[Senate Hearing 108-149]
[From the U.S. Government Publishing Office]
S. Hrg. 108-149
NOMINATIONS OF TERRENCE A. DUFFY, SUSANNE T. MARSHALL, AND NEIL A.G.
McPHIE
=======================================================================
HEARING
before the
COMMITTEE ON
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
ON THE
NOMINATIONS OF TERRENCE A. DUFFY TO BE A MEMBER OF THE FEDERAL
RETIREMENT THRIFT INVESTMENT BOARD; SUSANNE T. MARSHALL, TO BE CHAIRMAN
OF THE MERIT SYSTEMS PROTECTION BOARD; AND NEIL A.G. MCPHIE TO BE A
MEMBER OF THE MERIT SYSTEMS PROTECTION BOARD
__________
MAY 15, 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, Deleware
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 Counsel
Johanna L. Hardy, Senior Counsel
Michael Russell, Staff Director, Financial Management, the Budget, and
International Security Subcommittee
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Jennifer E. Hamilton, Minority Research Assistant
Jennifer L. Tyree, Minority Counsel, Financial Management, the Budget,
and International Security Subcommittee
Darla D. Cassell, Chief Clerk
C O N T E N T S
------
Opening statements:
Page
Senator Fitzgerald........................................... 1
Senator Durbin............................................... 2
Senator Akaka................................................ 4
WITNESSES
Thursday, May 15, 2003
Hon. George Allen, a U.S. Senator from the State of Virginia..... 3
Terrence A. Duffy, to be a Member of the Federal Retirement
Thrift Investment Board........................................ 5
Susanne T. Marshall, to be Chairman of the Merit Systems
Protection Board............................................... 10
Neil A.G. McPhie, to be a Member of the Merit Systems Protection
Board.......................................................... 11
Alphabetical List of Witnesses
Allen, Hon. George:
Testimony.................................................... 3
Duffy, Terrence A.:
Testimony.................................................... 5
Biographical and professional information.................... 28
Pre-hearing questionnaire.................................... 32
Marshall, Susanne T.:
Testimony.................................................... 10
Prepared statement........................................... 21
Biographical and professional information.................... 43
Pre-hearing questionnaire with attachments................... 48
Post-hearing questions and responses from Senator Akaka...... 181
McPhie, Neil A.G.:
Testimony.................................................... 11
Prepared statement........................................... 27
Biographical and professional information.................... 157
Pre-hearing questionnaire.................................... 167
Post-hearing questions and responses from Senator Akaka...... 186
Appendix
Memo to Elise Bean, PSI, Joe Bryan, Senator Levin, dated May 16,
2003, from Susanne T. Marshall, subject: Classified
Information/Security Clearance Issues.......................... 23
Letter to Senator Fitzgerald from Susanne T. Marshall, dated May
21, 2003, with enclosed chart entitled ``Case Processing Times
for Selected Agencies--May 19, 2003''.......................... 24
NOMINATIONS OF TERRENCE A. DUFFY,
SUSANNE T. MARSHALL, AND
NEIL A.G. McPHIE
----------
THURSDAY, MAY 15, 2003
U.S. Senate,
Committee on Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 2:03 p.m., in
room S-143, U.S. Capitol, Hon. Peter G. Fitzgerald, presiding.
Present: Senators Fitzgerald, Levin, Akaka, and Durbin.
OPENING STATEMENT OF SENATOR FITZGERALD
Senator Fitzgerald. The Committee will come to order.
Senator Akaka is at a meeting but he gave us dispensation to
begin without him. He will be here shortly.
Today we consider the nominations of Terrence Duffy to be a
member of the Federal Retirement Thrift Investment Board;
Susanne Marshall to be chairman of the Merit Systems Protection
Board; and Neil McPhie to be a member of the Merit Systems
Protection Board. I would like to welcome our nominees today.
Each of you has a distinguished background and record of
service. The President has selected you for important positions
in our government, and I congratulate you on your nominations.
I would also like to welcome our distinguished colleagues
from Illinois and Virginia, Senator Durbin and Senator Allen,
who are with us today to introduce two of our nominees.
Mr. Duffy, Ms. Marshall, and Mr. McPhie have filed
responses to the Committee's biographical and financial
questionnaire, answered prehearing questions submitted by the
Committee, and had their financial statements reviewed by the
Office of Government Ethics. Without objection, this
information will be made part of the hearing record with the
exception of the financial data which are on file and available
for public inspection in the Committee offices.
In addition, I personally have reviewed the FBI background
investigation reports on each of the nominees.
On our first panel today we will hear from Mr. Duffy, whom
I have had the pleasure of knowing personally for several years
now. President Bush nominated Mr. Duffy to be a member of the
Federal Retirement Thrift Investment Board, which was
established as an independent agency to administer the Thrift
Savings Plan. Mr. Duffy has served as chairman of the Chicago
Mercantile Exchange Inc. since April 2002, and has been a
member of the Chicago Mercantile Exchange Inc. for over 20
years.
On our second panel we will hear from Susanne Marshall, and
Neil McPhie, whom the President has nominated to the positions
of chairman and member, respectively, of the Merit Systems
Protection Board. Both Ms. Marshall and Mr. McPhie currently
serve in those positions on the board through recess
appointments.
The Merit Systems Protection Board was created in 1978 to
serve as a guardian of Federal merit systems principles. The
board plays a critical role in protecting the rights of
whistleblowers, who have presented some of the most compelling
evidence of government abuse and in fiscal mismanagement,
saving the taxpayers hundreds of millions of dollars.
Both the Federal Retirement Thrift Investment Board and
Merit Systems Protection Board are vital agencies in our
Federal Government. The nominees are being considered for
important positions of leadership in these agencies, and we
appreciate their presence today before this Committee.
Before we proceed with their statements, I would first like
to call on my colleague from Illinois, Senator Durbin, to
introduce Terrence Duffy, if that is OK with Senator Allen.
OPENING STATEMENT OF SENATOR DURBIN
Senator Durbin. Thank you, Mr. Chairman. I am pleased to be
here this afternoon and honored that Terry Duffy would ask me
to introduce him to this Committee. Of course, he needs no
introduction to you personally. We both know of Terry Duffy and
his contribution to the business community and the city of
Chicago. I think he is an excellent choice to be a member of
the Federal Retirement Thrift Investment Board. I know that he
is accompanied here by his spouse, Jennifer, and his mother,
Barbara Duffy, and his assistant, Joyce Balkus. I am certain
that he appreciates their presence and support at this
important hearing.
This is a critical appointment to an important position.
The Federal Retirement Thrift Investment Board may be obscure
to some, but it is not to the millions of Federal retirees and
current Federal employees who are saving a portion of their
earnings in anticipation of retirement. This is an independent
agency which administers the Thrift Savings Plan and it has an
important mission. Currently the Thrift Savings Plan has
approximately 3 million participants and assets of over $100
billion, including the family fortune of the Durbin family, so
I am particularly interested in making certain that Mr. Duffy
does a great job in his new position.
As you said, Mr. Chairman, he has an excellent background.
A native of Chicago, he graduated from the University of
Wisconsin at Whitewater, and worked as a broker assistant for
RB&H Commodities in Chicago. Since November 1981, Terry Duffy
has been president of TDA Trading, Inc., a trading broker
association, most recently serving as chairman of the
prestigious Chicago Mercantile Exchange Holdings Board and the
board of the Chicago Mercantile Exchange Inc. itself.
I have had an opportunity to look at his responses to the
policy questions which this Committee has posed, and there is
no question he is well-prepared and well-positioned to serve
this Nation well in this capacity. I heartily endorse his
nomination.
Senator Fitzgerald. Thank you, Senator Durbin.
I would now like to recognize my colleague from Virginia,
Senator George Allen who will introduce Mr. McPhie on panel
two.
Senator Akaka is here. Do you want to let Senator Allen
introduce Mr. McPhie first and then you can make your opening
statement?
Senator Akaka. Yes.
Senator Allen. If I may, I will introduce Mr. McPhie and
also Susanne Marshall.
Senator Fitzgerald. You certainly may.
STATEMENT OF HON. GEORGE ALLEN, A U.S. SENATOR FROM THE STATE
OF VIRGINIA
Senator Allen. Let me start first with Susanne Marshall as
she is appointed to be chairperson of the U.S. Merit Systems
Protection Board. I am pleased to introduce her. She is a
resident of the Commonwealth of Virginia. She is well-known to
many of you already having served on the Governmental Affairs
Committee staff for Senator Roth of Delaware, Ted Stevens of
Alaska, and Fred Thompson of Tennessee. As you may know, she
was confirmed as a member of the Merit Systems Protection Board
in November 1997 under former President Clinton, and now
President Bush has nominated her to serve as chairman for the
remainder of her term.
I can go into her Virginia heritage, that I know you would
all love to hear, since her father's side of the family came to
Virginia in 1650 a few years after it first was founded in
1607. That makes her one of the first families of Virginia.
She does have an expert record having served here on
Capitol Hill as a staffer for more than 15 years in both the
House of Representatives and the Senate, ending only upon her
appointment to the Merit Systems Protection Board. Mr.
Chairman, Senator Akaka, I recommend her very highly to you as
an outstanding public servant and respectfully ask that she be
confirmed as chair of the Merit Systems Protection Board.
While her family is not here with her, they are all here in
spirit and very proud of her.
Mr. Chairman, Senator Akaka, I am also pleased to introduce
Neil McPhie, who has been nominated to be a member of the U.S.
Merit Systems Protection Board. I am confident that when you
look at his record in the Commonwealth of Virginia and his
service to the community, you will recognize that President
Bush selected the right person for this job.
I am pleased to be recommending him because I do know of
his service. He helped me when I was Governor of the
Commonwealth of Virginia. He has served most recently as senior
assistant attorney general in Virginia since 2002 where he has
shown himself to be a very seasoned and effective litigator. He
also served the Commonwealth of Virginia as executive director
of the Virginia Department of Employment Dispute Resolution.
Now I mention my service as Governor. Right as my term
ended, Governing magazine rated Virginia as one of the best
managed States. Any CEO or executive will tell you, the
executive is fine, but you need good people and a good cabinet.
You need good leaders. Mr. McPhie, his attention to detail, his
superb leadership skills really played an important role in
Virginia getting that high honor from Governing magazine. It
was not just to me. It was to my cabinet secretaries, to a
variety of State agencies, and also to the attorney general's
office.
You will see from his education and his background, he
unquestionably has way more than the necessary qualifications
to undertake the charge President Bush has asked of him. He has
a wealth of knowledge in employment law issues that will enable
him to successfully meet the challenges he will face an
adjudicator of the board. I would like to take a quick moment
to recognize Neil's wife, Regina, holding young Sydney there.
This is Abigail here. So he has a fine family and I urge each
of you all on the Committee to move as quickly as possible to
get Mr. McPhie to work for the people of the United States.
I thank you, Mr. Chairman, Senator Akaka, for your
willingness to pull together this hearing so that you can move
forward in these deliberations. Thank you, all.
Senator Fitzgerald. Thank you for being here. Hope you did
not miss any votes.
Senator Allen. Me too. If you will excuse me.
Senator Fitzgerald. Thank you, Senator Allen.
Now the Chair would call upon Senator Akaka for an opening
statement.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. Thank you very much, Mr. Chairman. I want to
welcome all of you here and add my welcome to all of you. Ms.
Marshall, it is good to see you again after all these years.
Mr. McPhie, and Mr. Duffy, welcome to this Committee.
Before I begin I want to compliment the Chairman of this
Committee. Today is one of those days when everything is
upended. He was able to pull this hearing together despite a
day-long voting session. I had some problem finding this room,
but I finally found it, and I want to thank him for moving so
quickly and so well.
I would ask that my full statement be placed in the record.
I just want to say that the positions to which our witnesses
have been nominated are among the most important to Federal
employees. Let me highlight that. You have a tough job ahead of
you. But it is important for our country.
If confirmed, Mr. Duffy will have authority over the
government's retirement savings plan which serves over 3
million participants with assets of about $100 billion.
Likewise, Ms. Marshall who is the acting chair of the Merit
Systems Protection Board and Mr. McPhie who will join her, will
play a critical role in safeguarding Federal employees from
abuse by agency management. Those are important jobs. In the
next 7 years it is going to be critical for our Nation, but we
will talk about that later.
I will submit the rest of my statement, Mr. Chairman.
Senator Fitzgerald. Without objection, Senator Akaka's
statement will be provided in the record.
[The prepared statement of Senator Akaka follows:]
PREPARED STATEMENT OF SENATOR AKAKA
Thank you, Mr. Chairman. It's a pleasure to be with you this
afternoon, and I join you in welcoming Ms. Marshall, Mr. McPhie, and
Mr. Duffy to our Committee.
The positions to which our witnesses have been nominated are among
the most important to Federal employees. If confirmed, Mr. Duffy will
have authority over the government's retirement savings plan, which
serves over 3 million participants with assets of about 100 billion
dollars. Likewise, Ms. Marshall, who is the acting chair of the Merit
Systems Protection Board, and Mr. McPhie, who will join her, will play
a critical role in safeguarding Federal employees from abuse by agency
management.
As the sponsor of legislation to strengthen Federal whistleblower
statues, I believe that one of the key tenants of the Federal merit
system principles is the ability of employees to report waste, fraud,
and abuse without the fear of retaliation. Reporting government
mismanagement is a basic obligation of a Federal employee. As our
witnesses know, the MSPB shares great responsibility to ensure that
employees are protected when they come forward to report waste, fraud,
or abuse.
Since enactment of the WPA in 1989, Congress has revisited the law
to address actions taken by the Federal Circuit Court of Appeals, the
MSPB, and the Office of Special Counsel that have been inconsistent
with congressional intent. I plan to reintroduce whistleblower
legislation shortly, and I welcome the opportunity to discuss this with
Ms. Marshall and Mr. McPhie. I am also interested in your views on the
new Department of Homeland Security and the Department of Defense
proposal to exempt itself from many civil service laws, including MSPB
appeal rights.
I don't want Mr. Duffy to think I am ignoring him. You have had a
distinguished career as a member of the Chicago Mercantile Exchange
Inc. where you now serve as its chairman. As head of the Nation's
largest futures exchange, I am hopeful that you will impart your
knowledge and expertise with your fellow Thrift Board members.
Mr. Chairman, I wish to thank you for holding today's hearing.
Senator Fitzgerald. I am going to recommend that Senator
Akaka and I leave to vote. The vote started at 2:10, so we are
a few minutes into it, and they are only 10-minute roll calls.
We will immediately return and then we will proceed with Mr.
Duffy and then to the Merit Systems Protection Board. We will
try and conduct this hearing rapidly given the time constraints
we are under today. So we will recess for a few moments and we
will be back shortly.
Thank you.
[Recess.]
Senator Fitzgerald. I would like to call the meeting back
to order.
At this point I would like to call on our first witness,
Terry Duffy. Why don't you come up here, Terry. Our Committee
rules require that all witnesses at nomination hearings give
their testimony under oath, so I am going to ask you to remain
standing and raise your right hand.
[Witness sworn.]
Senator Fitzgerald. Thank you. You may be seated.
Before you begin your opening statement, Terry, I wonder if
you would like to again recognize your wife and mother and
assistant who are here? I know Senator Durbin briefly referred
to them but maybe you would like to introduce your family
members.
TESTIMONY OF TERRENCE A. DUFFY,\1\ TO BE A MEMBER OF THE
FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
Mr. Duffy. I appreciate that, Senator. With me today I have
my wife Jennifer, my mother Barbara, and my good friend and
assistant, Joyce Balskus, along with two young ladies that
represent us out here in our Washington office, Lita Frazier
and Lanae Denney.
---------------------------------------------------------------------------
\1\ The biographical and professional information of Mr. Duffy
appears in the Appendix on page 28.
Pre-hearing questionnaire appears in the Appendix on page 32.
---------------------------------------------------------------------------
Senator Fitzgerald. Welcome to all of you. You may go ahead
and give your statement.
Mr. Duffy. Thank you, Mr. Chairman. I appreciate it very
much. Senator Akaka, I appreciate it. Good afternoon. As
Senator Fitzgerald has said, my name is Terry Duffy and it a
great honor for me to be nominated to serve as a member of the
Federal Retirement Thrift Investment Board.
I understand the gravity of the responsibilities that I
will be required to fulfill if my nomination is approved. Three
million Federal employees have invested more than $100 billion
to assure a successful and productive retirement after
diligently serving the government and its uniformed services. I
have discussed my duties and responsibilities with the staff
and the board. I have reviewed the pending litigation involving
the board and its director. I am confident that my background
in the financial services industry will permit me to perform
the duties of this high office as intended by Congress.
I believe that my experience in the financial industry
equips me to perform the important fiduciary duties for which I
have been nominated. My professional life has been connected to
the Chicago Mercantile Exchange Inc., which is now the largest,
most successful futures exchange in the United States. I began
my career at the very bottom of the ladder as a runner in 1980.
In 1981, I became a CME member and was able to work as a floor
broker and a trader. I have formed and been a president of my
own company, TDA Trading, Incorporated since 1981. In 1995, I
was elected to the CME's board, in which capacity I have served
since that time. In 1998, I was elected vice chairman of the
board, and in 2002 I was elected chairman of the board.
In that time I led a very successful effort to execute an
initial public offering to make the Chicago Mercantile Exchange
Inc. the first publicly traded exchange in the United States. I
have served or currently serve on the executive compensation,
nominating, strategic planning, and regulatory oversight
committees. My professional life has equipped me to understand
tools available for modern risk management. In my leadership
role at the CME, I have participated directly in the creation
of new risk management tools, and I have managed financial risk
in all segments of our economy.
Retirees are a major element of our economy, and their
economic welfare depends on the safety and the soundness of
their retirement plans. In 2002, I was appointed by President
Bush to serve on the National Saver Summit on retirement
savings. I understand the serious responsibilities that are
invested in the thrift board. I will bring to bear all my
experiences and knowledge to serve the interest of the
beneficiaries of the thrift board's actions.
Again, I am extremely honored to be here today and look
forward to answering any questions that you may have for me.
Thank you.
Senator Fitzgerald. Mr. Duffy, thank you very much. I would
begin with customary Committee questions, and we will limit
questions to 6 minutes each, if that is OK. We will probably
have another vote shortly.
Is there anything that you are aware of in your background
which might present a conflict of interest with the duties of
the office to which you have been nominated?
Mr. Duffy. No, sir.
Senator Fitzgerald. Do you know of anything personal or
otherwise that would in any way prevent you from fully and
honorably discharging the responsibilities of the office to
which you have been nominated?
Mr. Duffy. No, sir.
Senator Fitzgerald. Do you agree without reservation to
respond to any reasonable summons to appear and testify before
any duly constituted committee of Congress if you are
confirmed?
Mr. Duffy. Yes.
Senator Fitzgerald. Senator Akaka, do you have questions
that you want to ask at this time?
Senator Akaka. Yes, I do, Mr. Chairman.
Mr. Duffy, let me start off by saying how impressive your
background is.
Mr. Duffy. Thank you, sir.
Senator Akaka. It appears that you have been in the right
place at the right time and moved up well, and here you are
again, another place at another time. I did review your papers
and everything seems to be in order.
My question to you is one that interests me tremendously
because I have been trying to move our country to be more
financially literate. My question will be along that line.
Federal employees, for instance, depend a lot on the thrift
savings program for a significant part of their retirement
savings. As life expectancy in the United States continues to
increase and people are living longer, as they do in Hawaii,
they must make sure that their retirement savings meet their
future needs. Federal workers cannot afford to make mistakes on
their TSP, the allocations, or miss opportunities presented by
TSP or other retirement investment options. Employees of all
agencies should be informed about different retirement options.
My question to you is, what can be done to improve
financial literacy among Federal employees to ensure that they
are making educated and informed decisions about their
retirement investment options, especially their use of TSP?
Mr. Duffy. Senator, I think that is an excellent question.
The way I would respond to it, I think that I would go about it
the same way I do about running a public company today, and
that is through the education process. I think education and
communication are key. If you can have what I believe--I do not
know the other board members of the TSP, but you have to have
independence. When you have independence, then the participants
who are in that plan will have more confidence in you and they
will be more willing to listen to you when you try to educate
them.
So I think education, communication, and independence are
critical to getting more people to participate in plans, and
give them the confidence. This has been a very difficult time
over the last 3 to 4 years with markets and market conditions.
I think the American public, and I do not think the government
workers are immune to it, have been affected by it. I think
that they need to have the confidence reinstalled in them to
let them know that there are legitimate people looking out for
their best interest, and we should educate them, Senator.
Senator Akaka. Mr. Chairman, I have other questions but I
will submit them for the record.
Thank you very much for your response.
Senator Fitzgerald. I was wondering, Mr. Duffy, if you had
been following the dispute that the TSP board has had with its
contractor who had been working on its computer system. There
subsequently was a suit filed by the board. Subsequent to that,
a new board has come in at TSP and they have suggested that the
executive director of TSP should not have filed that suit, and
should have gone through the attorney general.
There is a dispute about the level of independence that the
TSP board should have from both Congress and the
administration. This morning there was an article in the
Washington Post that contained a recommendation or relayed a
recommendation that the GAO had made regarding how greater
accountability could be placed on the TSP board, having them
made more accountable to the Department of Labor. Apparently,
the Department of Labor could sanction a private pension fund
that was violating its fiduciary responsibilities, but in the
case of the TSP board the Department of Labor could find a
violation but they could not do anything to the TSP board.
So there is a tension between walling off the TSP board
from the political process on the one hand to prevent it being
used for political purposes. But on the other hand, there is a
danger that the board not be accountable to anyone if there are
violations of fiduciary obligations by the board of directors.
I would like to ask if you had given any thought to whether
the board should just totally be out on its own? If a member of
Congress or the administration calls you and makes a
recommendation, should you get your hackles up and be very
concerned, or do you feel that it should be more accountable to
Congress? This is a tough question, and I do not mean to throw
a tough question to such a good friend, but it is an important
issue.
Mr. Duffy. I welcome it, Senator. Actually, I think there
are several questions in your statement. I will address the
latter part of it on the issue of whether the board should be
accountable to Congress. Again, I am not on the board right
now. I just know by what I read through the press and what is
available in the public domain.
As a chairman of a publicly traded company, I think
independence is critical. To come under pressure from either
side of the aisle of Congress does not seem to suit $100
billion very well because it just does not seem to work. These
are decisions that have got to be made in the best interest of
these government workers and I do not think that Congress
should have too much influence over how that works. Obviously,
there has got to be somebody that they have to be accountable
to. When you talk about fiduciary responsibility, I think that
is where the accountability comes in. I think that is why you
hold these hearings and you try to find the best people to
represent a substantial amount of money like this which is a
good part of the savings of these people.
So I think it is critical to have accountability. Whether
it should be Congress or not, I do not know. I guess I would
have to read into it a little bit more. I know that the Labor
Department has some oversight on this.
As far as the litigation is concerned, I am not a lawyer by
trade, but as a chairman I worked in litigation with our
lawyers. Just when you think you have got it figured out, there
is another side of the story. That is one thing I have learned
about lawsuits. So for me to make a comment on the litigation I
do not think would be fair because I do not have the
information the rest of the board has or the staff has. I only
have what is in the public domain. I do know one thing for
certain. Whatever is in the public domain, there is another
side of that story, and there might be two more sides to that
story.
Senator Fitzgerald. I can attest to that.
Mr. Duffy. So I think it is important that you have all the
information.
Senator Fitzgerald. That is right. I like your answer. I
think you recognize the fiduciary responsibilities of the
members on that board. That is an awful lot of money, $100
billion. It is a big responsibility to be one member of that
board who is overseeing so much in retirement funds for so many
people. It is an awesome responsibility. You are certainly one
who is up to the task, and I think you have a proven record of
success in the business world, and certainly at the Chicago
Mercantile Exchange Inc., which was the most successful initial
public offering in all of 2002 in our entire country. We really
could not have someone much better than you here. So I
congratulate you and wish you well.
I would leave it open to Senator Akaka for any final
questions you may have before we proceed to the others.
Senator Akaka. May I ask one more?
Senator Fitzgerald. Yes.
Senator Akaka. Mr. Duffy, along the same line. The Federal
Thrift Investment Board is seeking a new executive director.
Given the current debate over independence and authority of the
executive director as raised in the American Management System
lawsuit over completion of the new TSP recordkeeping system, my
question to you is, how would you define the roles and
responsibilities of the executive director as compared to
thrift board members?
Mr. Duffy. I look at it, Senator, in a couple ways. But I
would say again, I use my experience chairing a public company
board, that the buck stops there. We are ultimately accountable
to our shareholders. The Thrift Savings Board is ultimately
accountable to its participants. So I could sit there and tell
you that I think that the management made a bad decision. They
say, that is great, but you are accountable. You are the board
of directors. That to me is doing my fiduciary duty to the
participants.
It is no different from you today as being the chairman of
the largest U.S. exchange. I have a duty to my shareholders,
fiduciary responsibility. So I have to stay completely
independent of my management. I think that is critical to the
success, not only of private business, but also in the public
and the private sector.
Senator Akaka. Thank you very much for that response.
Mr. Chairman, thank you.
Senator Fitzgerald. Senator Akaka, thank you very much. Mr.
Duffy, thank you for your testimony. Thank you for bringing
your family here, today. We wish you well. We will not take any
more of your time. We will now go on to Ms. Marshall and Mr.
McPhie. Thank you very much for coming.
Mr. Duffy. Thank you, Senator Fitzgerald. Thank you,
Senator Akaka. I appreciate it very much.
Senator Fitzgerald. Thank you.
Another vote just started. We are going to take another
break. We will not be long. A quick vote and we will be right
back, and then we will swear in Ms. Marshall and Mr. McPhie.
[Recess.]
Senator Fitzgerald. I call the hearing back to order. I
would like to swear both of the witnesses.
[Witnesses sworn.]
Senator Fitzgerald. Thank you. You may be seated.
Mr. McPhie, I understand you want to introduce your family,
too. I know that Senator Allen briefly introduced your family,
but maybe you want to introduce them, and then I will allow Ms.
Marshall to start with her statement.
Mr. McPhie. Yes, sir. There are a number of people who came
from Richmond that I will recognize, if I may.
Senator Fitzgerald. Absolutely.
Mr. McPhie. First my family. My wife Regina McPhie is right
here. My daughter Abigail, and my son Sydney.
Senator Fitzgerald. What grade is Sydney in?
Mr. McPhie. Sydney is in third, but sometimes I think he is
in sixth or seventh. I am very proud of those folks, and they
have stood by dad, and my wife by me, through ups and downs.
Without them, I would not be here and I am grateful for that.
As I said, there are some folks who I really owe a lot to
as my career has progressed. I do appreciate them taking time
off and coming up here from Richmond, Virginia. There are some
people from the Attorney General's office in Richmond, and then
there are some folks from my agency over there, the Employment
Dispute Resolution Agency that have come up here. And then
there are two other persons who knew me when I was a little guy
in my native country of Trinidad, and they are both here. I
feel very grateful to be here with people like that around me.
I appreciate the opportunity to say that on the record.
Senator Fitzgerald. Welcome to all your friends, and thank
you for being here. At this point, Ms. Marshall, I would
welcome you to the Committee. Do you have a statement you would
like to make at this time?
TESTIMONY OF SUSANNE T. MARSHALL,\1\ TO BE CHAIRMAN OF THE
MERIT SYSTEMS PROTECTION BOARD
Ms. Marshall. Yes, Senator. Thank you and your staff for
coordinating the hearing this afternoon with so much going on.
I also want to thank Senator Allen for taking the time to be
here to provide the introduction for both Mr. McPhie and
myself. I have to thank President Bush for the honor of
nominating me to be chairman of the Merit Systems Protection
Board.
---------------------------------------------------------------------------
\1\ The prepared statement of Ms. Marshall appears in the Appendix
on page 21.
The biographical and professional information of Ms. Marshall
appears in the Appendix on page 43.
Pre-hearing questionnaire with attachments appears in the Appendix
on page 48.
Post-hearing questions submitted for the Record by Senator Akaka
appears in the Appendix on page 181.
---------------------------------------------------------------------------
In order to save the Committee time, I will provide a more
lengthy statement for the record.
Senator Fitzgerald. Without objection, we will submit your
prepared comments for the record.
Ms. Marshall. Thank you. It is very hard for me to believe,
having been a Committee staffer, that it has been 5\1/2\ years
since I have been here in the Capitol building. It is really an
honor for me to be here today, and quite a treat to see some of
my former colleagues and friends. I do not have family here,
but I would acknowledge friends that are here from the Hill as
well as from the MSPB. So, I just would acknowledge that for
the record.
In 1997, when I was confirmed, my goal, as I stated at that
time, was to prove myself worthy of the confidence that had
been placed in me. As I come here 5\1/2\ years later, I hope
that my record and my reputation speak for itself, and that I
have the support of members on both sides of the aisle.
In every effort that I have made as a member, as vice
chair, as acting chair, and now as chairman, I look forward to
being able to lead the agency throughout the remainder of my
term. It is a terrific agency. It is very small, very
efficient, with hard-working and dedicated civil servants. That
is what I look forward to. I appreciate the opportunity to be
here today.
Senator Fitzgerald. That is great.
Mr. McPhie, you may also submit your written comments for
the record and we will make that a part of the Committee's
transcript, or you may read them if you wish, or you may talk
off the top of your head.
TESTIMONY OF NEIL A.G. McPHIE,\1\ TO BE A MEMBER OF THE MERIT
SYSTEMS PROTECTION BOARD
Mr. McPhie. In the spirit of intimacy and speed I would
submit--I have already submitted a prepared statement for the
record and I would ask that it be placed into the record.
---------------------------------------------------------------------------
\1\ The prepared statement of Mr. McPhie appears in the Appendix on
page 27.
The biographical and professional information of Mr. McPhie
appears in the Appendix on page 157.
Pre-hearing questionnaire appears in the Appendix on page 167.
Post-hearing questions submitted for the Record by Senator Akaka
appears in the Appendix on page 186.
---------------------------------------------------------------------------
Senator Fitzgerald. Without objection.
Mr. McPhie. Rather than just read it, I just want to
highlight some other things. I am extremely grateful to be
here. I am honored by the confidence placed in me by the
President of the United States. I am honored by the effort this
Committee went through, and the opportunity for me to come
before you at this time. I appreciate the questions that were
asked of me, some very probing questions by your staffers some
of whom are here. I tried to answer them as forthright and as
best I could. I hope I have succeeded in doing that. I look
forward to a relationship based on openness, candor, and
forthrightness.
If confirmed, I pledge to do everything within my power and
to the best of my abilities to decide these important cases in
a fair and objective basis, controlled by the facts, the law
and the policies and nothing else.
I intend to give this position all I have and to work with
Chairman Marshall in a collaborative effort and a common goal
to make the Merit Systems Protection Board better than I found
it. I know the staffers by their questions had certain issues
that they raised. I intend to follow up on some of these
concerns and see if we cannot get cases in and out of that
place as quickly as we can and as fairly as we can. I look
forward to acquitting those responsibilities in that fashion.
I would be more than happy to answer any questions you or
anyone else may have, sir.
Senator Fitzgerald. Thank you, Mr. McPhie.
Ms. Marshall, you began serving as acting chairman in
February 2002, and then as the board's chairman since August
2002?
Ms. Marshall. Yes.
Senator Fitzgerald. Given your experience in these
capacities, what new initiatives have you undertaken, and what
new policies have you implemented to improve the operations of
the Merit Systems Protection Board?
Ms. Marshall. Initially, because our main function is the
adjudication of a large volume of cases, it was to try to
determine how we could move more quickly, particularly with our
complex cases. Oftentimes, these cases were reviewed so
extensively in our Office of Appeals Counsel or Office of
General Counsel before they came up to the board members that
we were left with a short timeframe to act on them.
Senator Fitzgerald. How many cases do you have?
Ms. Marshall. At Board headquarters, we process, on
average, about 1,700 cases annually. In those cases that are
more difficult and more time-consuming, that have multiple
claims or different sets of facts, we have tried to get them to
the board members earlier so that we have enough time to give
direction to the staff to work those cases.
Senator Fitzgerald. Have you been able to do that?
Ms. Marshall. Yes. We actually have color-coding, putting
them in green folders so that we can make notes as they come
into our office that this case has a particularly difficult
issue and we need to give it expeditious review so that we can
determine what direction it should take if it needs any more
work.
Senator Fitzgerald. Assuming your confirmation, are there
any additional initiatives or policies that you want to
implement?
Ms. Marshall. One of the major initiatives that we are
working on implementing is our e-Appeal process. It will be an
interactive electronic process for filing an appeal. The user
will be able to navigate it in a manner similar to TurboTax.
Questions will be asked as to the action being appealed. Is it
an adverse action? Is it a retirement decision? Then the user
can follow a set of questions for the action being appealed, as
opposed to having to deal with a very lengthy form.
Senator Fitzgerald. To get rid of the paperwork.
Ms. Marshall. Yes, it would also do that. We hope to have
e-Appeal implemented by October.
Senator Fitzgerald. So do you see the biggest challenge of
the MSPB the caseload numbers and how to speed the cases along?
Is that one of the biggest challenges?
Ms. Marshall. That certainly is our daily challenge,
something that we face on a regular basis. Right now, we also
must deal with the challenge of the Department of Homeland
Security, the Department of Defense, and plans that would take
certain employees out from under Title 5 protections. I think
the board must work to make sure that the role that we play in
protecting employee rights is understood. We provide the
neutral third party review. So, I think that our biggest
challenge over the next year is going to be educating the
public and other agencies as to the role that we play.
Senator Fitzgerald. Do you think the MSPB has sufficient
resources to do its job now?
Ms. Marshall. Currently we operate adequately. We meet our
needs. I would not want to see our budget cut. I think we are
right at the edge. We have reduced our staff dramatically, with
almost a 25-percent cut in personnel 5 years ago. So, we have
to hold our own. I do not want to see us reduced. We operate, I
think, very efficiently with the resources that we have.
Senator Fitzgerald. Are there any legislative remedies that
you would recommend that Congress consider to help the board at
this time?
Ms. Marshall. At this time I would say that it would be
preserving the merit principles as Congress looks at the future
of civil service protections for Federal employees. I have one
proposal that I described in my written responses that deals
with a legislative fix in the handling of FERS disability cases
so that we do not have to have repayment issues occur. That is
something I would be happy to provide additional information on
if the staff wishes to follow up on this suggestion.
Senator Fitzgerald. Part of the MSPB's work involves
hearing cases that fall under the Whistleblower Protection Act
as it was amended in 1994. The act was intended to strengthen
protections for Federal employees when they disclose
information pertaining to wrongdoing within a particular agency
or department. This act is an integral part of the MSPB's
mission and operations.
Ms. Marshall, would you please share your assessment of the
current effectiveness of this Whistleblower Protection Act
including any particular strengths and weaknesses?
Ms. Marshall. I think probably the greatest value of the
act is something that we cannot measure. That would be the
deterrent effect. I believe that by its very existence and the
enforcement of it over the years that it has probably led many
agency managers and supervisors to be much more careful in the
actions that they take. They know that there will be
enforcement by the Office of Special Counsel and the Merit
Systems Protection Board.
I personally am not supporting any particular legislative
remedies. I know that there have been a number of provisions
reviewed by the Committee and currently under review by the
Committee. I have found, as an adjudicator, that the more
recent amendments, when Congress emphasized the use of
``any''--and a very broad reading of the language--allows the
adjudicator to look at all the particular facts of the case and
any violation of any law, rule, or regulation or any
significant change in duties. So I think it is our enforcement
of a broad reading of the statute, the plain language of the
statute that I find most useful.
Senator Fitzgerald. Do you believe that whistleblower
rights are adequately protected now?
Ms. Marshall. I think it has been very effective.
Senator Fitzgerald. Do you think they are adequately
protected now? Do you know how many whistleblowers have been
helped through settlements or board rulings providing relief,
or what the win-loss track record for decisions is?
Ms. Marshall. OSE considers all WPA claims first, but I
think for cases that have come to the board, say over the past
year, perhaps we have had 130 cases that have not been
dismissed that we have looked at the merits of the issue. A
little over 50 percent of that, maybe 60 percent, we have made
a finding of a nonfrivolous allegation of whistleblowing.
But even if we had a finding of potential whistleblowing,
the agency still has the opportunity to prove by clear and
convincing evidence that they would have taken the personnel
action anyway. So you may have a valid whistleblower as an
appellant, but it does not always lead to relief.
Senator Fitzgerald. Thank you.
Mr. McPhie, as has been noted by Senator Allen, you have a
wealth of experience in dispute resolution through your work in
the Virginia Department of Employment Dispute Resolution and at
the EEOC. Based on your background and experience, what
specific initiatives would you like to pursue as a confirmed
member of the Merit Systems Protection Board?
If we could interrupt you for one second, Mr. McPhie, I
would like to welcome Senator Levin. Thank you for coming here.
Senator Levin, would you have any opening comments? We are on
Susanne Marshall and Neil McPhie, who are nominated for the
Merit Systems Protection Board, and we were discussing the
whistleblower laws.
Senator Levin. I have some questions but no opening
statement.
Senator Fitzgerald. OK. Mr. McPhie, would you like to go
back and answer that question. Based on your background and
experience, what specific initiatives would you like to pursue
as a confirmed member of the Merit Systems Protection Board?
Mr. McPhie. First, sir, I want to tell you, I do not have
any specific agenda. I came here with a wide open mind. The
bottom line is, I want to be known and ultimately remembered as
a member who decided cases objectively on the facts, applying
the relevant law and policies and nothing else. I think the
board has got to be impartial when it speaks. I think the board
has a history of being impartial. I intend to continue that.
Some of the things that I have picked up over the years is,
whenever you run a system and you have a lot of pro se people
in the system, those cases to me are the most difficult cases
to decide. Not because the law or the facts are complex.
Sometimes it is a clear loser. But because of the human
emotion, and lack of understanding.
It seems to me any system worth its salt, has to stay away
from outcomes. I never carried around a win-loss record because
then you get caught up in this one side should win more than it
should be winning, and I think that is not healthy. But what I
do try is to assure the folks who come before that system, win
or lose, really feel that they have gotten a shot; somebody
listened. Many times these disputes are between people who
ultimately are going back to the same job situation and the
expectation is from both sides that they are going to be
friends, and they are going to be productive, and they are
going to continue a relationship.
So many times it is not about taking prisoners, who can use
cross-examination to make the other person look bad and so on
and so forth. You have to find a way to preserve that working
relationship, albeit in difficult circumstances.
So it seems to me, top and bottom, the board has got to
reflect that kind of culture. I think we have got to
understand, and I am going to try my best to employ some of it,
is that you can do a case quickly and you can still assure
quality. They are not necessarily two different items. They can
coexist quite nicely. But if you do not get the folks from the
front end to the back end to buy into that then it is not going
to happen.
I personally think the administrative judges in that
system, have perhaps one of the most important jobs. I think
the way people feel about the MSPB turns a lot of what happens
to them in front of those administrative judges.
I had the pleasure of going to a conference recently where
I met the administrative judges for the first time in their
element. These guys are not afraid to talk. And I listened to
them. I will tell you it concerns them when cases take too
long. It concerns them when people complain that they are not
being fair. It concerns them when they get, in their view,
scattershot directions from court precedent. These folk
impressed me as people who understand the importance of their
job, who want to do a good job, and will indeed do a good job.
Some will tell you there are some resource issues. I do not
know anything about that so----
Senator Fitzgerald. I am afraid I am going to have to
interrupt you because I am going to have to run to the floor
for a vote. Senator Levin, I do not know if you have voted.
Senator Levin. I did, thank you.
Senator Fitzgerald. I will turn it over to you, Senator
Levin, you could ask some questions, and I will go vote. Thank
you.
Mr. McPhie. Senator Levin, those are some of the things I
would do.
Senator Levin. I just have a few questions for you, Ms.
Marshall, because you have been there. Mr. McPhie, you are
going to get off the hook a little bit here because you are
new. I am intrigued by your comment that the people who appear
before the board should feel that they have had a fair hearing,
because that is what I think everybody's goal would be. That is
a constant search and a constant struggle for whistleblowers.
Some of the questions that I have of Ms. Marshall have been
addressed to you, but for the record I want to clarify your
answers to some of those questions. First is a case which was
decided by the Federal Circuit in 1999, and maybe Mr. McPhie
could listen to this. Even though you have not been on the
board I would be interested in your reaction in any event.
In the LaChance case, LaChance vs. White, the Federal
Circuit said that in order to establish a reasonable belief of
gross mismanagement, the whistleblower, the appellant, had to
overcome a presumption that the management of the Department of
the Air Force had acted ``correctly and fairly and in good
faith, and in accordance with the law and governing
regulations.'' So that the agency is given a presumption of
good faith to begin with which the whistleblower needed to
overcome.
But then the court added the following, which was truly
unusual. That the presumption would stand unless Mr. White
provided irrefragable proof to the contrary. Now that is almost
an irrebuttable presumption, to use another word. If you have
to prove or disprove a presumption with irrefragable proof, you
have got to show that what you allege is incontestable,
incontrovertible, incapable of being overthrown, undeniable.
That is what irrefragable means. So this standard is extreme.
It contradicts Congressional intent in the whistleblower law.
And it, frankly, I think almost stands alone in the law, as far
as I can tell, in terms of what evidence would be needed to
overcome a presumption.
Now in your answers, you state that in your view the
irrefragable standard applies only in limited circumstances so
that it may not be necessary to amend the act to make it clear
that we are talking about reasonable belief on the part of the
whistleblower, and not having to prove something which is
undeniable, indisputable, and so forth. Some of the experts
that we have consulted with have already said that the LaChance
decision has had an impact on a broad array of whistleblower
cases and that we need to clarify the law.
So I would ask you, Ms. Marshall, whether you would agree
that is appropriate for Congress to pass legislation which
clarifies the whistleblower statute and overturns the erroneous
standard in the LaChance case?
Ms. Marshall. Far be it from me to say Congress does not
have the appropriate authority to take that action if it deemed
it appropriate.
Senator Levin. But would you recommend----
Ms. Marshall. I have not necessarily recommended it on
LaChance vs. White. I do not look at the holding as being as
strong as it has been interpreted by some others. As you said,
the case was decided in 1999. Irrefragable had not been
referred to prior to or after in any other whistleblower
decision. I do not think it is a standard that the board has
used, and I do not believe it is an appropriate standard, as
you say, impossible to refute.
Senator Levin. You do not think that is the appropriate
standard for the board?
Ms. Marshall. No. We would not be able to adjudicate under
irrefragable in the sense that no one would ever be able to
prove anything. So, in that sense, I understand the seriousness
and the use of the term in that decision. Actually, the case is
still pending before us on a remand decision, and it is
something that we will be looking at again. As to whether
Congress should deal specifically with irrefragable, I said as
an adjudicator, earlier that, I prefer the broad language of
the statute, which covers ``any'' violation of law, rule, or
regulation. I think that is because we need to be able to look
at all the facts of the case.
Senator Levin. If the board does not follow the
irrefragable standard, and I am glad to hear it does not, why
should then there be any doubt that the Congress should make
sure that is not the standard?
Ms. Marshall. I should not say the Board does not follow a
decision of the Federal Circuit because it is our reviewing
court. I think it is the context in which language is used. I
think there have been some initial decisions where
``irrefragable proof'' is quoted because it is quoted as having
been from the Federal Circuit decision, so perhaps that is
somewhat of a misstatement. Since I have been a member of the
board, we have not seen the language as requiring proof that
was irrefragable.
Senator Levin. There is a lot of uncertainty here which
needs to be cleared up. You have a court decision and I think
the board is bound by it; are you not?
Ms. Marshall. We are bound by the decisions of the Federal
Circuit. They are precedential, very definitely.
Senator Levin. So how then can you not follow that
decision, even though it is wildly wrong?
Ms. Marshall. I would say, without going too far, that in
reading the White case, the holding in the case is that there
should be an objective versus a subjective standard for a
finding of gross mismanagement. The sentence in which
irrefragable was used appeared in a following paragraph. It
does not seem to me to be the main holding of the case. That is
just my view as a member of the board.
Senator Levin. Now has the legal----
Ms. Marshall. It is still pending before the board and it
is something that we have been researching and continues to
research.
Senator Levin. Is there a counsel to the board who has
given you advice on this issue?
Ms. Marshall. Yes.
Senator Levin. Has that counsel said that the irrefragable
standard is not binding upon you, is not the holding in the
case?
Ms. Marshall. As the case is ongoing, it is hard to say
that we have a final conclusion on that. That would obviously
take a majority vote of the board. I have had some interesting
discussions with your staff. As I said, if there were action by
the Congress specifically to overturn the use of irrefragable
proof, I see that only as upholding what I currently consider
to be the law.
Senator Levin. And what you consider to be appropriate for
the board to follow.
Ms. Marshall. Yes.
Senator Levin. So that you do not believe the board should
follow the irrefragable standard. But if Congress decided to
adopt that belief into law you would----
Ms. Marshall. I think it would simply reinforce what I
believe is what the board practices and what is appropriate.
Senator Levin. A couple additional questions. Senator Akaka
and I have the bill which would do just that and I would hope
that the subcommittee could consider that bill given this court
opinion which is so extreme on this subject, so unusual and is
not apparently even viewed as a holding by the board, thank
God. So perhaps the subcommittee will be able to take a look at
the bill which Senator Akaka and I have introduced for possible
consideration.
Just two other questions, Ms. Marshall, for you. It relates
to the question of somebody whose security clearance has been
revoked because they have been a whistleblower. That is part of
the retaliation, and as to what the board can do to reverse
that decision revoking the security clearance of an employee.
Your written answers suggest that there is no ability to
reverse a security clearance revocation itself, therefore
whatever the board might do would be viewed as an advisory
opinion which the board cannot issue.
First of all, I think that the board can do much more than
just give an advisory opinion that the whistleblower was
retaliated against. The board has the ability to invoke other
remedies against the employer, the agency that discriminates
against the whistleblower or retaliates against the
whistleblower, other than ordering the removal of a security
clearance. There are other remedies which are permitted
including back pay, reassignment of the employee to a new
position, attorney fees, and other relief. So how would that be
viewed then as an advisory opinion?
Ms. Marshall. In the written responses, I was looking at
the fact, that the board's opinion in finding retaliation could
be used by another agency to try to determine whether or not to
restore a security clearance. It seemed to me that would be
giving the board's opinion to another agency as to what we find
and that this ought to be considered. I have met with your
staff and had more detailed discussions on this. The way the
bill is written, as a matter of law, we would have a final
decision of the board providing relief. Then, it might trigger
another action, but the decision is not advice from the board
to the other agency. So I would agree, as a matter of law, that
there is a distinction, yes.
Senator Levin. And you would agree that the board in a
security clearance revocation retaliation case, can order other
remedies.
Ms. Marshall. We could provide relief under the
legislation, not under current law.
Senator Levin. Under current law, do you not agree that the
board could, if somebody was retaliated against in the form of
revocation of security clearance, could remedy that in other
ways than ordering the restoration of the security clearance,
including attorneys fees, back pay, and so forth? Are there not
other remedies?
Ms. Marshall. We would be looking at retaliation, perhaps
under an individual right of action case that might come to us.
Generally, we are not going to look behind a security clearance
issue. So, there might be a finding of retaliation for some
other related reason, but we look at the due process rights for
an individual under a security clearance revocation right now.
We do not look at underlying issues.
Senator Levin. You are saying under current law you cannot
look at an allegation that somebody's security clearance was
removed because of a retaliatory motive for whistleblowing;
that you are not allowed to look at that.
Ms. Marshall. We have not been reviewing security clearance
issues under retaliation.
Senator Levin. So our bill would give you the authority.
Ms. Marshall. The legislation would provide that, yes.
Senator Levin. So that is another reason why I would hope
the subcommittee would look at the bill. But I would disagree
with you. I think that you can look at other remedies under
current law besides the restoration of the security clearance.
Ms. Marshall. It would be possible for the board to look at
other remedies.
Senator Levin. Then finally, your written answers state
that the legislation requiring the board to review security
clearances would have an impact on how the board conducts its
normal business and that the board would need to establish
procedures and a separate process for handling and reviewing
security clearance matters as well as classified and/or
sensitive material. I understand that subsequently you reviewed
the board's handling of past cases involving classified
information and concluded that the board did and does have an
information security manual which establishes official board
policies for handling classified information; is that correct?
Ms. Marshall. Yes, there is a manual. But we currently do
not have employees with the necessary background checks. It has
not been an issue during the 5\1/2\ years that I have been at
the board. So, we would need to reinstitute and restore some of
those practices.
Senator Levin. By the manual----
Ms. Marshall. The manual exists. We have a process. We just
do not have the employees right now.
Senator Levin. Thank you, Mr. Chairman.
Senator Fitzgerald. Senator Akaka, do you have any
questions of the witnesses?
Senator Akaka. Thank you very much, Mr. Chairman. I pose
this question to both Ms. Marshall and Mr. McPhie. The
Department of Defense has proposed legislation to waive a
number of provisions in Title 5, including those relating to a
Federal employee's right to appeal to the MSPB. Appeals from
DOD constitute approximately one-third of MSPB's caseload
according to your 2001 annual report.
Now here is the question. If the Defense Department
proposal is enacted, how would this change impact the MSPB? And
what does this trend signal for the public's trust in the
civilian workforce?
Ms. Marshall. Certainly, DOD is the largest agency in terms
of the number of civil service employees. What is not clear in
the legislation as drafted is whether or not DOD employees
would be in a different internal review process, or what their
due process rights would be. As I said, we are trying to
educate others as to our systems and how we have gained
credibility with the civil service workforce for our
independence.
I use the example of the FAA. The board currently has the
ability with FAA, as we do with the Internal Revenue Service,
the Patent and Trademark Office, and other personnel systems
that have provisions outside of Title 5, to adjudicate appeals
from employees of those agencies. Our have to look at the
particular regulations that govern in the particular personnel
system that may be unique. The board has the ability to provide
those services and I would just like to sell what I think is
the very effective work of the board.
Senator Akaka. Mr. McPhie.
Mr. McPhie. I was asked that question by your staff. The
answer involves a discussion of due process, what it is and how
you protect it. Once you give people a right, then the
Constitution says, before you can take it away you have to give
them this dispute process. What it means simply is notice and
opportunity to be heard; a hearing being the key. A hearing
that is effective, a hearing that makes sense, you cross-
examine, do all those kinds of things.
Out there exists a number of due process models, some with
review to third parties, some without. State and Federal courts
broadly speaking, have held such models to be constitutional.
So you would have, for example, a decisionmaker reviewing his
or her own decision and it is constitutional.
The question for me is, does it make good sense? The answer
to that, based on my experience, is no. If you have an
internal, a completely internal process, your process tends to
lose credibility. If it has no credibility, in a sense you have
no process because you end up with more disputes, not less. So
in my judgment, at a minimum, you have to have some external
body.
Should it be the MSPB? I think Congress will put it
wherever Congress wants. But if you have an MSPB and based on
its history and its record, it is operating, with some
criticisms but in the main it is operating well, why would you
want to create another body to do that? It would not make a lot
of sense to me. But again, I defer to the wisdom of Congress on
that.
Senator Akaka. Thank you very much for your response.
Mr. Chairman, thank you very much.
Senator Fitzgerald. I now will ask you both the standard
questions that the Committee always asks. You may respond
together.
Is there anything you are aware of in your background which
might present a conflict of interest with the duties of the
office to which you have been nominated?
Ms. Marshall. No.
Mr. McPhie. No.
Senator Fitzgerald. Do you know of anything, personal or
otherwise, that would in any way prevent you from fully and
honorably discharging the responsibilities of the office to
which you have been nominated?
Ms. Marshall. No, sir.
Mr. McPhie. No.
Senator Fitzgerald. Do you agree, without reservation, to
respond to any reasonable summons to appear and testify before
any duly constituted committee of Congress if you are
confirmed?
Ms. Marshall. Yes.
Mr. McPhie. Yes.
Senator Fitzgerald. If Senators have no further questions,
and I gather there are no other Senators here, I want to thank
you both very much for coming. Without objection, the hearing
record will remain open for any additional statements or
questions from Senators through 5 p.m. tomorrow. If there is no
other business to come before the Committee, this hearing is
adjourned.
[Whereupon, at 3:31 p.m., the Committee was adjourned.]
A P P E N D I X
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