of and 
proud to represent. They're a vital, skilled and dedicated 
national asset focused on one mission, that being to support 
this Nation's warfighters through developing, modifying, 
testing, maintaining, and delivering the best weapon systems 
the world has ever known in the past, now, and in the future.
    What AFMC does is a team effort, and the leadership of the 
AFMC team is exemplary. It is my opinion, and the opinion of 
AFGE national president, Bobby Harnage, that General Lester 
Lyles and his senior staff are the best there are in taking 
care of their employees, so they, the employees, can take care 
of the AFMC mission, military and civilian alike. When we say 
the best, we mean the best in the entire Federal sector.
    In that spirit, AFGE Council 214 and AFMC work in 
partnership. Together we have committed to develop and advocate 
the means to fully implement our labor/management partnership 
and to make AFMC an exciting, but productive and rewarding 
place for people to live and work. AFMC is a huge, diversified 
and complex command, as is the Council 214 bargaining unit 
structure. But we, AFMC and AFGE have been and will continue to 
work in collaboration to meet our challenges now and in the 
future, both internal challenges and external challenges, where 
appropriate.
    AFMC may be able to do things independently, AFGE may be 
able to do things independently, but the parties recognize that 
working together when we have mutual interests that there is 
probably not much of anything we cannot accomplish. That is our 
race strategy, and we are committed to going the distance.
    The instructions I received Friday in my invitation was it 
asked me to testify on five issues. The first three issues 
refer to Wright-Patterson Air Force Base specifically. I will 
defer my testimony to the specifics at Wright-Patterson to 
Deputy Treasurer of AFGE Local 1138, Deputy Treasurer Michael 
Durand. I will testify to the same issues from an AFMC command-
wide perspective with your permission.
    Senator Voinovich. Sure.
    Mr. Blanch. I base this perspective on my personal 
knowledge and experience in the AFMC/AFGE partnership 
activities and face-to-face discussions with bargaining unit 
employees and local union leadership. As an original charter 
member of the AFMC/AFGE partnership council, I am now co-chair 
of that council, it has been my privilege to visit every AFMC 
base that is represented by AFGE Council----
    Senator Voinovich. Tell me again your--the council is made 
up of who again?
    Mr. Blanch. The AFMC, the AFGE Council 214 or the AFMC 
partnership council?
    Senator Voinovich. The partnership council.
    Mr. Blanch. The partnership council is made up of--we have 
a local and a base manager from the air logistics center, 
product center, and a test center, then we have the chairman of 
the council, two co-chairs of the council, and then we have 
personnel and the vice president of the council.
    Senator Voinovich. So it's a labor/management council for 
better labor relations, is that it?
    Mr. Blanch. Yes. It's like a center director, a director 
from the logistics center, a director from the test center, a 
center director from the product center, then you have union 
leaders the same way. That's the command partnership council.
    Senator Voinovich. OK.
    Mr. Blanch. That's how it's made up. Where was I?
    Senator Voinovich. I'm sorry.
    Mr. Blanch. That's OK. I base this perspective on my 
personal knowledge and experience gained through the AFMC/AFGE 
partnership activities and face-to-face discussions with 
bargaining unit employees and local union leadership.
    As an original charter member of the AFMC/AFGE partnership 
council and now co-chair of that council, it has been my 
privilege to visit every AFMC base that is represented by AFGE 
Council 214. Not only does our partnership council con-ops 
require the council to rotate bases, but they also require that 
the partnership council be provided a mission briefing at every 
base before we visit. I've received this briefing at every 
base.
    The partnership council is also provided a tour of each 
base to allow us to see up close and personal on what exactly 
the employees of that particular base do, how they do it, how 
they are working to improve the way they do it, and tell us how 
they feel about the work they do. A valuable experience.
    In my day-to-day dealings I also receive the rest of the 
story through conversing with local union leadership and 
disgruntled employees who may not feel comfortable airing their 
frustrations and complaints during the partnership council 
tours. I am also frequently approached by management officials 
to share concerns. If something is going on, either good or 
bad, that pertains to the bargaining unit, I hear about it 
sooner or later, one way or the other. Based on the above, my 
testimony is submitted, and we'll be happy to address any 
questions you have.
    Senator Voinovich. Thank you. Mr. Durand.

  TESTIMONY OF MICHAEL DURAND,\1\ DEPUTY TREASURER, AMERICAN 
         FEDERATION OF GOVERNMENT EMPLOYEES LOCAL 1138

    Mr. Durand. Yes, sir. Good afternoon to everybody, Senator. 
I'm here on behalf of Pamela McGinnis, president of Local 1138, 
who due to family illness could not attend. My name is Michael 
Durand. I'm deputy treasurer of Local 1138 of the American 
Federation of Government Employees AFL-CIO. Senator Voinovich, 
on behalf of the members of Local 1138 I would like to thank 
you for the opportunity to make a statement today to you and 
the Members of the oversight Subcommittee.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Durand appears in the Appendix on 
page 175.
---------------------------------------------------------------------------
    First I would like to address four major concerns that you 
outlined in your letter of April 21. And I would like to offer 
solutions to these personnel challenges for your consideration.
    First, it is my opinion that the civilian workforce at the 
Wright-Patterson Air Force Base has been severely demoralized 
because of the continuing reduction in force which we have been 
subjected to nearly every year for the past decade. This is 
especially true among the younger population who no longer see 
employment at Wright-Patterson as a long-term option.
    This continuing downsizing affects how they view their 
future. It affects how they perform their jobs. It affects 
their motivation because opportunities for advancement become 
fewer with each surplus action. And in better times they would 
be on a fast track. Today their government careers are dying on 
the vine.
    Second, it is my perception that the DOD 2001-2002 fiscal 
year authorization bill which offered early retirement and 
separation incentives gutted the civilian workforce of its 
knowledge base. Furthermore, in conjunction with the 
downsizing, the remaining employees have been stressed by the 
additional workload imposed on them and upset once again by the 
lack of promotional opportunity and mobility in their careers.
    Third, the proposed reduction for fiscal year 2003 and 2004 
will continue this cycle of despair. This is the worst time, as 
we ponder our fate, before the first wave of notices are sent 
out. The question begins will I lose my job this round or just 
transfer again. Will I be downgraded this time. Managers and 
supervisors worry about losing their key employees, the ones 
with the most knowledge, the most dedication. They also face 
the possibility of being displaced, downgraded, or laid off 
themselves.
    Every reduction in force I have witnessed has created an 
atmosphere of complete turmoil and confusion in spite of the 
fact that it has become an annual ritual at Wright-Patterson. 
It just gets worse, not better.
    In a memorandum dated October 25, 2002, the Air Force 
Materiel Command announced the new reductions, with the caveat 
that there is virtually no chance that the projections will 
decrease, but decisions by the Air Force may very well increase 
the command's total share of the 2004 reduction mandate as well 
as those of the out years. That's hardly encouraging news for 
the workforce here.
    Fourth, possible changes in the law that would enhance the 
Department of Defense's ability to manage its civilian 
workforce should include the following: A, require agencies to 
identify what happens to the workload from positions subject to 
proposed surplus action. For example, will the work be 
distributed to other persons of like kind and grade? If not, 
what effect will eliminating the workload have on the mission 
of this organization?
    B, required payoffs and voluntary retirement incentives to 
be separate from the downsizing process. Vacancies resulting 
from incentives, usually targeted for the older population near 
retirement age, will provide promotional opportunity for the 
remaining workforce. This would have a positive effect on 
morale and offset negative impact of surplus action. If surplus 
actions are deemed necessary, they should be determined by 
factors other than the fact that a position was voluntarily 
vacated by the incumbent.
    I would like to discuss a collateral issue that is directly 
related to workforce morale and stability for your 
consideration. It is the issue of contract services. During the 
past decade, the Pentagon has decreased its civilian workforce 
by nearly 300,000 while increasing its cost of contract 
services by 40 percent.
    I would like to propose the following legislation to 
provide a level playing field for the civilian workforce when 
our jobs are on the chopping block. One, place a moratorium on 
contracting out jobs traditionally performed by civilians until 
an accounting is complete which identifies the number of 
contract employees which have been hired to replace civilian 
employees, the cost of such contracts, and the work being 
performed. Statistics from this database should be accessible 
to the public as well as other governmental agencies, labor 
organizations, the media, etc. The civilian workforce should be 
allowed to bid on these contracts as they are renewed.
    Two, free agencies from privatization quotas, whether self-
imposed or imposed by the Office of Management and Budget. This 
will take the pressure off of agency managers to contract out 
services that are more efficiently performed in-house by 
knowledgeable career employees.
    Three, allow Federal employees to compete for their own 
jobs as well as for the new work in order to save money for 
taxpayers. This will eliminate the discretion by DOD managers 
to simply give most work of contractors without--to 
contractors, excuse me, without any private or public 
competition.
    Four, make the competition process more equitable and more 
accountable by providing Federal employees with the same legal 
standing enjoyed by contractors.
    In closing, I believe the Air Force should slow down its 
downsizing in view of what is happening nationally with all the 
challenges facing our country, the constant threat of more 
terrorist attacks, and a possible pre-emptive attack on Iraq by 
our military forces. It defies reason for the Air Force to 
carry out its arbitrary manpower reductions for the current 
fiscal year and beyond. During this time of uncertainty and 
insecurity, downsizing the civilian workforce should be put on 
hold.
    Furthermore, more than 5,000 Federal employees have been 
called into active duty and deployed to overseas locations. How 
many of these 5,000 civilians work at Wright-Patterson? Who 
will do their job while they are gone? Will the absence from 
the workplace be considered in the current downsizing equation? 
These questions need to be addressed before any further 
manpower reductions are even considered.
    For now, I thank you for listening and giving me the 
opportunity to make this statement on behalf of the members of 
AFGE Local 1138. I hope we can do this again. Thank you, sir.
    Senator Voinovich. Thank you, Mr. Durand. Mr. Nauseef.

 TESTIMONY OF J.P. NAUSEEF, VICE PRESIDENT, AEROSPACE DEFENSE 
TECHNOLOGY, DAYTON DEVELOPMENT COALITION ON BEHALF OF RONALD D. 
      WINE, PRESIDENT & CEO, DAYTON DEVELOPMENT COALITION

    Mr. Nauseef. Mr. Chairman, I'm presenting testimony on 
behalf of Ronald Wine, president and CEO of the coalition who 
was scheduled to speak, but, unfortunately, due to some family 
health concerns Ron is attending to those issues with his 
family right now. Ron very much wanted to be here to present 
his testimony personally, and he sends his sincere regrets, Mr. 
Chairman. I ask that Ron's full statement be included in the 
record in its entirety, and I will summarize his remarks for 
you.\1\
---------------------------------------------------------------------------
    \1\ The prepared statement of Ronald D. Wine, President and CEO, 
Dayton Development Coalition submitted by Mr. Nauseef appears in the 
Appendix on page 179.
---------------------------------------------------------------------------
    Senator Voinovich, on behalf of the coalition and the 
entire Dayton business community and the 12-county area that we 
serve, we would like to welcome you back to Wright-Patterson 
Air Force and the Dayton region. It is an honor for us to have 
you here holding these hearings in our community. Thank you 
very much.
    Ron wanted to extend his personal thank you to you, Senator 
Voinovich, for holding this hearing on the topic of the Defense 
civilian workforce. The coalition is deeply grateful for your 
consistent leadership in looking out for Wright-Patterson Air 
Force Base and the thousands of talented and dedicated men and 
women who work here.
    This is a wonderful time to visit Wright-Patterson Air 
Force Base and the Air Force Museum as we make final 
preparations for our celebration of the 100th anniversary of 
the Wright brothers first flight.
    So great is the magnitude of this base on our region's 
economy that statistics barely tell the story. Over 20,000 
civil service, military, and contract employees work on the 
base. Putting it another way, about one out every 18 jobs in 
the entire metropolitan area is physically located within the 
fence of Wright-Patterson Air Force Base. The base is by far 
the largest employer in the metropolitan area. In fact, it is 
almost three times larger than the second largest employer.
    Wright-Patterson is more than just a national defense asset 
and an economic engine to this region. It represents a solid 
base of citizens in our community. Its workers contribute to 
local charities through the combined Federal campaign, they are 
Boy Scout troop leaders, hospital volunteers, and school 
tutors. And because of Wright-Patterson, the Dayton area has 
one of the highest concentrations of Federal civil service 
workers outside of the Washington, DC area.
    The workforce of the base is very special. It's a highly 
stable, educated and active group of motivated people. They are 
the kind of workers every community wants. Few places are as 
lucky as the Dayton region to have these workers. That is why 
we care so much about Wright-Patterson and its people, 
especially its civilian workforce.
    Not only are civil service employees at Wright-Patterson 
large in number, they are diverse in function. That means that 
if there is a problem with any aspects of civil service law or 
regulation, that problem may show up here. In fact, Wright-
Patterson may be a microcosm of many of the challenges that 
face civil service reform.
    We are proud that Wright-Patterson probably has more 
employees in science and engineer classifications than any 
other single Federal installation. Recent pilot programs 
authorized by Congress, again with your help, Mr. Chairman, 
have made important contributions to workforce flexibility in 
these important areas.
    A large challenge in our community is the sheer decline in 
workers. Through the 1980's the workforce at Wright-Patterson 
increased slowly, hitting a peak of 30,000 civilian and 
military employees in 1989. We have seen a steep, steady 
decline since then.
    We understand that Dayton's loss is largely the result of 
America winning the Cold War and facing a requirement for a 
smaller military. This is good for our Nation, and we embrace 
the change.
    Still, we are concerned that the cuts might be too deep. 
Hiring freezes and last-hired, first-fired rules have created 
an aging workforce. We risk losing enormous institutional 
memory when large groups of our senior employees leave at once. 
Managers need the flexibility to give workers a healthy balance 
of a combination of young vigor and senior wisdom.
    Thanks to your efforts, Mr. Chairman, Congress began to 
tackle this problem a few years ago, and some progress has been 
made. Mr. Chairman, the title of this hearing, An Overlooked 
Asset: The Defense Civilian Workforce, is all too appropriate 
from a national perspective. However, I can assure you that 
here in the Dayton area we are proud of our civilian workers' 
unselfish contributions they make to our national defense. They 
are not overlooked by our local leaders, nor by our 
representatives in Washington.
    Thank you again for giving the coalition the opportunity to 
express our support for you and for these important issues. 
Thank you for your leadership and dedicated service, especially 
for holding this important hearing here at Wright-Patterson Air 
Force Base, the birthplace and future of aviation.
    Senator Voinovich. Thank you very much. As you may know, 
one of my concerns has been what I refer to as mindless 
downsizing. And what I'm picking up from you, Mr. Durand, is 
that the downsizing continues. Do you have any members that 
work in Dr. Russo's shop?
    Dr. Russo. The air base wing.
    Mr. Durand. The air base wing.
    Senator Voinovich. Are you familiar with what's going on in 
Dr. Russo's shop in terms of taking advantage of the 
legislation that we provided? The purpose of it was to allow 
him to shape his workforce, meaning that he could provide 
voluntary early retirement or voluntary early separation 
payments, but that rather than having less people, those slots 
would remain open so that he could bring in new people to deal 
with the challenges that he has and to get, in some instances, 
some expertise that he needs that he doesn't have in his 
current workforce, but it wasn't meant to have less people. Is 
that your observation?
    Mr. Durand. I would like to say that mostly what I've seen 
in the last couple years a reduction has occurred, but it has 
come in and is slow in coming, but most of the positions that 
have been reduced by employees leaving the workforce has not 
been filled at the moment and people that are staying there are 
right now gathering and doing the job of those vacancies, and 
it's kind of a morale issue at this point.
    Senator Voinovich. So your impression is that they're still 
losing people and they're not bringing new people in?
    Mr. Durand. They're trying to get people in, but, sir, at 
the moment it's not that quick. The turnover is a little bit 
more. We have lost more folks than we have brought in at the 
time, and I'm talking about my organization at the moment.
    Senator Voinovich. Yes. Some of the people that you're 
losing occurs through attrition. Many of them are retiring, 
correct?
    Mr. Durand. That's correct.
    Senator Voinovich. Do you sense a crisis in retirement and 
loss of institutional knowledge?
    Mr. Durand. Yes, we do. We do sense that there is a crisis 
of knowledgeable people walking out the door and not passing 
that information on to the younger generation walking in.
    Senator Voinovich. Mr. Blanch, you're familiar with what's 
going on at various places your council represents. I notice 
you had some very complimentary words for General Lyles and his 
operation here. I know that Bobby Harnage has a lot of respect 
for General Lyles, and I've talked with him about it. He 
challenged me one of these days to come out here and spend some 
time with him and with General Lyles. But I like your 
observation. What we're trying to do is reshape, not downsize. 
And does it look to you like it's downsizing and not reshaping?
    Mr. Blanch. Well, we went through the decade of downsizing 
in the 1990's and then we went through the fiasco with the 
privatization in place, and we got all that behind us, we got 
that done, that was a lot of work to make that happen, so a lot 
of----
    Senator Voinovich. That was the challenge the previous 
administration cited, you had to get rid of 57,000 people and 
outsource or downsize.
    Mr. Blanch. Right. Specifically the ALC's were only running 
60 percent capacity. It was killing us on labor rates. We went 
through all that, and my observation command-wide is we're at 
the point now where we've kind of stabilized. I'm talking a 
command-wide look here. What I see, especially in the Air 
Logistics Centers, we are in a hiring mode out there.
    Senator Voinovich. What?
    Mr. Blanch. Hiring people. We're having trouble, AFGE, and 
this is one thing that we agree on in this partnership, we 
agree the hiring process needs to be fixed. And we're seeing it 
out there in the air logistics centers. They need people 
desperately and they can't get them. And if they do get them, 
it takes way too long, it's just way too hard. As far as I see 
that, we're at the point now where we're kind of stabilized, 
we're looking more at right sizing more command-wide.
    Senator Voinovich. And has your union done any 
calculation--were you here for the first panel's testimony?
    Mr. Blanch. No, sir.
    Senator Voinovich. OK. We got into the announcement that 
they made to get rid of 13,000 people throughout the Air Force. 
And has your observation been that since that's been announced 
that it's impacting on your membership at these various 
facilities that you're responsible for?
    Mr. Blanch. Well, that gets into just the arbitrary 
manpower cuts just announced recently.
    Senator Voinovich. Yes.
    Mr. Blanch. The manpower cuts that were announced, that's 
what you're talking about. When I was first briefed on that I 
was told the only base that was going to lose positions or lose 
jobs was Wright-Patterson. And the reason being the air 
logistics centers which we were in a hiring mode, I was told 
Hill Air Force Base at that time was sitting on 800 vacancies 
they needed to fill and couldn't fill.
    We've got a new modern personnel system that just came on 
board, it has got a lot of bugs in it, they're doing a lot of 
work-arounds, it's just real hard. And I was informed that 
Wright-Patterson would be the only base that would actually 
take any cuts. Everybody else would do it through attritions 
and by absorbing vacancies.
    My position was that we need to take these vacancies 
because I assumed that if Hill Air Force Base had vacancies, 
the other ALC's would have had vacancies, so it was my position 
to absorb those and to use vacancies that we have at other 
ALC's so we don't lose people. It didn't make sense to me to 
let people at one AFMC base with years of service out of the 
gate while we're trying to hire other people off the street at 
other bases.
    And my understanding is that's what we did in 2003, that's 
the approach we took, and so there wouldn't be any cuts in 
2003. We have 2004 and beyond coming up.
    Senator Voinovich. Are you familiar with the level of 
employment here in the last couple of years in terms of your 
membership? Have you lost members or have you gained members?
    Mr. Blanch. I would say as far as potential members in the 
last couple of years----
    Senator Voinovich. Yes.
    Mr. Blanch. I would say we've probably been pretty stable. 
A lot of what Dr. Russo said about the workforce shaping 
initiatives and stuff, these are professional series employees. 
I understand the challenges they have in getting these folks. 
We don't represent those folks. They're not in the bargaining 
unit. But we talk about them a lot in the partnership council 
activities and things like that. I see the challenges they have 
to get these college graduates on board. But as far as the 
bargaining unit, like I said, I'm not as familiar with it 
probably as much as Mike would be because I have the whole 
command. I might defer that specifically to Wright-Patterson to 
him.
    Senator Voinovich. Dr. Asch, you've been observing it. What 
is your appraisal?
    Dr. Asch. It being?
    Senator Voinovich. In terms of they have these new 
authorities that we granted them, 9,000 slots, and they started 
to utilize them. Is it working out as we envisioned, that is 
providing early retirement, early separation and are we 
reshaping, in your opinion?
    Dr. Asch. I don't know if we're reshaping to the extent 
that there is a requirement--some people are going out the door 
and they're being replaced with skilled people who--or with 
people who have more appropriate skills, which is my impression 
of the intent of having workforce shaping tools. What we know 
is that these incentives are effective in getting them out. 
Whether or not they're achieving the workforce that's going to 
make the mission by hiring or whatever, that I don't know.
    Senator Voinovich. So you haven't decided. You know that 
the tools do work though?
    Dr. Asch. That they do work?
    Senator Voinovich. That people do take advantage of them. 
If I recall from your testimony, you said that a lot of it had 
to do with people just figured out they're financially better 
off taking advantage of it and do it.
    Dr. Asch. Not everybody who was offered it takes it because 
obviously people make these decisions for a range of reasons, 
but there is a marked change in their behavior as a result of 
financial incentives.
    Senator Voinovich. There is always the argument--we did 
early retirement when I was mayor and as governor, and you're 
supposed to end up with less cost. But if I'm not mistaken, 
it's not that much less and you have to weigh that against the 
institutional knowledge that's going out the door, so you got 
to do it very carefully----
    Dr. Asch. That's right.
    Senator Voinovich [continuing]. So you make sure that you 
don't leave yourself without the people that you need to get 
the job done.
    Dr. Asch. Or conversely, there will be separation 
incentives towards maybe mid career, even more junior workers 
sometimes--for example, I'm thinking of the separation 
incentive for military personnel. And if you do that, you can 
change the mix that way too. So I agree with your point, which 
is you can lose the productivity of those people, but at the 
same time--the way you do it will affect the age mix as well, 
so you have to be sensitive to that.
    Senator Voinovich. Was it Mr. Blanch or Mr. Durand that 
commented on the fact that downsizing has impacted on the 
current workforce, that they're a little demoralized because of 
it?
    Mr. Durand. Yes, I did, sir.
    Senator Voinovich. And from your observation, has that 
impacted on the ability to recruit? We were talking at the last 
hearing about the fact that when people come to work for an 
outfit, they would like to have some idea of where they're 
starting and where they could end up and the kind of work 
that's there and so forth because that's something to which 
they're going to devote a lot of their life. And have you 
observed that there is a lot more uncertainty? How long have 
you been with the Federal service, Mr. Durand?
    Mr. Durand. Twenty-three years.
    Senator Voinovich. Twenty-three years. And this downsizing 
really took place during the 1990's?
    Mr. Durand. Yes, sir.
    Senator Voinovich. Do you want to comment again in terms of 
recruiting new people, on the effect of this downsizing on the 
government's ability to get new people to come to work for 
them?
    Mr. Durand. No, not in recruiting new people, I'm not 
saying that it is affecting it. I'm just saying they do bring 
new tools, and Dr. Russo has done a very good job in promoting 
some of those, and to come up with tools they also have to meet 
organizational goals. The organizational goals are kind of 
molded into us when we come here and we have years of 
experience of what the goals are. When the tools are brought 
in, a new generation is brought in, they have to be taught 
these goals, these are the directions we are going to. That's 
all I'm saying.
    All the generations are here, and they're almost out the 
door, probably in retirement age. What I'm saying, those are 
here and they're saying, OK, the tools are here, but they're 
more oriented to the younger generation, what about me, what am 
I going to contribute, I'm contributing here, I'm still here, 
I'm not dead. That's what they're looking at. They want to 
contribute. But the offer sometimes either doesn't get to them, 
the information, like Dr. Asch said, is not disseminated to 
them. But that's basically what I'm referring to.
    Senator Voinovich. You observe that it's a problem. Do you 
think that the hiring process is archaic in terms of bringing 
people in?
    Mr. Durand. I apologize, what was archaic?
    Senator Voinovich. Well, that it's very slow. Are people 
frustrated?
    Mr. Durand. Yes.
    Senator Voinovich. Let's just start off, you have people 
who want to come to work for the Federal Government, for 
instance here, they go to the Web site. Do you hear any 
comments about why it takes so long for approvals to come 
through----
    Mr. Durand. Yes.
    Senator Voinovich [continuing]. Or it took so long for me 
to get my approval after I actually got the offer? Any of that?
    Mr. Durand. I've heard some situations where people have 
said I got hired, but I haven't seen the paperwork, they're 
still waiting for the paperwork. It doesn't occur until several 
weeks or months probably. I've heard that situation, sir.
    Senator Voinovich. Mr. Blanch, do you want to comment on 
that?
    Mr. Blanch. Sure. What I've seen is like we just came into 
this new personnel system, it's called the modern personnel 
system and we talked a lot about it before it happened, they 
kicked it around on the smaller AFMC bases, and it was working 
pretty good, so they wanted to try it at a big AFMC base, Hill 
Air Force Base. They turned that system on, and it has just 
caused a lot of problems.
    What I'm seeing out there is, and I'm getting this from the 
SES's on down, the system is really hurting the mission. It's 
really we need to hire people, we can't hire people.
    So what they're doing is they're going out and hiring a 
contractor to work for us to subsidize it. These contracts are 
coming on board working about 5 or 6 months, they get up to 
speed on systems, whatever the systems are they're working on, 
they're told go apply and they are getting hired as Federal 
employees.
    It's interesting that I was told these contractors are 
costing $8 more than the hourly rate of pay over the long run, 
but that's the problem I'm seeing out there at those centers. 
It is like I said, these are not engineering and scientist 
jobs. These are actually just blue collar type people. And 
that's a big issue out there. But interesting enough, these 
contract employees, while they make a little more money with 
the contractor, they are jumping to Federal service. They want 
to work for Uncle Sam.
    Senator Voinovich. I've talked to Bobby Harnage a little 
bit about this, but it seems to me, first of all, one of our 
witnesses, I think it was Mr. Chu, Under Secretary of Defense 
for Personnel and Readiness, indicated DOD has about 320,000 
military people doing jobs that civilians should be doing. And 
the reason they're doing them is the flexibilities that are 
connected with the military side are so much broader and better 
than what you have on the civilian side.
    Second of all, I've heard that because of the frustration 
that many of these people have with the system, many times the 
temptation is just to try and outsource the jobs because it's 
too much of a hassle to try and get the civilians on board to 
do them. So they say, I just can't hire them, so I'm going to 
look around and outsource the work because it's a lot easier to 
do that than to try to go through this complex system of trying 
to bring people on. Do you want to comment on that?
    Mr. Blanch. That's one thing, like I said, we've talked 
about. We've identified that at AFMC-AFGE Council 214 as a 
mutual interest. That's something we want to work together on. 
We agree that that's a problem, that's one of the issues we've 
set. Yes, we agree there has got to be a better way to get 
these people on board and up to speed. It's nice to agree with 
management.
    Senator Voinovich. Do you believe there are governmental 
jobs that are being outsourced that should remain? And there is 
a big question about outsourcing, I didn't get into it with Mr. 
Dominguez, but the whole issue of outsourcing these jobs, is 
it----
    Mr. Blanch. It's my concern with outsourcing the jobs, I've 
heard core for the last 10 years, core workload. Nobody can 
tell me what core workload is. I have real concerns with 
national security. You start outsourcing these weapons systems 
to who knows who or where, they have foreign ownership, they're 
subject to labor strikes, they're subject to go broke. There 
are just all kinds of things. AFGE believes that national 
security, these major weapons systems should be maintained by 
Federal employees on Federal installations because we just 
can't afford the risk.
    Senator Voinovich. In other words, you believe they should 
be more conservative in their definition of core 
responsibilities and that in too many instances activities that 
should be defined as core--is there a definition that is used 
commonly in the civil service?
    Mr. Blanch. I've never heard a definition of what is core. 
When we were doing authorizations in places like McClelland, 
people were calling and asking me what is core. I said I don't 
know where you draw the line at core workload. To me core 
workload is workload that national security focuses on.
    Senator Voinovich. So we need a better definition of core. 
Would you agree with that?
    Mr. Blanch. Yes, sir.
    Senator Voinovich. OK. Second of all, if an agency is 
thinking about outsourcing work, what kind of competition do 
they have? For example, when I was governor, we gave our unions 
the opportunity to bid for jobs that we considered to be not 
core or not governmental in nature, such as security and 
cleaning. But we did give our State employees an opportunity to 
bid for them to show that they could do them better.
    Are you given an opportunity to compete for this type of 
work? And if you are, do you think you're getting a fair shake?
    Mr. Blanch. I spoke with Jim Hansen, he was on the Armed 
Services Committee before he retired, and we talked about Hill 
Air Force Base where I came out of, and that was his thing. We 
could do this in, I believe, the Federal sector, Federal DOD 
workers could go in there and not only compete for the work to 
do, but compete for outside work. I think we could go compete 
at Delta Airline for their landing gear corps. But those things 
are not out there to allow us to do that.
    Senator Voinovich. So you're telling me you think your guys 
should be able to compete for work that somebody is doing in 
the private sector, and that you could bring it back in and do 
as good a job or better?
    Mr. Blanch. Yes, I think we can do that. As far as for 
competition, I think it hurts us. We have so many rules and 
things we have to account for that. It makes it real hard. We 
have MEO's. The MEO's, you got MEO, it just really hurts you, 
trying to do what you've already got to do. Once you got it on 
the table, you mention these MEO things, they say hey, you're 
good, we're going through a war here, we really got to get into 
this right now.
    So like I said, like Michael said, the stress, the stress, 
the stress, to put in for that job, we got to, I think we can 
go in, and if we had the equal opportunity to compete with 
these jobs, we got a fair shot. We're ready, willing and able, 
especially AFMC employees.
    Senator Voinovich. From my experience I've seen it both 
ways. When I was Mayor of Cleveland that we outsourced our data 
processing. They did a disastrous job, and we were way behind 
because they billed us for their cost of developing new 
systems.
    So I had a private sector firm conduct a management study, 
and they said you ought to take this work back in-house. We did 
and it was one of the best things that we ever did. So it works 
both ways. But you think that overall we should have more 
fairness than we have?
    Mr. Blanch. Yes, I do.
    Senator Voinovich. Yes. Are any of you familiar with the 
new NSPS, the new National Security Personnel System that's 
been promoted by the Defense Department?
    Dr. Asch. Some of it.
    Senator Voinovich. I would be interested in your comments 
on it.
    Dr. Asch. I think what I would say, like everything you 
said, the devil is in the details. I think there are things 
that work very well in the civil service, and some have worked 
in the past, but it's not fully effective.
    Senator Voinovich. It's what?
    Dr. Asch. It's not fully effective or as effective as it 
could be. Especially when one considers all of the factors that 
define a successful human resource system. The current system 
doesn't have all those areas.
    For example, there are the issues of whether managers have 
discretion over resources, are there incentives for 
performance, are there adequate resources for policies that 
could make a difference? These are areas where the civil 
service isn't quite where it should be. But, of course, there 
are also things that have been done well.
    And I think there has been so much attention by such a 
diverse array of groups. So many commissions and study groups 
of all sorts have looked at the system and consistently said 
there are some serious problems with the civil service system.
    So looking at the DOD proposal, I think it has the 
potential to be terrific and provide the flexibility that is 
needed--the ability to introduce innovative methods, be quicker 
at hiring, those things. The plan would have those potentials. 
But that said, when you look at past examples of, for example, 
the demonstration projects and so forth, one of the 
conclusions, and I would recommend reading the Naval Research 
Advisory Committee for the science technology community, the 
conclusion is that the flexibilities were underutilized, it 
didn't meet its potential.
    And some of the reasons for why that was the case was 
excessive bureaucracy, the need to get approval from OPM, and 
OPM having concerns about some of the more radical ideas. They 
felt that they did not have a system that was supporting the 
efforts. And so looking at the DOD proposal, it certainly is 
focused on many of the areas that commissions consistently 
identify as problem areas. But it needs to recognize that if 
not implemented well, it could be a real disaster and attention 
needs to be put to such things as including the employees, 
making sure they're not going to be hurt by the process, that's 
critical, not having arrangements with OPM so that not 
everything has to be approved. On the other hand, OPM needs to 
have oversight.
    Senator Voinovich. So you think it goes too far in zapping 
out OPM?
    Dr. Asch. I don't know that.
    Senator Voinovich. Are you familiar with it?
    Dr. Asch. In general terms.
    Senator Voinovich. There is some criticism that they're 
really trying to get out from OPM.
    Dr. Asch. I think what I'll respond to is that commissions 
consistently find that the need for approval by OPM has 
hindered real progress in many initiatives that have the 
potential to be very positive. And so it's a fine line between 
giving people the authority to make decisions without having to 
go to OPM, and yet at the same time recognize that oversight is 
important, clarity is important, transparency, all those things 
need to be there too. So I think there is a fine line that 
needs to be walked there.
    Senator Voinovich. I've been working on this issue for over 
4 years. Last Congress I drafted the Federal Workforce 
Improvement Act, and included about half of it in the Homeland 
Security Act. That legislation called for elevating the 
importance of human resources management.
    A question I have is, if you don't have good human resource 
people already in the Department, then how can you outsource 
the personnel function?
    When I was governor we did outsource it because the 
Department of State services, frankly, got in the way, so we 
let them go ahead and do it and they had to follow certain 
guidelines. So if you take this on, I think you will agree, you 
really have to do some work in this area to make it work well. 
A question I asked the other witnesses that were here was about 
going to a pay banding system with performance pay. I'm going 
to ask you this question as well. Tell me if you're not 
familiar with it and I'll understand, but if you've observed 
that aspect of the Federal workforce, do you think that they're 
capable of doing pay for performance.
    Dr. Asch. How many of the human resource managers?
    Senator Voinovich. Yes. One of the concerns that we have is 
if you go to pay for performance, the people that do the 
performance evaluations really have to know what they're doing.
    Dr. Asch. That's correct.
    Senator Voinovich. That is hard work. You have to be 
trained for the issue. Is the infrastructure in place in order 
to get that done inside the Federal Government or in the 
Department of Defense?
    Dr. Asch. I'm more familiar with the Department of Defense 
civil service, but I think that it is possible to go to that 
system. It could be very costly. It's very costly in terms of 
people's time to do a meaningful performance review, especially 
in the kind of work that people do in the civil service because 
much of it is difficult to quantify. How do you quantify good 
ideas? It's very difficult.
    So my position is that it is possible to have a pay for 
performance system. It won't necessarily be in the form of you 
did a good job this year, I'm going to give you a raise. It 
could be in the form of--I'm not recommending this, but just to 
give an example of a system that does work pretty well is the 
military pay system where promotion is very important? It's 
essentially pay for performance.
    So you can structure pay and compensation in a way that 
provides incentives for performance that doesn't--maybe where 
you're reviewing performance not every year, but maybe every 
few years. I'm not recommending the military system. I'm saying 
it is possible to design meaningful performance incentives in a 
governmental situation.
    Senator Voinovich. Well, I think probably one of the 
reasons why they want to do it is that they've had some good 
experience with the uniformed service, and they think we can 
maybe transfer it over.
    Dr. Asch. But it will take work. My sense is that 
infrastructure isn't there today. I think that given the lack 
of incentives right now for performance, basically where the 
performance incentives exist in the civil service is that the 
civil service hires really good people who are motivated and 
want to work in the public service. But it would be nice also 
to reward them when they do perform well, and that is missing. 
And so the infrastructure isn't quite there, but maybe it 
should be. In fact, I think it should be.
    Senator Voinovich. You would have to get on with that 
before you just go full blown with it.
    Dr. Asch. I think it's important to have a meaningful plan 
and then be willing to tweak the plan. I do a lot of research 
on the active military. When you consider what happened in the 
move from the draft to the all volunteer force, what a radical 
change in personnel policy that was. And, yes, it was rocky at 
first, but with attention to pay raises, introduction of 
bonuses, revamping----
    Senator Voinovich. Where is this again?
    Dr. Asch. I'm talking about the active duty military in the 
uniformed service.
    Senator Voinovich. OK.
    Dr. Asch. We moved from the draft to an all volunteer force 
in the 1970's. My point is exactly an example of a radical 
change in personnel policy that wasn't done successfully at 
first, it was rocky, but it evolved and it improved, and so I 
think it's important to have a good plan in place and then have 
the willingness to come back. And I think that's an important 
role for Congress is to say, OK, how is this working, and 
actually in the legislation include data collection, and say 
we're going to have evaluations. It's interesting going back to 
the military example, the institutionalized quadrennial review 
of military compensation that occurs every 4 years. DOD has to 
review its compensation system. So institutions were put in 
place in the 1970's so that it wasn't like we're changing the 
law and off it goes. Rather we're going to monitor this very 
carefully and make changes.
    Senator Voinovich. My complaint, General Lyles, and it's 
too often, 3 years----
    Dr. Asch. Is not enough.
    Senator Voinovich. They ought to look at giving him a 
little more time. Mike, would you want to comment on this?
    Mr. Blanch. I can tell you from the bargaining unit 
perspective one of the most controversial issues we have out 
there is performance appraisals. I mean probably half the 
grievances filed in this command every year are over 
performance appraisals. We have Chapter 43 in place now. We 
have a system in place that generates so many complaints.
    Senator Voinovich. What is it again?
    Mr. Blanch. Chapter 43, the performance appraisal system. 
That's something they want to get rid of in the new personnel 
system. They would get rid of that. We have that in place. That 
is something----
    Senator Voinovich. I'm sorry, maybe I should know more 
about it. Is that one of the waivers that one of the agencies 
received and they're doing it?
    Mr. Blanch. That's what's waived in the Homeland Security 
Act. DOD is going for the same thing to get rid of that that 
people go through.
    Senator Voinovich. In other words, you have some members 
where they've waived that and you have performance evaluations.
    Mr. Blanch. No. We have that in place now, and we use that. 
That's a tool that the employees have to make sure they get a 
fair appraisal, they have to use that system and the collective 
bargaining agreement and if you take that, that takes away from 
employees and you give that sole authority to the supervisors 
to determine if he or she moves up or down or anything else.
    Senator Voinovich. Well, let me just ask you this, do you 
think the supervisors that you deal with are trained enough 
to----
    Mr. Blanch. That's exactly my point. That system now is a 
good objective system in place, and they have a lot of trouble 
administrating this system, which I think because it's right 
there in the same place, and like I said, it's one of the 
hardest things is the supervisor, and I feel for them because 
no matter what they do it's not good enough, so it's like----
    Senator Voinovich. The real question----
    Mr. Blanch. What we have now is they have a real hard time 
with what we're looking to replace. They're going to have a 
harder time with it.
    Senator Voinovich. Does the union have any information 
about training people in doing performance evaluations?
    Mr. Blanch. No. We think the problem is in our line of 
business, the Council 214 people--you're a good employee and 
stuff, and we've talked about this again--it's a partnership 
council issue, we're working this thing, OK, you're a good 
mechanic or you're a good whatever you are, and tomorrow you're 
a supervisor and that's how it happens. You might get a 1 week 
training course, but supervision is--it's an art, it's not----
    Senator Voinovich. I'll tell you something, I really would 
like you to go back and get additional information on this. I'm 
going to see Bobby Harnage tomorrow, I would really like to get 
into the issue of how much training people actually receive in 
the civilian side on doing performance evaluations.
    Mr. Blanch. I think we could probably answer this from this 
command because we've been working that at the partnership 
council. I think we can probably get you that from this command 
real soon.
    Senator Voinovich. I know that when I spoke to you about a 
year ago, you said you were working on something like that, but 
I would really like to know how you're going about getting it 
done and the time it takes to get it done.
    General Lyles. We'll provide that information to you, sir.
    Senator Voinovich. Great.
    Mr. Blanch. The next biggest issue in AFMC would be 
disciplinary type actions. We are really concerned with waiving 
Chapter 75. We have real big concerns there because we are very 
active with locals and in processing disciplinary actions, and 
sometimes they're warranted, sometimes they're not.
    Senator Voinovich. Is the process expedited?
    Mr. Blanch. To my understanding it pretty much goes away. 
You lose your right.
    Senator Voinovich. I see, but it goes away.
    Mr. Blanch. Right. We have an expedited procedure in place 
at AFMC.
    Senator Voinovich. For hearing grievances.
    Mr. Blanch. We worked our grievance procedure, we've 
shortened that up substantially. We've stressed to people here 
for grievances to move them fast, let's get these things out of 
our way. To freshen everybody's minds, in the old days it would 
take months and months and months to get through the grievance 
procedure and we've taken it through collaboration, we know, 
let's get these problems behind us and let people get back to 
work because the longer this goes on the worse it gets.
    Senator Voinovich. Right. Let me ask you another question 
on the grievance procedure.
    Mr. Blanch. Right.
    Senator Voinovich. How familiar do you think the 
supervisors are with the grievance procedure? We regularly hear 
from people that you have poor performers and can't get rid of 
them.
    Mr. Blanch. That's just amazing to me. I've been a union 
steward for a long time, and I can tell you in this command and 
I get into that----
    Senator Voinovich. Do what?
    Mr. Blanch [continuing]. With the OPM director. I don't 
know where this came from because I represent literally 
hundreds and I know lots and lots of people just like me. If 
you are not--if you are unacceptable in your performance on any 
one critical element on your performance plan, you are 
unacceptable and you are given 90 days to get up to speed or 
you're out the gate or downgraded seriously. My experience is 
you're out the gate. I mean, we just don't mess around with 
that. And I don't know where this old wives' tale comes from 
that it takes 5 years or whatever to fire a Federal employee.
    Senator Voinovich. Yes.
    Mr. Blanch. If you do something wrong at AFMC, you are held 
accountable, so why do we need this flexibility. You've got it 
right there. And, if you violate a security regulation, you're 
out the gate, just like that. It happens. I don't know where 
these things come from.
    Senator Voinovich. So your observation is that at the Air 
Force Materiel Command the people who are in supervisory 
positions are pretty knowledgeable about how the system works, 
they follow the procedures, and if somebody is not doing what 
they're supposed to do, you think they're gone?
    Mr. Blanch. My observation of the Air Force Materiel 
Command is sometimes they're a little overzealous.
    Senator Voinovich. They're what?
    Mr. Blanch. They're a little overboard. I would say the 
person needs some discipline, but you don't need to fire him. 
But I would say, yes, AFMC is very aggressive.
    Senator Voinovich. It would be interesting to see the 
number of grievances, some statistical evidence on the 
grievances and appeals here versus some other parts of the 
Defense Department.
    Mr. Blanch. Yes.
    Senator Voinovich. That's good to hear. I'm not glad that 
they're running people out, but that they are familiar with the 
procedure. My experience as mayor was that the city directors 
often complained that they couldn't get rid of poor performers. 
So I talked to the person that ran the civil service and the 
appeals process, and it turned out they didn't follow the 
rules. They have to follow the rules and if they do what 
they're supposed to do it would work out. You know what, they 
went back and trained them, they started following the rules 
and the frustration ended. But the problem was that most of 
them didn't know the system and in some instances they were 
just too lazy to use the system. But you think the system we 
have in place is fair?
    Mr. Blanch. I think it's a real fair system. I'll be frank 
with you, I'll have a new supervisor come in, an employee will 
do something wrong, I'll bring the employee over afterwards and 
say maybe your boss screwed up procedurally here, but let me 
tell you something, you got a job to do, so does that 
supervisor, and he is not going to make the same mistake twice, 
and, I mean that's the way it goes down. And, yes, all the 
protections they need are out there, all the tools they need 
are out there, they use them, and so I just don't understand 
why they need more.
    Senator Voinovich. Does anyone else want to make a comment 
on anything? Mr. Durand, you're where the rubber meets the 
road. Do you share his observations?
    Mr. Durand. Yes, I do share his observation. There is 
times, and I haven't been a union treasurer for a long time, so 
I apologize a little bit of my ignorance on it, I do share his 
observation. I do realize that there is training to be involved 
and it all boils down to that, both from the management side 
and both from the employee sides. They both have to know what 
the advantages are, what the disadvantages are, what you can 
do, what you cannot do. And once they're educated in the 
system, Dr. Asch was talking about the system you were 
referring to earlier, you have to learn both, it has to be 
training, it has to be uniform, it has to be disbursed to the 
people so that they know what to expect.
    Senator Voinovich. And do you think that that training, for 
the most part, is going on so that people are trained for their 
responsibilities?
    Mr. Durand. Yes. I think the training is occurring.
    Senator Voinovich. OK.
    Dr. Asch. Can I make one last suggestion? In addition to 
training, there also has to be an incentive for supervisors to 
give poor evaluations when necessary and feel that they're 
going to be backed up when they give poor evaluations. So it's 
partial--I mean it's the typical argument there are lot of 
policies on the books that are the right policies, but for some 
reason they're pointing to the training issue, which is, of 
course, critical, but another possibility is what's the 
incentive for them to use it?
    I am an economist, there is big literature on how 
organizations, particularly public organizations because it's 
not a profit maximizing type of thing, the incentive of a 
supervisor is to make sure the workers like them, and so they 
might not do things that a private sector supervisor would do. 
I'm not saying that's the case here. I'm just saying there is 
an incentive for supervisors not to give poor evaluations or to 
follow through with them.
    Senator Voinovich. Well, it's interesting. David Walker, 
who is comptroller general, has commented that in their studies 
on the performance evaluations, most of the time it's always 
very good.
    Dr. Asch. Everybody is above average, yes.
    Senator Voinovich. And it's either because it's easier or 
you don't want to----
    Dr. Asch. I think that's very telling.
    Senator Voinovich [continuing]. Have the discomfort of 
saying to somebody what you're doing. Then, of course, there 
are some that are arguing for a flexible pay band, or broad 
banding. This is particularly important in the senior executive 
service where 70 percent of the people earn the same amount of 
money.
    Dr. Asch. Right. And actually what's to prevent them from 
going to the top of the pay band. I mean what incentive does a 
supervisor have to control costs? So the incentives of the 
managers and the supervisors in this process are pretty 
critical, especially when you're in a public organization where 
it's harder to measure productivity. There is no cost bottom 
line, like you would have in a private sector concern.
    Senator Voinovich. I'm going to ask you one last question, 
it's for Mr. Blanch and Mr. Durand, do you know what total 
quality management is? Do you know what that term means?
    Mr. Blanch. I worked on that a few years ago. Yes, I'm 
familiar with the term.
    Senator Voinovich. It's primarily about demonstrating 
principles of empowering your workers to become involved in 
decisionmaking and developing self-improvement teams of 
excellence and continuous improvement. Do you have any 
experience?
    Mr. Blanch. Yes. I've had a lot of experience in that. In 
fact, AFMC is working on basically TQM. It's lean logistics.
    Senator Voinovich. Lean what?
    Mr. Blanch. Lean logistics. It's a new program that's come 
on board. It started down in Warner Robins Air Force Base. 
They've gone to the people with all these crazy things, all 
these things--get these things out of my way, it's just 
basically a common sense thing, but it's going to the people, 
the people are like the customer, to know what that customer 
wants and they know how to get it though now, to get it fast to 
them. I believe AFMC, we've been kind of practicing that one 
way or another. Sometimes I don't think we get through with one 
situation or before we start another one. It was like there was 
always something going on in this command. Somebody is always 
looking for a better way to do it.
    Senator Voinovich. Yes. Do you think overall that your 
members are involved in decisionmaking and asked how they think 
they can do their jobs better?
    Mr. Blanch. That depends on the leadership at like General 
Lyles' leadership. He put the word out, but you get this 
impermeable layer, you get the word out, you have to go through 
all the layers of management before it gets down. Sometimes I 
see it working great, at some bases they'll push back on it, 
but it's been endorsed at this level.
    Senator Voinovich. I'd be really interested if you would 
share with me from your perspective where you think you have 
some good information because my next project, if we get all 
these personnel reforms completed in this next couple of years, 
is to see if we can start moving on total quality management. 
It's been my experience in the city and in the State Government 
that when you empower people and you give them the tools and 
the training and you do the performance evaluation properly you 
will have a very motivated workforce.
    And I think the problem that I've observed is that this 
whole area of personnel has been neglected for so long in so 
many places that we must get the fundamentals in operation 
before we can start going----
    Mr. Blanch. It sounds so easy.
    Senator Voinovich [continuing]. Where we move on to 
something else.
    Thanks for being here. Thank you, Mr. Durand and Mr. 
Nauseef. I know you're listening intently. Thank you for your 
nice words. We enjoy working with you and we understand how 
important this base is to you.
    Mr. Nauseef. Thank you, Senator.
    Senator Voinovich. We want to make sure you have the best 
workforce you can possibly have here.
    Mr. Nauseef. Yes, sir.
    Senator Voinovich. Again, thank you very much.
    Dr. Asch. Thank you.
    Senator Voinovich. The hearing is adjourned.
    [Whereupon, at 3:36 p.m., the Committee was adjourned.]


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