[Senate Hearing 108-753]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 108-753

                   BUILDING THE 21ST CENTURY FEDERAL
                 WORKFORCE: ASSESSING PROGRESS IN HUMAN
                           CAPITAL MANAGEMENT

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

                                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

                             SECOND SESSION

                               __________

                             JULY 20, 2004

                               __________

      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 A. Rechtschaffen, Minority Staff Director and Counsel
                      Amy B. Newhouse, Chief Clerk

                                 ------                                

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

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

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




                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Voinovich............................................     1
    Senator Akaka................................................    15

                               WITNESSES
                         Tuesday, July 20, 2004

Hon. Clay Johnson, III, Deputy Director of Management, Office of 
  Management and Budget..........................................     4
Hon. Dan G. Blair, Deputy Director, Office of Personnel 
  Management.....................................................     6
J. Christopher Mihm, Managing Director, Strategic Issues, U.S. 
  Government Accountability Office...............................    20
Ed Sontag, Ph.D., Assistant Secretary for Administration and 
  Management, Department of Health and Human Services............    22
Joanne W. Simms, Deputy Assistant Attorney General for Human 
  Resources and Administration, U.S. Department of Justice.......    24
Vicki Novak, Assistant Administrator for Human Resources, 
  National Aeronautics and Space Administration..................    26

                     Alphabetical List of Witnesses

Blair, Hon. Dan G.:
    Testimony....................................................     6
    Prepared statement...........................................    40
Johnson, Hon. Clay, III:
    Testimony....................................................     4
    Prepared statement...........................................    37
Mihm, J. Christopher:
    Testimony....................................................    20
    Prepared statement...........................................    47
Novak, Vicki:
    Testimony....................................................    26
    Prepared statement...........................................    80
Simms, Joanne W.:
    Testimony....................................................    24
    Prepared statement...........................................    76
Stonag, Ed, Ph.D.:
    Testimony....................................................    22
    Prepared statement...........................................    68

                                APPENDIX

Responses to follow-up Questions from Senator Voinovich for:
    Mr. Johnson..................................................    85
    Mr. Blair....................................................    90
    Mr. Mihm.....................................................   101
    Mr. Sontag...................................................   109
    Mr. Simms....................................................   114
    Mr. Novak....................................................   118

 
  BUILDING THE 21ST CENTURY FEDERAL WORKFORCE: ASSESSING PROGRESS IN 
                        HUMAN CAPITAL MANAGEMENT

                              ----------                              


                         TUESDAY, JULY 20, 2004

                                       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 9:08 a.m., in 
room SD-342 Dirksen Senate Office Building, Hon. George V. 
Voinovich, Chairman of the Subcommittee, presiding.
    Present: Senators Voinovich and Akaka.

             OPENING STATEMENT OF SENATOR VOINOVICH

    Senator Voinovich. The Subcommittee will come to order.
    Good morning, and thank you all for coming. The title of 
today's hearing is ``Building the 21st Century Federal 
Workforce: Assessing Progress in Human Capital Management.'' 
Its purpose is to examine the implementation of six human 
capital reform bills that have been enacted over the last 2 
years. All of these bills originated in this Subcommittee, and 
I am proud that they have become law.
    Before I discuss the legislation, I want to thank my 
colleagues across the aisle--Senator Akaka, Senator Carper, 
Senator Durbin, and Senator Lieberman--for their good ideas and 
tireless work over the last 2 years. All of these bills passed 
on a bipartisan basis. We need more bipartisanship here in the 
U.S. Senate.
    I consider it a privilege to work with each of these 
individuals. This is so important for our country, and I look 
forward to continuing to work together on behalf of the Federal 
Civil Service.
    I also thank our Chairman, Senator Collins. She is a leader 
in this field in her own right, and I appreciate that she has 
been a steadfast supporter of my efforts to improve the Civil 
Service. Chairman Collins was dedicated to establishing the 
Department of Defense National Security Personnel System, and 
this legislation is now law thanks to her hard work.
    On November 25, 2002, the Homeland Security Act of 2002 
became law. Title XIII of that bill has incorporated a series 
of governmentwide human capital reforms, including the 
establishment of agency Chief Human Capital Officers, a Chief 
Human Capital Officers Council, the permanent authorization of 
workforce reshaping authorities, a long overdue modification of 
the hiring process that gives Federal agencies the option of 
using a more modern procedure. New category rating system 
versus the over 100-year-old rule of three, expands the pool of 
potential candidates from which a manager may choose.
    A year later, on November 11, 2003, S. 926, the Federal 
Employees Student Loan Assistant Act became law. This is very 
important, particularly because so many of our college students 
are graduating with the big loans that they must repay. This 
legislation raises from $6,000 to $10,000 and to $60,000 from 
$40,000, respectively, the annual aggregate limits of student 
loan repayment Federal agencies may offer as recruitment and 
retention incentives. I am hoping that soon the Finance 
Committee will consider S. 512, which would amend the tax code 
so Federal student loan repayments are not considered income of 
individuals working for the government.
    On November 24, 2003, the purpose of my Senior Executive 
Service Reform Act was accomplished by a provision of last 
year's defense authorization bill. This provision relieves pay 
compression within the Senior Executive Service and allows 
agencies to establish a pay for performance system for their 
senior executives. How this is implemented is very important as 
it hopefully will be a benchmark for other segments of the 
Federal workforce.
    On December 19, 2003, S. 1683, the Federal Law Enforcement 
Pay and Benefits Parity Act of 2003 became law.
    The law required OPM to conduct a study of Federal law 
enforcement compensation and classification. The report was 
submitted to Congress last week, finally.
    In that report, OPM argues for a comprehensive, integrated 
government approach for addressing three key problem areas: 
Retirement, classification, and base and premium pay. That is 
very important because Homeland Security is in the process of 
their harmonizing several law enforcement agencies. I think it 
is important that we consider non-Homeland Security law 
enforcement entities to make sure that we do not create a large 
discrepancy between agencies. This already is an ongoing 
problem at the FBI. For a dozen years, they have been asking 
for some changes in their workforce classification system, and 
it has fallen on deaf ears. And I am hoping that with this 
report, we can do something about it.
    On February 24, 2004, S. 610, the NASA Flexibility Act of 
2004 became law. The law provides several new personnel 
flexibilities to the National Aeronautics and Space 
Administration to help that agency recruit and retain the best 
and brightest scientists and engineers for the Agency's high-
technology mission.
    I am very happy that I got to know Administrator Sean 
O'Keefe when he was at OMB. It was interesting that considering 
workforce flexibilities was something that I encouraged him to 
do. Then once he got to NASA, he came back and said, ``George, 
we need some help at NASA,'' and I am really delighted that we 
were able to accomplish this for NASA because he is starting to 
make progress.
    Most recently, on July 7, 2004, H.R. 2751, the GAO Human 
Capital Reform Act of 2004, the companion measure to my 
legislation, S. 1522, became law. It provides several new 
personnel flexibilities to the newly named U.S. Government 
Accountability Office, which will allow GAO to continue to be a 
leader in the field of human capital management.
    As I said earlier, we are proud of the changes we have made 
to the Civil Service Code. All of these changes have been 
carefully considered and have sought to provide greater 
flexibility within the existing Civil Service framework. And I 
would be remiss if I did not at least mention Dean Joseph Nye, 
and the John F. Kennedy School of Government, for their 
willingness to make human capital an executive session at the 
John F. Kennedy School of Governments. There we brought 
together the best and brightest people in this country to 
discuss how we could better provide a competitive human capital 
program in the Federal Government.
    When combined with the much broader changes underway at the 
Departments of Homeland Security and Defense, in which my 
colleagues and I, on this Subcommittee, played a role, Congress 
has enacted the most far-reaching changes to the rules 
governing the Federal workforce since the passage of the Civil 
Service Reform Act of 1978.
    We have not stopped there. Currently, S. 129, the Federal 
Workforce Flexibility Act of 2000, is advancing through 
Congress. I am hopeful it will be enacted this year. However, 
passing legislation is merely the beginning of changing the way 
the Federal Government does business, in this case, to attract 
and retain the best and the brightest of the Federal 
Government.
    Implementation and careful management of the new 
flexibilities are critically important. Today we will examine 
how these six laws are being implemented. Through this hearing, 
I am hoping to establish a sense of what has worked, what has 
not, and how lessons learned from initial implementation can 
aid Congress as it considers future human capital reforms.
    Our work is far from finished. The Departments of Homeland 
Security and Defense are in the process of redesigning their 
personnel systems. It is a process that will take several 
years. I think we need to really emphasize that. I was 
remarking to somebody that I had breakfast with this morning 
that when I was governor of Ohio, we instituted total quality 
management. It actually took us 7 or 8 years to fully 
implement. I think everyone should understand that there are 
some significant challenges in implementation. For example, it 
will be approximately 2 years from authorization to 
implementation of the new personnel system at DHS. Negotiations 
between the Department and employees continue.
    I believe these significant changes are the beginning of 
broader reforms that may move across the entire Federal 
workforce. We must closely monitor their progress and learn 
from them. In the meantime, the measured reforms that I have 
sponsored during the last several years should continue to move 
forward for two reasons: One, they allow agencies to experiment 
with new and greater flexibilities and, two, agencies should be 
given as much flexibility as they need to address their 
workforce challenges until broader reforms are adopted 
governmentwide.
    I am hoping that Senator Durbin is going to be here, and 
when he does come in, I will give him an opportunity to make an 
opening statement.
    I would like all of the witnesses to stand up and be sworn.
    Do you swear that the testimony you are about to give 
before this Subcommittee is the truth, the whole truth, and 
nothing but the truth, so help you, God?
    [Chorus of I dos.]
    Senator Voinovich. Thank you very much. The record will 
indicate that you all answered in the affirmative.
    I would like to welcome Clay Johnson, Deputy Director for 
Management at the Office of Management and Budget, and the Hon. 
Dan Blair, Deputy Director of the Office of Personnel 
Management. I have worked often and closely on many issues with 
Mr. Johnson and Mr. Blair.
    Our second panel consists of four distinguished guests. 
Testifying first is Christopher Mihm, Managing Director of 
Strategic Issues for the Government Accountability Office. 
Chris, does that sound good--Government Accountability Office? 
Does Comptroller General Walker like that title? [Laughter.]
    Our other three witnesses are their respective agencies' 
Chief Human Capital Officers--Dr. Ed Sontag, from the 
Department of Health and Human Services; Joanne Simms, from the 
Department of Justice; and Vicki Novak, from the National 
Aeronautics and Space Administration.
    I want to thank you all for being here today.
    I would ask the witnesses to limit your oral statements to 
5 minutes or thereabouts and remind you that the entire written 
statement will be entered into the record.
    Clay, again, it is nice to welcome you. I want to 
congratulate you on the really good job that you are doing. 
This administration is very serious about their President's 
Management Agenda. One way you can tell an administration is 
serious is whether or not they are willing to measure the 
performance of their people, and your grading system has been 
welcomed. Keep it up, and thank you again for coming.

  TESTIMONY OF HON. CLAY JOHNSON, III,\1\ DEPUTY DIRECTOR OF 
          MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET

    Mr. Johnson. Mr. Chairman, thank you. I am going to make 
some general comments on the details about what the agencies 
are doing to implement these laws. More will come from the 
other panel members, but let me just make some general 
comments.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Johnson appears in the Appendix 
on page 37.
---------------------------------------------------------------------------
    In general, departments and agencies are doing a very good 
job in improving the way in which they place the right person 
in the right job at the right time. The goal is to place well 
trained, highly motivated people, with a clear understanding of 
what is expected of them and how they are performing relative 
to expectations; their improvements are the result of the 
legislation that you talked about in your opening statement 
and, I might add, of the President's Management Agenda. And one 
of the key issues is the new focus by the agencies on human 
capital. This is a new focus on results.
    I conducted some focus groups recently with managers, 
SESes, GS-14s and GS-15s, career employees in 10 agencies. 
During the focus groups I talked to them about how their 
agencies function now versus 3, 4, or 5 years ago. As an 
example, I asked, does the President's Management Agenda have 
an impact on ``the way they do business?'' And the responses 
were very interesting.
    The comments I received back, particularly with regard to 
performance evaluations, were that employees, by and large, are 
here to serve the American people. These Federal employees 
deserve, want and need greater clarity about what is expected 
of them, so they can better serve the American people. They 
want to be challenged, they want to do a good job, and they 
want better training, they want better managers, they want 
better information technology, and they want support to help 
them do a better job.
    The Federal Government performing better is not about all 
of our employees working harder; it is about our employees 
working smarter, and that means better management, better 
training, better IT, greater clarification about what is 
expected of them and so forth. It also means better pay. We 
received a lot of comments back from the employees that 
participated in the focus groups about pay.
    The details of what is happening at individual agencies 
will come from the other panel members. I would like to suggest 
that I think there are two big issues for the Executive Branch 
and for Congress to work on.
    The first one is how and when we will extend 21st Century 
personnel flexibilities throughout the Federal Government. The 
work that is going on in the Department of Homeland Security 
and the Department of Defense will be successful. It is too 
important for what happens throughout the Federal Government. 
It is too important to our creating the 21st Century workforce, 
which we all talk about and aspire to create. It will be 
successful. There will be a lot of continued discussions and 
negotiations with the unions, a lot of attention to detail, a 
lot of training of managers, but the goal will be accomplished.
    So the question I think that we ought to ask each other in 
the months and years ahead is what happens next? Do we extend 
these flexibilities piecemeal, agency by agency, NASA here, HHS 
there, Interior Department there, or do we do it across the 
board? I hope we would be inclined to do it across the board. 
That would prevent us from ending up with 26 or 28 slightly 
different personnel systems. I think there is great value to 
having consistency across agencies. It is not a question of 
whether we extend these flexibilities; it is a question of when 
and how.
    The second question that I hope we spend a lot of time 
working on together is when we begin to pay our employees more 
responsibly and effectively. Pay is a primary means by which we 
recruit, motivate and retain quality people. Our pay structure 
today is not set up to do that. We pay people too much alike. 
We give the same raises to top performers as we give to poor 
performers. We give the same raises to people in job categories 
that we have retention problems, as we do to job categories 
where we have no retention problems. We have the same problem 
with recruitment.
    One of the things I heard back from managers is that they 
need greater pay flexibilities in agencies to better manage 
their people. I know this is going to happen, and I also know 
that training is going to be a factor in this. We will be 
talking about not just pay on an annual basis, but about what 
we are doing with pay and training. I know this will happen, 
but we need to decide when. An election year is probably a 
difficult time to accomplish change, but this is going to 
happen, and I hope it happens sooner rather than later.
    Mr. Chairman, I look forward to working with you and the 
other Members of this Subcommittee and with other Members of 
Congress on these matters. A 21st Century workforce, which is a 
great umbrella under which to think about all of these 
management issues is going to occur. I think we have the 
potential to make this change happen in a handful of years. You 
talked about the changes accomplished in your State of Ohio. 
Total quality management took 7 or 8 years in Ohio, and they 
are probably still working on it and getting better at it every 
year. But I believe that we can get all of the disciplines in 
place that are required to manage a 21st Century workforce in a 
handful of years and not a decade. I think it is important to 
do this sooner, rather than later.
    Dave Walker, head of the General Accounting Office (GAO) 
held a conference at GAO 6 months or so ago, and we discussed 
whether you wait until it is 100-percent certain that the 
extension of flexibilities will be successful before making 
changes? And the resounding answer from everybody in the room 
was, no, you cannot wait until it is ever 100-percent certain 
because nothing is 100-percent certain. When you believe you 
have a good concept, you grant the authorities, and then you 
execute like crazy to make sure it happens well.
    Mr. Chairman, thank you for having me at this hearing, sir. 
I welcome any questions from the Subcommittee.
    Senator Voinovich. Thank you. Mr. Blair

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

    Mr. Blair. Mr. Chairman, thank you for having me here 
today. I am glad to appear on behalf of the Office of Personnel 
Management (OPM) and Director James and share this panel with 
Deputy Director Johnson.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Blair appears in the Appendix on 
page 40.
---------------------------------------------------------------------------
    I have a written statement, and I ask it be included for 
the record, and I will be happy to summarize. But before I 
start, I would like to have the Subcommittee indulge me for a 
moment. I have a beloved family member in the audience today. 
My niece, Amy Blair, is sitting at the back, and she began her 
public service this summer interning for Senator Kit Bond. So I 
hope the Subcommittee could extend a warm welcome to her as 
well.
    You mentioned this in your opening statement, and I want to 
repeat it as well. We have seen tremendous progress on the 
human capital front over the past 3 years. I think this has 
been one of the busiest times we have seen since the enactment 
of the Civil Service Reform Act of 1978. The achievements 
brought about the enactment of the Chief Human Capital Officers 
Act were greatly needed. It granted agencies needed 
flexibilities in the Federal human resource (HR) field. These 
tools put into place a framework of accountability and 
assessment for using these flexibilities fairly and, 
importantly, responsibly.
    So my testimony today is going to focus on three 
dimensions: Leadership, flexibility, and accountability.
    First, let us talk about leadership. It starts at the top. 
President Bush knows that. That is why we have the President's 
Management Agenda. Mr. Chairman, you know that, and that is why 
you have taken the helm and shown the leadership in enacting 
the needed reforms that we have seen Congress act on.
    The President's Management Agenda highlights the strategic 
management of human capital. We have seen that progress on the 
other agenda initiatives clearly depends on having the right 
people, with the right skills, and the right jobs doing the 
right things for America. OPM's responsibility is driving that 
initiative. We are advising departments and agencies and 
holding them accountable according to the scorecard. Agencies 
are now focused like never before on strategically managing 
their most important assets, and that is their people.
    In the Chief Human Capital Officers Act, one key component 
established a new council for elevating human capital 
management to what we believe is its proper role in a place at 
the management table.
    It required agency-level designation of the Chief Human 
Capital Officers (CHCOs), it established a governmentwide 
council, and it signaled a cultural change in the strategic 
importance of managing people in the Federal Government.
    The CHCO Council met seven times the past year, adopted a 
charter, established an Executive Committee, conducted a 2-day 
retreat, and drafted a technical plan for the current fiscal 
year. We implemented a CHCO Academy for learning and sharing 
best practices, and we appointed an executive director, whom 
you know quite well. Leadership and the determination to break 
new ground in modernizing Federal Human Resources practices has 
indeed been demonstrated, both by you and this administration.
    Second of all is flexibility. There is a recognition that a 
one-size-fits-all government is a practice for the past. 
Agencies must have the ability to customize for individual 
needs. We have seen this with the Department of Homeland 
Security (DHS), the National Aeronautics and Space 
Administration (NASA), the Government Accountability Office 
(GAO) and now with the Department of Defense (DOD). Regarding 
DHS, those regs were issued back in February, after an 
intensive 10-month, highly collaborative and inclusive human 
resources systems-designed process. It involved employees, 
managers across DHS and staff and leadership from OPM as well. 
And our involvement was not only with the employees, but 
employee groups and unions.
    After a comment period, we proceeded to the statutory meet-
and-confer stage, where we presently find ourselves, and that 
is set to end at the end of this week. Final regs are expected 
in late September.
    With the Department of Defense, we have the National 
Security Personnel System. A Program Executive Office has been 
established by DOD earlier this spring, and we are actively 
engaged in union employee outreach as well. Proposed regs are 
expected late this year.
    Our Law Enforcement Officer report, which you referred to 
in your opening statement, also showed that we need flexibility 
to modernize how we compensate law enforcement personnel.
    Also included in the Homeland Security Act and the Chief 
Human Capital Officers Act were new very significant 
authorities, such as direct hire. This expanded the authority 
during a severe shortage of candidates or critical hiring needs 
allows agencies to select from available candidates on-the-
spot. OPM has approved six agency-specific requests, with two 
pending, in addition to governmentwide authorities for three 
occupations.
    You also referenced category rating, which was an update of 
the ``rule of three.'' That was a very important flexibility 
for agencies to use.
    It also included authorities for Voluntary Early Retirement 
Authority and Voluntary Separation Incentive Payments. Both are 
important authorities for agencies to be using as well.
    In an effort to educate agencies on the use of these 
flexibilities, OPM has taken a consistent leadership role in 
guiding, supporting, and evaluating the agencies. We have 
conducted training sessions for agencies. As a matter of fact, 
last month we had a hiring symposium on the hiring 
flexibilities for agencies and Chief Human Capital Officers. We 
have unveiled a 45-day hiring model for agencies to use. We 
have unveiled a 30-day hiring model for the Senior Executive 
Service. We have administered surveys of agency hiring 
practices and reported their findings, and we have also 
conducted CHCO academies.
    We also see other flexibilities on the road with S. 129. 
But I think that an important part of all of this is 
accountability, and you mentioned the careful implementation 
and good management. Executive Order 13197 established two new 
Civil Service rules aimed at addressing internal 
accountability, external oversight, and submission of workforce 
information to OPM. The scorecard really ratcheted that up 
several notches. It scores agencies on the five goals in the 
President's Management Agenda. OPM has developed six human 
capital standards for success, and this year seven agencies 
have achieved green status on the human capital management.
    So much has been accomplished. More remains to be done, but 
it will require close collaboration with the administration, 
congressional leaders, employees, veterans service 
organizations, union representatives, managers and other key 
stakeholders. But we are confident, Mr. Chairman, that under 
your leadership, we will continue to see more progress. You 
have been a tireless leader and champion for the Federal 
Government. We salute you for your hard work, and most of all 
we thank you.
    I am happy to answer any of your questions.
    Senator Voinovich. Thank you very much.
    As I mentioned earlier, significant reforms to the Federal 
workforce were enacted as part of the Homeland Security Act. 
However it seems that OPM has been slow to issue implementing 
regulation for these authorities. Agencies have been reluctant 
to use the new authorities under the interim regulations out of 
concern that there may be changes. This has led to some 
confusion regarding the new flexibilities, including the new 
hiring authority.
    I would like to ask both of you how are OMB and OPM working 
with agencies to ensure they understand these new flexibilities 
and are able to use them effectively?
    Mr. Johnson. I keep telling them they need to do it faster, 
and they just will not listen. [Laughter.]
    Mr. Blair. We want to do it fast, and we very much 
understand everyone's impatience. However, we also want to get 
it done right.
    Senator Voinovich. Mr. Blair, would you please elaborate.
    Mr. Blair. We want to get it done right at the same time. 
We are working hard to get the Senior Executive Service (SES) 
pay regulations out and the certification regulations out. We 
expect those to come out very soon. We recently issued the 
final regulations on category rating, and we have also issued 
the regulations on direct hire.
    We understand the agencies have been slow in embracing some 
of these flexibilities, and so we have been out on the road 
working with agencies to make sure that they understand them. I 
referenced in my statement earlier the number of training 
sessions that we have held at OPM. We had a hiring symposium, 
which was attended by about 250 people last month at OPM. We 
are going to be conducting one in August, but we are also going 
to take that show on the road because we understand that 
flexibilities need to be used in the field as well. So we will 
be working with our Federal Executive Boards to coordinate 
hiring symposiums across the country.
    But since last year, Director James has been putting out 
extensive guidance on the use of these flexibilities, and we 
will make sure that agencies have the knowledge, and have the 
guidance, and most of all have the will to use these things. 
Last week, I testified before the House Subcommittee on Civil 
Service, with some of the other Chief Human Capital Officers, 
and there was a recognition that not all agencies will want to 
utilize all of those flexibilities. We understand that. We just 
want to make sure that they know about them and that they are 
available.
    Senator Voinovich. We want to make sure that they have the 
flexibilities they need, but authorizing flexibilities and 
using them are two different things. What, Mr. Johnson, is OMB 
providing agencies regarding oversight and encouragement on the 
use of flexibilities?
    Mr. Johnson. That is not part of the Management Agenda. 
Flexibilities are a means to an end, and we hold them 
accountable for the end. We will work with OPM to change this 
and they are as interested as anybody in the use of these 
flexibilities, but we pay attention to what we are doing to 
fill skills gaps, succession gaps, leadership gaps, and 
performance evaluation systems and so forth.
    Senator Voinovich. How about training? Have you looked at 
the overall training programs?
    Mr. Johnson. Well, you and I have talked a little bit about 
training and your use and emphasis on training in Ohio. We have 
an opportunity to pay a lot more attention to training. We are 
not really sure how much money the Federal Government spends 
across the board on skills management and leadership training. 
We think it is in the vicinity of $2 billion a year, which 
makes it about 2 percent of our total payroll and benefits. I 
think in the private sector? The general rule of thumb is a 3 
percent ratio. So that suggests that we do not spend as much 
money as we should, and if we are playing catch-up, we really 
do not spend as much money as we should be.
    So I think OMB and OPM need to work much more aggressively 
with the agencies and with Congress to think through more about 
formally what we are investing, what is the right level of 
investment on training on a year-to-year basis, particularly in 
the management area. As we become more focused on results and 
performance, we need to have managers who are better managers. 
They are not just senior workers; they are managers, and we 
need to invest in their ability to manage more effectively.
    Senator Voinovich. In terms of assembling budgets, several 
years ago I surveyed 12 Federal agencies and asked them how 
much money they were spending on training. Eleven said they did 
not know, and one said we do know, but we will not tell you. 
When you have asked folks to put together their annual budgets 
have you asked them to specifically put in an item for training 
or does it just fall under some other category?
    Mr. Johnson. I think it falls under another category. When 
Members of Congress and people in agencies go looking for money 
for other priorities, they tend to find it in training 
categories. It is an investment that is not managed as formally 
as it should be.
    Senator Voinovich. Mr. Blair.
    Mr. Blair. Mr. Chairman, when you mentioned training, I 
think you really hit a really ripe area for action. Over the 
course of the last 10 years, and during the downsizing effort 
of the 1990;s, we saw that a number of agency and Department 
Human Resources staffs were decimated, that the administrative 
arena was targeted for the buyouts and downsizing. And what we 
have seen with a number of our human resources folks, just not 
at OPM, but across government, is that some of the best ones 
left, and that the ones that we have left are in need of 
additional training and education.
    If we are going to be extending these flexibilities to the 
agencies, it is vitally important that they understand what 
they are. We are holding sessions at OPM. We will be doing it 
here in Washington and across the country, but what Director 
James has talked about is moving ahead toward a higher 
professionalization of the human resources staff.
    In my written testimony, we talk about implementing 
competency models and a community of practice, but it is very 
important that the human resources staffs across government 
understand their roles and what really their new roles are, 
that under decentralized government it is all the more 
important that they understand what the merit system principles 
are, that they understand the applications of veterans 
preference, that they understand what are the right 
circumstances for going for direct hire and the other 
flexibilities. And so that is going to be a new area that we 
will be embarking on in the future is better training and more 
of a professionalization of the human resources staff, just not 
at OPM, but across government as well.
    Senator Voinovich. Could you share with me what OMB and OPM 
have done within your own organizations to implement the use of 
workforce flexibilities.
    Mr. Johnson. Well, the specific flexibilities have been 
made possible with this past legislation. To my knowledge, OMB 
has not utilized them, the buyout authorities and student loan 
repayment. Our focus has been, thinking in terms of present 
management agenda goals, and what we have tried to do in the 
last year, is better differentiate between levels of 
performance with our workforce, improve the quality of our 
performance evaluation systems, help train our managers to be 
better evaluators, better providers of feedback to employees 
regarding what is expected of them and how they are performing 
relative to those expectations.
    We have been working on a better strategic plan to better 
define the outcomes that OMB is responsible for, which then 
gives us better definition of goals to hold senior leadership 
responsible for. Those have been the primary things that OMB 
has been working on to improve our human capital practices.
    Senator Voinovich. How often do you get together with the 
Secretaries of the Departments to talk about Management Agenda? 
Are there regular meetings to talk about the Management Agenda?
    Mr. Johnson. The so-called President's Management Council, 
the PMC, meets every other month. These are the chief operating 
officers, typically the deputies in the departments. The 
Executive Committee, which is six or seven members of the PMC, 
meet with me every month. We discuss the President's Management 
Agenda and what we need to accomplish and what the nature of 
the resistance is, what are the opportunities to go faster, and 
what can we do to help them get to where they want to be.
    So, the leadership of the PMC meets monthly, and the full 
PMC meets every other month. We also meet if individual issues 
come up, or if we are introducing a new initiative or there is 
a new law that needs to be explained. I am in constant 
communication with them by E-mail, and phone.
    Senator Voinovich. Mr. Blair, does OPM itself use 
flexibilities?
    Mr. Blair. We have utilized them. We have used category 
rating for between 25 and 30 positions, I am told.
    I do not believe we have used the direct hire authority 
yet, but we also have a student loan program that is in place, 
and we have utilized the 30-day hiring model for our SES 
positions, and we have also been utilizing the 45-day hiring 
model for our general schedule positions.
    Senator Voinovich. We talked a little bit about the 
regulations instituting pay for performance in the SES. What 
are their status? That is really important.
    Mr. Blair. They are imminent. They should be out in the 
next few days. They will come out in two parts. One will be the 
certification, which will be issued jointly, I believe, by both 
the Office of Management and Budget and OPM, and then we will 
have the pay regulations themselves, which will be open for 
comment for 30 days.
    The certification regulations I am told will be interim 
final. So agencies will be able to start applying them and will 
be able to get in the process of certifying them.
    Senator Voinovich. Well, it is really important they are 
published and that we, in Congress, really watch carefully how 
this is done. People must be trained to do the performance 
evaluations because I think that when this cascades into other 
segments of the workforce, we will need a benchmark to ensure 
they do it properly. It takes a lot of time to get to do it 
correctly. I hope everybody understands that.
    Mr. Blair. We will be putting out guidance along with the 
regulations, and we also plan to host another training session 
at OPM for those SES regulations.
    Senator Voinovich. Mr. Johnson, I was pleased to see that 
on the revised President's Management Agenda scorecard, seven 
agencies now have earned a green on their overall status of 
human capital management. What more will OMB do to continue 
moving agencies toward green?
    Mr. Johnson. Well, the way we relate to agencies now, with 
regard to the President's Management Agenda, is we are asking 
them to set goals of where they want to be on each of these 
five initiatives a year from now. So we are in the process of 
starting to work with them to decide where they would like to 
be on all five of these initiatives in July 2005.
    And we find the agencies are very aggressive in their goal-
setting. They all want to get to yellow if they are red, and 
they want to get to green if they are yellow, and they want to 
get there faster than their fellow cabinet secretaries. They 
want to improve for bragging rights, but they also want to get 
there because they realize it is good for their agencies. 
Improvement in the Management Agenda helps their agencies be 
more focused on results. It makes their agencies better places 
to work.
    So we help them achieve their goals, sooner, rather than 
later. Our primary responsibility is to make sure that the 19 
agencies that are not at green understand what the 7 agencies 
that are at green have done. There is a lot of facilitation, a 
lot of sharing of best practices. How did the 7 green agencies 
train their managers to better evaluate performance? What does 
the HHS performance contract look like, and so might one of 
these yellow or red agencies want to adopt something like HHS, 
which Ed Sontag will talk to you about later?
    A few agencies that, for instance, have pass/fail systems 
are expressing some reservation about going to a system that 
provides more distinction between different levels of 
performance. We are meeting with those agencies to explain to 
them--for instance, that OMB just went through this. We had a 
system a couple of years ago that though it was not called 
pass/fail, 80 percent of the people were in one category and 20 
percent were in another. That is largely a pass/fail system, 
and I think we have successfully moved away from that, very 
much for the betterment of OMB.
    And so we met last week with the leadership at one of the 
agencies to take them through what we had experienced, to walk 
them through the steps OMB took to transition, and to give them 
comfort level that they could accomplish the same thing. And if 
they followed our model, we felt that they could be as 
successful as we have been.
    So it is giving them confidence to move forward and giving 
them best practices to move forward most expeditiously.
    Senator Voinovich. And is the forum for that the Chief 
Human Capital Officers Council?
    Mr. Johnson. That is the primary forum because that is 
where the real technical work is done. But then also for any 
significant movement to be made on any of these PMA 
initiatives, it has to have the total commitment at the top of 
the agency. If there is any reservation at the deputy level or 
secretary level, then there is going to be reservation 
throughout.
    And so while Director James and the CHCO Council are 
working on the expertise at the Chief Human Capital Officer, we 
are working with the senior leadership to make sure that they 
are committed, and they are going to go back to their agencies 
and help their CHCOs implement this sooner, rather than later.
    Senator Voinovich. Do you think they understand how that is 
going to help them do a better job?
    Mr. Johnson. We conducted focus groups in these 10 agencies 
that I mentioned, and they talked about what is in this for 
them, what enlightened personnel practices are all about, what 
is in it for the employee. And we had members of the leadership 
of these agencies sitting in on this to observe, and they all 
walked away, as I did, very enlightened that this is a good 
thing. This is not something that we are imposing upon the 
employees. This is good for employees. This makes their 
agencies better places to work, and therefore it is good for 
employees.
    And our challenge is to be able to develop and implement 
these new processes really well and really quickly.
    Senator Voinovich. Mr. Blair, in the recently released 
Federal Law Enforcement Pay and Benefits Report, OPM makes a 
case for broad authority to establish a governmentwide 
framework for law enforcement, retirement, classification, and 
basic pay and premium pay systems in consultation with 
employing agencies and with the concurrence of the Attorney 
General.
    Regarding basic pay, OPM says that this authority would 
provide the flexibility to make strategic decisions that target 
specific occupations based on labor market conditions and other 
factors.
    Could you please explain the difference between labor 
market pay adjustments and locality adjustments, and why do you 
believe that labor market adjustments are a better alternative?
    Mr. Blair. Labor market adjustments would be more targeted 
than just broad, across-the-board locality payments which may 
go beyond just law enforcement occupations. And what our report 
really wanted to do was to make a recommendation to Congress to 
follow the template that was established in DHS and DOD. It is 
a recognition that the law enforcement pay and compensation 
systems covering basic pay, premium pay, and retirement have 
become outmoded and outdated and that there is a need for them 
to be modernized and to be brought up-to-date.
    We need to go forward because over the past 50 years there 
has been a patchwork of authorities established giving certain 
groups of law enforcement premium pay, additional retirement 
benefits or additional pay, which has created inequities across 
the board. Rather than doing it on an across-the-board 
adjustment, which some of the legislation has proposed, we need 
to be much more targeted, and specific occupations and specific 
localities may need to be targeted as well. That is why we made 
a recommendation that we establish a broad framework that 
agencies could operate in, in order to best assess how they can 
recruit, retain and bring about the strategic management of 
their law enforcement communities.
    Senator Voinovich. Is your plan to look at various areas of 
the country to see what the market is paying and for comparable 
positions, for example, in the sheriff's office or the police 
department?
    Mr. Blair. I do not believe that our report would delve 
down that far, but what we would do is, depending on the 
legislative authority recommend that Congress give us broad 
latitude to look across the board at different localities, at 
differences within those localities among occupations and to 
develop a broad framework that agencies then could use.
    What we do not want to see is a system that we have now 
where one agency, because of additional legislative 
flexibilities such as added pay or retirement benefits, can 
pick the best of another agency's law enforcement. We need to 
equalize and harmonize and at the same time recognize that it 
can be done within a framework of flexibility.
    Senator Voinovich. Well, I know that when the law 
enforcement report was issued, some groups that were very 
disappointed because they thought there would be some specific 
recommendations. Instead, OPM issued generic recommendations in 
three broad areas. However, those recommendations need to be 
flushed out as quickly as possible. We really need to move on 
the FBI. We must provide relief to people that work for the 
Agency in high cost-of-living areas. I have heard horror 
stories of employees living 60 miles out of town in order to 
find affordable housing. I am not certain that locality 
adjustments will fix the problem. Given Mr. Blair's statement 
perhaps we should explore market based salary adjustments.
    I know when one of our outstanding leaders in Cleveland, 
Van Harp, transferred to Washington, they gave him an extra $26 
a month to live in Washington, DC. I mean, there are just some 
unrealistic things going on out there. And if we are going to 
get the job done in homeland security, then we have to 
understand that those agents have got to be paid competitively.
    And I think that, as we are moving, I do not know where we 
are yet in Homeland Security--where are we, do you know, in 
terms of that harmonization?
    Mr. Blair. In Homeland Security, we are in the final work 
of the statutory meet-and-confer period, and that should be up 
at the end of this week, and we expect the final regulations 
later this fall.
    Senator Voinovich. In terms of the harmonization of the 
agencies, how is that coming? Where is that? What is the status 
of that, do you know?
    Mr. Blair. I would have to provide that for the record. I 
know that we have been in constant consultation with the 
employee organizations and with DHS on that.

                       INFORMATION FOR THE RECORD
    The passage of the Homeland Security Act of 2002 signaled the 
beginning of one of the largest transformation of the U.S. Government 
in almost 60 years. When the new Department of Homeland Security (DHS) 
stood up in March 2003, it included 22 different human resources 
servicing offices, 8 different payroll systems, 19 financial management 
centers, and literally hundreds of legacy systems that had to be 
consolidated, integrated and upgraded. My understanding is that a year 
later, those 22 different human resources servicing offices are now 
down to 7, the 8 different payroll systems are now down to 3 and moving 
to 1, the 19 original financial centers are now down to 10, and steps 
are underway to address legacy systems.
    Recognizing the magnitude of this consolidation, the timetable for 
DHS to complete the standup stretched over a period of 24-30 months. I 
am told that the Department identified over 900 activities that needed 
to be completed during this period and that 12 months after the 
Department's first day, 75 percent of those activities had been 
completed.

    Senator Voinovich. What I would like to know is when are 
they contemplating doing their harmonization among the various 
agencies in Homeland Security? And look at that date, and what 
are they doing, and then we ought to move very quickly on the 
non-DHS agencies. But I think that you ought to set a goal that 
you knock this thing out in the next 6 months or sooner, if you 
possibly can. I think it is really important.
    Mr. Blair. That is a good message. Thank you, Mr. Chairman.
    Senator Voinovich. I have several other questions that I 
would like to ask, but I am going to ask that you answer them 
in writing.
    Senator Akaka is here today. Senator Akaka, thank you very 
much for being here. If you would like, you can share with us 
your words and ask the witnesses additional questions or you 
can start with asking additional questions.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Thank you very much, Mr. Chairman. I would 
like to make a statement and then ask questions.
    I want to commend you, Mr. Chairman, for all you have done 
in human capital management. You have been a champion in this 
respect, and I have been so happy working with you on this. Mr. 
Chairman, our Nation will be facing a huge crisis in a few 
years if we do not move to take care of the problems that we 
expect in human capital and its management.
    Mr. Chairman, you and I have worked together to give 
agencies the tools and resources needed to recruit, retain, and 
manage their workforce. I was pleased to join you in offering 
an amendment to the Homeland Security Act providing a number of 
new workforce flexibilities for the Federal Government. It is 
in that spirit, Mr. Chairman, that I thank you for holding this 
hearing today to review the implementation, use, and training 
and education related to these new flexibilities.
    According to a new Government Accountability Office report, 
agencies cite several barriers to using the new flexibilities, 
including the lack of guidance and rigid regulations from the 
Office of Personnel Management. Although OPM has recently 
engaged in a number of activities to address this issue, I am 
interested in hearing OPM's long-term strategy to help agencies 
use flexibilities effectively.
    I wish to be fair to OPM because this problem is larger 
than OPM. Agencies must do their part, too, by engaging in 
strategic workforce planning and skills assessments and working 
with the Chief Human Capital Officers Council to determine best 
practices, eliminate internal red tape, and utilize the 
flexibilities best suited to meet their needs.
    Such action is essential because, despite continuing 
efforts to reduce inefficiencies and reform the hiring process, 
studies show that the Federal Government lags far behind the 
private sector in its ability to recruit, to hire, to retain 
and to manage a skilled workforce. These studies are quite 
troubling, in light of an increased interest in Federal 
employment during the past few years and the growing number of 
employees eligible to retire. We may be winning the hearts and 
minds of Americans seeking employment with the Federal 
Government, but we are still losing the talent war.
    Chairman Voinovich, you and I have committed ourselves to 
that cause, and I look forward to our continued partnership. I 
look forward to hearing from the witnesses, and I do have some 
questions for them.
    Mr. Blair, while I agree that not all flexibilities are 
appropriate for all agencies, I am concerned with the findings 
of GAO. The June 2004 report did not state that agencies failed 
to use new hiring flexibilities because they were unnecessary, 
but rather cited lack of OPM guidance.
    I recall that during the debate on the new human resources 
systems at DHS, GAO noted that agencies have the necessary 
flexibilities to manage their workforce, but failed to do 
because of a lack of OPM guidance.
    Mr. Blair, could you elaborate on the ``community of 
practice'' OPM plans to develop and provide more information on 
OPM's long-term plans to help agencies understand and use 
flexibilities, especially in the area of guidance and training.
    Mr. Blair. We took issue with the GAO finding about the 
lack of guidance. Since the enactment of the legislation, we 
have been putting out consistent and steadfast guidance on the 
use of these flexibilities. We have held training sessions, and 
Train the Trainer sessions. At every Chief Human Capital 
Officers Council meeting I am told that hiring was a subject. 
We have a hiring subcommittee devoted to the use of the hiring 
flexibilities.
    But you do hit a nail on the head when you talk about what 
are we going to do in the future to make sure that not OPM 
personnel, but that Agency personnel are trained in the use of 
this. One of the things that Director James has talked about is 
improving the competencies of human resources staff across the 
government. We need to move in the direction of automating some 
of our testing. The Administrative Careers with America test, 
which is not automated, needs to be updated and automated as 
well. But we also need to improve the talents, and the 
abilities, and the skills of human resources staff. That's one 
of the areas that we are going to be doing is looking at how we 
can increase the professionalism of human resources staff 
across government.
    Senator Akaka. Mr. Blair, last week, OPM delivered the 
report requested by Congress on pay and benefits for Federal 
law enforcement officers, which recommended that OPM be given 
broad authority to establish a governmentwide framework for law 
enforcement pay and benefits. This would be a rather broad 
grant of authority, and I would appreciate having more 
information as to what this framework would look like now or 5 
months later.
    Mr. Blair. I would be happy to give you a thumbnail sketch 
of what is the template that we have seen for the Department of 
Homeland Security and for the National Security Personnel 
System within DOD. Congress has given OPM the authority to 
develop this along with DHS and DOD. We recognize that this new 
law enforcement system that we recommended would cross agency 
lines, but it is really necessary in order to bring about ways 
of addressing the inequities that exist throughout the law 
enforcement occupations in terms of pay and benefits.
    And so it is very important that Congress consider how they 
want to grant that authority to us, and we would say, look, at 
the authority granted to OPM and DHS, look at the authority 
granted to the Department of Defense and OPM in developing 
these new systems, and I think that that could provide the 
framework.
    Senator Akaka. Mr. Blair, what role would you expect 
Federal employee unions and associations to play in the 
development of this new system for law enforcement officers?
    Mr. Blair. I think that the expectation would be that they 
play the same collaborative role that they have been playing 
within DHS and that you are seeing within DOD as well. I think 
that they provided an excellent framework, that the 
collaborative process was hailed probably from many different 
directions as a model of collaboration and that we would use 
that as a model for any new system as well.
    Senator Akaka. Mr. Johnson, upon release of the July 2004 
quarterly President's Management Agenda scorecard, you stated 
that agencies can only adopt the PMA's disciplines and habits 
and better focus on results if their employees are fully 
involved in the process.
    I agree that employee involvement is key to any change. 
What is OMB doing to help agencies fully involve their 
employees in meeting the goals of the President's Management 
Agenda?
    Mr. Johnson. Well, we were reminding agencies, starting at 
the top, that they have to do this. This is very important. As 
I mentioned, we conducted focus groups in 10 different 
agencies, and I have shared the findings, the feedback from 
employees and the managers that we talked to in these 10 focus 
groups, with the leadership of the 26 PMA agencies. And it is a 
very clear picture that is painted that what is good about 
this, what the challenges are about these changes and the 
degree to which employees need to be involved. The opportunity 
exists to do this with full engagement of the employees because 
it is to the employees' and the Agency's advantage; it is a 
win-win for everybody.
    And so I think we have done a good job so far of making 
sure that the leadership of agencies understand this agenda. 
Many agencies are already fully engaging their employees and 
have ways of seeking implementation ideas from their employees 
about how to get a clean audit or how to implement competitive 
sourcing or how to implement some new performance evaluation 
system. Some agencies obviously are better than others. A 
primary topic of conversation in these every-other-month PMC 
meetings is the various ways to involve employees.
    And in all of our communication about the PMA, such as our 
results.gov website, and the communication that agencies 
leadership are going to engage in with their employees in a 
couple of weeks, recapping what they have accomplished in each 
of the agencies over the last 3 years, they are going to be 
talking about their commitment to seek advice and counsel from 
the employees. They will remind the employees why this greater 
focus on results is good for the agencies and good for the 
employees.
    We will be reminding the leadership. The leadership will be 
reminding the employees. We will be talking about it as if it 
is an expectation, so that if and when it does not happen, 
there will be plenty of incentive for the employees and 
managers to raise their hand and say, ``Wait a minute. I 
thought we were supposed to be involved in this, we need more 
information than we are getting or we need to be more 
involved.'' Because they will be inclined to ask for 
involvement, results will happen with greater regularity.
    Senator Akaka. Mr. Blair, I understand that it is difficult 
to hire individuals for entry-level positions because most of 
the government's assessment tools are experience driven. What 
is OPM doing to help agencies recruit people for these 
positions?
    Mr. Blair. What I think you may be referring to are the 
administrative positions in a GS-5 and GS-7, which are covered 
under the Administrative Careers with America assessment tool. 
Right now that tool is cumbersome. It is experience driven, and 
we need to look at ways of modernizing that and bringing it up-
to-date and automating that.
    We realize that this is a substantial investment. This is 
an area where the Chief Human Capital Officers Council can play 
a role, and OPM can play a role in looking at best ways of 
updating, modernizing and automating the tool so that we can do 
a better job of recruiting for those positions.
    Senator Akaka. Mr. Blair, OPM has suggested a 45-day hiring 
period for agencies from the close of the application period to 
the hire date. At last week's House hearing on the use of new 
hiring flexibilities, I understand that there was a discussion 
over the time needed for agencies to write vacancy 
announcements properly and plan for vacancies in advance.
    What time lines are suggested for posting openings and what 
guidelines are available to help agencies in this area?
    Mr. Blair. We have Human Capital Officers at OPM which are 
available for the agencies to help them assess and answer 
specific questions regarding any specific positions they may be 
recruiting for.
    Generally speaking, we have seen that sometimes the vacancy 
announcements are oftentimes laden with government jargon, 
which is not readily understandable to the applicant who is 
coming from college or who is coming from outside of 
government. We have seen sometimes the agencies do not need to 
open the vacancy announcements for quite as long as they have, 
but they do so because they have agreements or other types of 
what we call self-wrapping red tape that bind them in one way, 
shape or form. We urge agencies to look at those and see what 
ways that they can streamline that process.
    It depends on the position that you are recruiting for. 
Some of these may be very hard-to-fill positions. Maybe it is a 
position that direct hire authority may be good for, if it is a 
critical hire or a shortage category. And, we recognize one 
size does not fit all in this, but what does fit into all of 
this is the need for agency leadership to pay close attention 
to the recruiting strategies and staffing strategies that the 
agency is employing because we all know that the retirement 
wave is coming upon us and that now, more than ever, it is 
important that we have staffing mechanisms in place through 
which you can quickly recruit employees to fill those 
positions.
    Before you do the recruitment, you need to do the 
succession planning and identify those vacancies in advance. If 
you do not plan for the vacancy until it arises, then you have 
already passed the critical point, and you are going to suffer 
further delay. This is why succession planning is critical.
    Senator Akaka. Mr. Chairman, I have one last question. May 
I?
    Senator Voinovich. Yes.
    Senator Akaka. Mr. Blair, I am interested in how agencies 
can do a better job of selling the Federal Government as an 
employer of choice. While OPM has offered training on the use 
of flexibilities, what kind of training does OPM provide on 
marketing Federal job opportunities?
    Mr. Blair. One of the things that we have done is that we 
have reached out to colleges and universities through a 
partnership with the Partnership for Public Service in a Call 
to Serve Initiative. We have engaged over 55,000 people in our 
hiring fairs across the country, and I think that those hiring 
fairs shattered what we believe to be a myth, that the Federal 
Government cannot recruit top-notch talent. We held over a 
dozen hiring fairs across the country. Over 55,000 people 
attended. Our hiring fair in New York had lines wrapped around 
Madison Square Garden probably at least four times. And our 
surveys of the people who attended showed not only were these 
bright, ambitious young people, but they were also well-
educated, they came prepared with resumes, and they came 
prepared with a dedication to public service, and a patriotic 
spirit, and they wanted to serve America.
    So we see that there is a broad vein to be tapped out there 
of not just young people, but people across the board who want 
to work for America. We just want to make sure that we have the 
processes in place that agencies can access in order to tap 
into that talent.
    Mr. Johnson. Senator, one comment about that question. 
Agencies have their own programs for attracting MBAs or fast-
track people or people with specific skills, and it is really 
quite impressive. And your question makes me think we need to 
do a better job of keeping inventory of all of those best 
practices and share that with agencies, and Dan and I will make 
sure that happens. We will share that information with you. We 
will do that here in the next month or so.
    Senator Voinovich. Thank you. I really appreciate your 
being here for this hearing.
    It is my understanding that the Partnership for Public 
Service works with OPM. In addition, OPM hired ``Monster,'' to 
redesign the USAJOBS website. What is the status of that 
project?
    Mr. Blair. We have updated our website. We have gone 
through a series of initiatives in which we have worked with 
the agencies to improve vacancy announcements, and we have had 
a whole series of updates to the website in order to try to 
make it more user friendly. That is an ongoing process for us.
    Senator Voinovich. Have you been responsive to suggestions 
of the Partnership for Public Service?
    Mr. Blair. We work very closely with that group. It is a 
key stakeholder. They have the best interests of the civil 
service and public service at heart. We engaged them in the 
Call to Serve in which we have reached out to about 450 
colleges and universities to date. We have worked with them on 
a number of initiatives on improving hiring, and we see them as 
a partner in this continuing effort to assess our human capital 
leadership.
    Senator Voinovich. Have they been helpful?
    Mr. Blair. Very helpful.
    Senator Voinovich. Well, I want to thank you for your 
testimony. I want you to know that I look forward to a 
continuing dialogue. I just want all of you to understand that 
I am going to continue to have hearings on all of this 
legislation and this issue. I want to make sure that it gets 
cascaded out throughout the various government agencies.
    Senator Akaka, you and I and several others are going to 
have to decide how reforms should progress, whether we are 
going to consider reforms agency-by-agency--and I know the 
Chairman of our Subcommittee has thought about that--or do we 
consider across-the-board changes?
    Of course, how we proceed depend upon the regulations for 
the new personnel system at the Department of Homeland 
Security. I want to underscore again how important it is that 
when the final regulations are published employees and unions, 
have been fully involved in the design process.
    I think it is really important that independent people 
reviewing the regulations will say that they are fair, make 
sense, and it is going to help the government and at the same 
time be fair to the people who work for our government that are 
represented by organized labor.
    Thanks very much.
    Mr. Blair. Thank you.
    Mr. Johnson. Thank you.
    Senator Voinovich. As I mentioned in my opening statement, 
I would like each of you to limit your remarks to 5 minutes. 
First of all, thank you for coming. We will start our testimony 
with Mr. Mihm.

    TESTIMONY OF J. CHRISTOPHER MIHM,\1\ MANAGING DIRECTOR, 
    STRATEGIC ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Mihm. Thank you, Mr. Chairman.
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    \1\ The prepared statement of Mr. Mihm appears in the Appendix on 
page 47.
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    Senator Voinovich. We welcome you back. You have been here 
a lot of times over the last 5 years.
    Mr. Mihm. Well, thank you, sir, and it is always an honor 
to appear before you and Senator Akaka to discuss progress in 
addressing the Federal Government's human capital challenges.
    Mr. Chairman, your December 2000 report to the President 
noted that successfully addressing the human capital crisis 
will not come quickly or easily. No single piece of legislation 
or Executive Order can accomplish these goals. And for this 
effort to be successful, it must be embraced by Congress, 
career managers and employees on the front lines--exactly the 
points you have been underscoring today. Without the sustained 
effort of all the stakeholders, this effort will fall short.
    Since 2000, and under the leadership of this Subcommittee 
and others in Congress, more progress has been made in 
addressing human capital challenges that the agencies face than 
in the last 20 years--a point that Mr. Blair made in his 
statement as well. The key to continued progress in our view is 
twofold:
    First, agencies must use the tools and authorities that 
Congress provided to address their individual challenges and 
ensure that they are creating the organizations they need for 
the future rather than just recreating the past. This is 
exactly the point, Mr. Chairman, that you made in your opening 
statement.
    Second, we need to consider if additional and more systemic 
changes are needed to the Federal Civil Service system, and 
that is the point, of course, that Deputy Director Johnson was 
making in his remarks.
    Turning then briefly to the first issue. A little over a 
year ago, in a joint hearing before your Subcommittee and 
Chairwoman Davis on the House side, we testified that Federal 
human capital strategies were not constituted to meet current 
and emerging challenges or to drive the needed transformation 
across government.
    At your request, and the request of others in Congress, we 
have undertaken a large body of work since then, looking at the 
implementation of the recent legislative initiatives. That work 
centered on four major themes that are detailed in my written 
statement, including:
    First, conducting strategic workforce planning, including 
using the right-sizing and hiring tools that Congress provided;
    Second, strengthening employee training and development, an 
area where, as you have noted, there has been substantial 
underinvestment, and often that investment has been unwise 
where it has been made, that is, not strategic;
    Third, implementing Pay for Performance and management 
reforms, particularly the new SES statutory reforms;
    And then, fourth, creating strategic human capital offices 
with strategic human capital officers and an effective and 
strategic Chief Human Capital Officer Council, which in our 
view is absolutely vital.
    Our work in each of these areas identified leading practice 
for the agencies to consider as they seek to address the 
current challenges and prepare for the future. Taking your 
guidance, Mr. Chairman and Senator Akaka's, we have had a 
specific focus on the capabilities that agencies need to put in 
place, in order to effectively use the new authorities that 
have been given: Training, employee involvement, education, 
strategically planning to use those authorities. All this we 
have done in order to help the successful implementation of 
these initiatives.
    Turning to my second point, the need to consider additional 
structural changes to the Federal Civil Service system. The 
broad authorities that Congress has provided the Department of 
Homeland Security and DOD were clearly important for those 
agencies. Nevertheless, we are fast approaching the point where 
the so-called standard and governmentwide ways of doing 
business are neither standard nor governmentwide.
    To help advance a discussion concerning how human capital 
reforms should proceed, the Comptroller General and Chairman 
Volcker hosted a forum to discuss the framework for human 
capital reform, as Mr. Johnson noted in his remarks. While we 
will issue a detailed summary in the coming weeks, the 
discussion was centered on three areas:
    First, principles that the government should retain in a 
framework for reform because of their inherent enduring 
qualities, such as an updated set of merit principles;
    Second, criteria that agencies should have in place as they 
plan and manage their new human capital authorities;
    And, third, processes that agencies should follow as they 
implement any new authorities.
    Returning to the point, Mr. Chairman, you made in your 
December 2000 report. Congress, OPM, OMB, the agencies, Federal 
employees and other stakeholders have all worked very hard 
together in recent years to make marked improvement in the 
Federal Government's human capital management. We are making 
progress, and that is real progress. We need to build on that 
current momentum, however, and ensure that agencies and their 
employees have, and are effectively using, the tools and 
authorities they need to address the governance challenges of 
the 21st Century.
    Senator Voinovich, this concludes my statement, and 
obviously I would be happy to take any questions you may have.
    Senator Voinovich. Thank you. Dr. Sontag.

   TESTIMONY OF ED SONTAG, PH.D.,\1\ ASSISTANT SECRETARY FOR 
 ADMINISTRATION AND MANAGEMENT, DEPARTMENT OF HEALTH AND HUMAN 
                            SERVICES

    Mr. Sontag. Senator Voinovich, it is a pleasure and an 
opportunity to be here this morning to testify on the 
flexibilities and efficiencies that Congress, administered by 
OPM and OMB, have given the Department of Health and Human 
Services.
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    \1\ The prepared statement of Mr. Sontag appears in the Appendix on 
page 68.
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    Secretary Thompson's major goal with the Department when he 
arrived in January 2001 was to create one department. We feel 
very confident and take a great deal of pleasure in talking 
about the flexibilities that have been granted to us and how 
they are helping Secretary Thompson and his appointees 
administer a very complex program.
    Clearly, recruitment, hiring, developing, and retaining the 
workforce is the key to any solid administrative management 
effort. Our one Department goal has been the showplace and 
centerpiece of what we are attempting to do, to bring disparate 
and sometimes unrelated agencies together to respond to the 
Nation's health needs.
    I would like to briefly talk about some of the things that 
we have done not only as a direct result of the authorized 
flexibilities, but of the culture of change that these 
flexibilities have brought about in our Department.
    We have reduced the number of hiring officers in a 
department from 40 to 4, saving, in person power, over 33 
percent and at the same time increasing our efficiencies. We 
have de-layered the Department of Health and Human Services. We 
have administered e-grants. We are moving into e-payroll.
    Particularly in the area of human capital, we have created 
Emerging Leaders Program. This program is really one of our 
showcases in human capital. We have recruited over 250 
individuals into government. We now are in our third year of 
administering this program. In the first 2 years, we have 
retained over 95 percent of the young people who have come to 
government. This program primarily focuses on individuals with 
graduate degrees. The vitas and the resumes they bring to 
government is just a wonderful example that government can 
recruit the best and brightest.
    We have developed our SES Candidate Program along the lines 
of some of the flexibilities that have been granted to us. We 
have created, and particularly to respond to some of the 
complexities in training, an HHS University. This university 
has eliminated many of the redundant training programs and 
increased training opportunities for all employees.
    At the same time we have done all of these things, we have 
increased the workforce diversity in the Department of Health 
and Human Services.
    Particularly, we are very pleased with the human capital 
flexibilities that have been granted us, the direct hiring 
authorities. We now have direct hiring authority, and we are 
using it for medical nurses, and other related personnel. As we 
implement Medicare, Medicaid changes, we have direct hiring 
authority in that area.
    And most recently, one authority that we are very excited 
about is the flexibility, in the case of a Secretary or 
Presidential emergency, to directly hire individuals who can 
respond to geographic and State needs. This cuts across a lot 
of professional and nonprofessional areas, but it means that we 
can develop rosters of individuals who can respond to emergency 
needs almost on a minute's notice. We can start putting those 
rosters together and, called upon, we can deploy literally 
thousands of people in particularly geographic areas who are 
employees of the Federal Government.
    One issue that we are having a little bit of trouble with 
is the categorical rating. We are working with other agencies. 
We think it is a good flexibility. It is just taking us a 
little longer to utilize than some of the others, but we hope 
in 4 or 5 months to have it up and running and being used by 
this Department and other agencies.
    I would like to end my brief comments here just on one 
note. It was raised earlier. We are still not being able to 
capture and recruit the individuals right out of their 
baccalaureate degree. This is a future strength that we need to 
attend to. We need to make sure that we have the flexibilities 
to do this. And the way the currency system is weighted, it is 
very difficult for a person with minimal experience and just a 
baccalaureate degree to come into the Federal Government.
    In conclusion, Senator, we are very excited about the 
cultural changes that these flexibilities are bringing to our 
Department, and we look forward to working with you in the 
future.

  TESTIMONY OF JOANNE W. SIMMS,\1\ DEPUTY ASSISTANT ATTORNEY 
GENERAL FOR HUMAN RESOURCES AND ADMINISTRATION, U.S. DEPARTMENT 
                           OF JUSTICE

    Ms. Simms. Good morning, Chairman Voinovich. Thank you for 
the opportunity to testify today. We appreciate and share your 
interest in improving the management of human capital in our 
Department and throughout the Federal Government.
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    \1\ The prepared statement of Ms. Simms appears in the Appendix on 
page 76.
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    Since September 11, the Justice Department has undergone a 
significant transformation in its mission, with a focus on 
finding and bringing to justice the perpetrators of terrorism 
and preventing terrorist acts in our Nation. This new mission 
has been added to our crucial mission areas, including 
enforcement of Federal laws and protecting the interests of the 
American people, assisting local, State, and tribal governments 
in preventing and reducing crime and violence and ensuring the 
fair and efficient operation of the Federal justice system.
    It has been our goal to implement strategic human capital 
efforts that guarantee a workforce capable of delivering this 
mission. To that end, the Department has focused substantially 
on revitalizing the partnership we have in place with our 
components to achieve an integrated vision for and set of human 
capital policies and programs.
    In terms of organizational culture, this partnership has 
resulted in a dramatic departure from past practice. Agencies 
are now functioning as one, a complete entity, and that is our 
vision as well. I am pleased to report that we have 
successfully worked with our components in developing policies 
and programs that meet their needs and the Department's needs, 
as a whole, in human capital planning and management.
    In September 2002, the Department issued a comprehensive 
Human Capital Strategic Plan, and in less than 2 years, we have 
accomplished the majority of our planned initiatives. Specific 
achievements are many and varied, as noted in my prepared 
statement. I would like to emphasize that through your work, 
and that of the Subcommittee, in concert with the 
administration and the President's Management Agenda, our 
Department has made significant and meaningful progress in 
projecting its workforce needs and in creating and implementing 
plans to address problems before they negatively affect our 
mission.
    In the past 18 months, we have conducted a thorough 
workforce analysis and planning review, with an emphasis on 
identifying skill gaps. We have launched the first 
departmentwide SES Candidate Development Program in 20 years to 
ensure a pipeline for projected SES vacancies. We had over 200 
applicants for what we had originally advertised as 25 
vacancies, and we are currently in the process of expanding 
that because of the interest shown in the program.
    We have completely revamped our performance management 
systems for SES and GS employees, ensuring that mission and 
organizational objectives are described in performance work 
plans and that results are recognized and rewarded.
    These are only three examples of the many improvements we 
have made. Beyond our overarching human capital plans, we have 
also sought to make full use of the flexibilities you afforded 
us in the enactment of the homeland security legislation.
    For example, I assumed responsibility as the Department's 
Chief Human Capital Officer in May 2003. Justice is one of the 
six agencies that OPM talked about earlier that sought and 
received approval for direct hire authority for critical needs 
primarily in our Criminal Division. This year, eight Justice 
components requested and were approved for voluntary early 
retirement authority, and three of those components requested 
and received voluntary separation incentive payments authority.
    This flexibility has enabled us to address funding 
shortfalls, realign our workforce to reduce skill gaps and 
restructure organizations to meet changing mission needs and 
priorities. The student volunteer transit subsidy was deployed 
and is a great resource for interns who work with the 
Department for short periods of time.
    The Department has made limited use of the academic 
training provision primarily in our Executive Office of U.S. 
Attorneys. EOUSA established an intern program that provides 
the payment of academic training while the employees provide 
Agency support. This program was successfully piloted, and 
these flexibilities are providing the much-needed information 
technology skills for the Agency.
    In 2003, we provided student loan repayment assistance for 
63 employees, at a cost of $300,000. This year, we look to 
double the number of participants, and I can tell you that I 
personally participated in 2003 and 2004 in reviewing well over 
200 applications for the slots and funding that we had 
available--a very successful program.
    As you know, our employees do a superb job maintaining the 
security of our citizens and enforcing the rule of law. We are 
confident that you agree that they deserve the best support we 
can give them as they perform their jobs on our behalf. Above 
all, providing us the ability to ensure fair and equitable 
treatment in pay and benefits for all professionals in the 
Department is essential to maintaining a stable, satisfied and 
high-performing workforce.
    We are pleased with our progress, and we are optimistic 
regarding efforts to ensure a future workforce, capable of 
meeting challenges for the Department and for our Nation.
    In closing, I would like to acknowledge the report on law 
enforcement pay and benefits released by OPM on July 16. We 
believe the issue of inconsistent pay, benefits, and roles of 
law enforcement personnel is a serious one, a problem with 
substantial impact on our operations and management of our 
workforce and ultimately our mission delivery.
    We look forward to working closely with you, and with OPM, 
as the recommendations in the report are considered, and these 
problems are addressed.
    Thank you for this opportunity to appear before you. I will 
be pleased to answer any questions that you may have.
    Senator Voinovich. Thank you, Ms. Simms. Ms. Novak.

TESTIMONY OF VICKI NOVAK,\1\ ASSISTANT ADMINISTRATOR FOR HUMAN 
    RESOURCES, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

    Ms. Novak. Good morning, Mr. Chairman. I am the Assistant 
Administrator for Human Resources at NASA and NASA's Chief 
Human Capital Officer. I am delighted to be here this morning 
to discuss the programs and initiatives that NASA has 
undertaken to address the Agency's human capital challenges, 
including our use of new workforce flexibilities.
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    \1\ The prepared statement of Ms. Novak appears in the Appendix on 
page 80.
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    Let me begin by expressing our appreciation on behalf of 
Mr. O'Keefe, our administrator, for your leadership and support 
in the area of Federal human capital management, both 
governmentwide and on behalf of NASA. We appreciate all you 
have done and look forward to continuing to work with you.
    You are already familiar with the challenges that NASA has 
faced with respect to its workforce. We are experiencing skills 
imbalances due to downsizing, anticipated loss of experience 
and knowledge due to projected retirements, and fewer qualified 
science and technology workers in the education pipeline, as 
well as increased competition for such workers.
    We at NASA have been very engaged over the last several 
years in addressing our human capital challenges so that we can 
assure that we continue to have a high-performing workforce 
with the competencies that the Agency needs to achieve our 
challenging mission.
    As I have said many times, in many forums, while I serve as 
the Agency's Chief Human Capital Officer, responsibility and 
accountability for effectively managing NASA's human capital 
resource is shared throughout all levels of the Agency.
    Two years ago, we produced a Strategic Human Capital Plan, 
as well as a companion Strategic Human Capital Implementation 
Plan, which created for us an integrated, systematic approach 
to assuring that the Agency continues to achieve and retain the 
workforce that it needs. The Strategic Human Capital Plan is a 
flexible, long-term plan, capable of accommodating changes in 
mission and program direction. It identifies human capital 
goals, strategies and improvement initiatives in areas where we 
feel improvements are most critical and necessary for the 
Agency.
    The implementation plan, which is updated periodically, 
provides action plan and metrics for achieving the Agency's 
human capital goals.
    Ensuring that NASA has state-of-the-art competence 10 years 
from now in emerging and cutting-edge technologies is a 
challenge. A critical element of our enhanced workforce 
planning and analysis is our competency management system. This 
was developed as an initiative under the Strategic Human 
Capital Plan, and it provides NASA our first-time-ever 
agencywide inventory of workforce competencies needed to 
accomplish our mission. It helps us to better identify, manage 
and report the competency strengths and needs, and it also 
helps us target recruitment, retention, training and workforce 
development and succession planning in a more focused and 
integrated way.
    We have also enhanced our recruitment efforts. In addition 
to our individual field centers' recruiting, we have 
established an active corporate recruitment effort targeted at 
at-risk competencies identified using our competency management 
system.
    This year, in the fall and also in the spring, NASA's 
senior leaders and managers participated in 18 recruitment 
events throughout the country, including on-campus visits, and 
we extended tentative offers to entry-level employees--well, to 
about 150 entry-level employees. And the very good news is 
those who have accepted to date are a very diverse group.
    We have also improved our hiring mechanisms. We have an on-
line, automated recruitment system we call NASA STARS, which 
gives applicants the convenience of applying on-line. It has 
reduced the time to fill vacancies by over 35 percent and 
enjoys an extremely high satisfaction rate among applicants for 
its ease of use.
    We also have interrelated performance management and awards 
and recognition programs which link to our Agency human capital 
programs and support mission accomplishment. We have explicit 
selection and performance criteria, which hold members of 
NASA's senior executive service directly accountable for 
performance results and for the effective management of human 
capital. We select, promote, appraise, and reward our senior 
executives based on these criteria.
    These requirements further cascade down to the non-SES 
supervisors and have been tailored and cascaded down to the 
rest of the workforce as well.
    Leadership development is an area where we spend a lot of 
time and attention. We have a leadership development strategy 
that we have implemented around OPM's executive core 
qualifications, as well as around our SES performance criteria 
and a NASA leadership model. We have a very robust set of 
leadership programs such as the SES CDP program, which has been 
a very effective pipeline to filling our key leadership 
positions.
    Let me turn to the workforce flexibilities. As you know, we 
have sought and obtained additional workforce flexibilities to 
help us recruit and retain the talent we need, and we are also 
making use of governmentwide flexibilities that Congress has 
provided.
    The flexibilities in the Homeland Security Act have been, 
and will continue to be, very useful to NASA in addressing its 
human capital challenges. Two significant provisions in the Act 
that have been very beneficial in the past year to us in 
reshaping our workforce have been the buy-out authority and the 
voluntary early retirement authority.
    We anticipate continued use of these tools to rebalance the 
workforce to align with our program needs and shifting 
priorities, particularly with the New Space Exploration Vision 
that we have to implement. We expect as many as six or seven 
buyouts and early outs in the coming fiscal year at our field 
centers as we rebalance our workforce.
    We are also very much looking forward to using the category 
rating system. We have long supported this provision, and we 
have worked with our field centers to develop implementing 
policies. Our NASA STARS evaluation process is in the process 
of being reprogrammed now so that we will be able to 
accommodate category rating in the next several months, and we 
expect to be aggressive in using that authority.
    In February of this year, of course, we were blessed with 
the NASA Flexibility Act of 2004, which gives our agency 
additional tools to help us address the specific workforce 
challenges we are facing. We are very grateful to you, Mr. 
Chairman, and to your Subcommittee in supporting this 
legislation.
    The law required that NASA submit a workforce plan approved 
by the Office of Personnel Management to Congress 90 days prior 
to exercising any of the new authorities. The 90-day waiting 
period ended less than 2 weeks ago on July 8, so we are in the 
very early stages of using these new authorities in connection 
with recruitment and retention initiatives. Nevertheless, our 
field centers and our senior managers were prepared to take 
action as soon as the flexibilities became available. Already 
several of our centers have issued vacancy announcements to 
fill positions under the new flexible term appointment 
authority that we received in the Act.
    Last week, two field centers offered the enhanced annual 
leave benefit to two prospective new hires as an incentive to 
accept our job offers. One center also offered the enhanced 
travel and relocation benefits to a candidate who has now 
accepted our offer and will be reporting to work at NASA in 
several weeks.
    Last, another center in a high-cost area has offered the 
enhanced travel benefit to attract two individuals with 
exceptional expertise to fill positions that have actually 
remained vacant for over 2 years. So, while we are just 
beginning, we think we are going to be very aggressive in the 
use of these new tools, and we know that they are going to help 
us in a great way.
    In closing, let me say that the human capital flexibility 
Congress has provided, along with the human capital programs 
and initiatives we are pursuing at NASA, are designed to 
improve the effectiveness of our human capital management and 
to maintain NASA's position as an employer of choice. While 
individually they can be powerful tools to address the Agency's 
workforce challenges, we believe it is in the integration of 
them, with each other and with our Agency's mission, goals, and 
objectives, that we will achieve the best results.
    Thank you very much, and I look forward to working with you 
in the future.
    Senator Voinovich. Thank you very much. I am very impressed 
with what NASA has been able to accomplish.
    Ms. Simms, you heard the testimony from Mr. Johnson and Mr. 
Blair. Preceeding the Federal Law Enforcement Pay and Benefits 
Report was a 1993 report. This is 11 years later, and nothing 
was done after the 1993 report. There are some real problems in 
your Agency, as I have heard from other committees.
    What are you going to do to make sure that this is just not 
another report that lays on the shelf?
    Ms. Simms. I think, for those who take a look at the 
report, they will see right away the Department's commitment to 
ensuring that pay and benefits for the law enforcement 
community is taken seriously.
    One of the things that we pushed for very strongly, and are 
very pleased it ended up in the report, is that anything that 
is done by OPM, with respect to law enforcement, is done with 
the concurrence of the Attorney General. That language was 
specifically requested by the Department of Justice because we 
are committed to moving that whole effort forward. So, in 
working jointly with OPM, we will ensure that law enforcement 
pay and benefits, to the extent that they can be, are 
consistent across the board. We are very much concerned about 
Homeland Security or DOD, as TSA did in the past, raiding other 
agencies when they set up their particular programs.
    It is our wish or our primary concern that we ensure as 
much flexibility as we can for agencies in being able to 
determine what is the appropriate pay level, not only taking 
into account the location, but also the caliber of the 
individuals that we wish to attract and retain.
    Senator Voinovich. Some law enforcement groups have argued 
that establishing a performance-based pay system for their 
members may be difficult to achieve. For instance, they argue 
that developing measures of performance based on criteria, such 
as number of arrests, may not be a valid indicator of 
successful performance. In your opinion, can a system for 
performance-based pay be created for Federal law enforcement 
officers?
    Ms. Simms. I think it is something that we should seriously 
take a look at. We are concerned about where our officers are, 
our agents, what they are doing, and certainly the input of the 
unions, the employee representatives, will be very important to 
this process.
    Senator Voinovich. Do you have any idea of what key 
indicators you would look at to show they are doing their job?
    Ms. Simms. Well, there are a multitude of key indicators 
that we could take a look at. I think what is most important is 
what is going to provide us with the most information in being 
able to make the appropriate decisions. The number of cases are 
relevant, certainly, but there are some cases that are more 
difficult to handle than others, and they will take longer. So 
it is not just the number that we should be looking at. We 
should also be looking at the quality of the case and the 
results of what comes out of all of that. So I think there are 
a number of measurements that can be brought to bear.
    Senator Voinovich. Do you know if there are any benchmarks 
around the country, in terms of Pay for Performance with law 
enforcement?
    Ms. Simms. I am not currently aware, but I certainly think 
it is something that the OPM, as well as the Department of 
Justice and other agencies with law enforcement interests 
should be taking a look at.
    Senator Voinovich. Maybe GAO----
    Ms. Simms. GAO?
    Senator Voinovich. Mr. Mihm, can you help them?
    Mr. Mihm. Mr. Chairman, the issue for Pay for Performance 
for law enforcement personnel, as Joanne is saying, is 
obviously an extremely sensitive one, and you do not want to 
create goals that create the wrong types of incentives--such as 
goals on the numbers of arrests. As one law enforcement put it 
to me, he said, ``Oh, we know how to meet that, if that is the 
goal, and it probably would not be pretty.''
    What you would want to do is to recognize and reward for 
competencies rather than results; that is, you figure out what 
are the individual competencies that are most closely related 
to a successful law enforcement officer, and then you pay the 
individuals to the extent that they demonstrate and develop 
those types of competencies. That gets you out of the trap of 
creating the wrong types of incentives, and in a positive way, 
gets you to pay for what has been shown to be positively 
related to good law enforcement. So it is a difficult issue, 
but it is not one that cannot be broken down.
    Senator Voinovich. Your agency has a lot of responsibility, 
but I know reforms for the FBI are long overdue. I am also 
concerned about the number of people that you have to get the 
job done. You have taken on additional responsibilities, with 
the highest priority on homeland security, but the traditional 
work of the FBI needs to be done.
    One of the concerns I have, and this stems from a hearing 
that we had in the Foreign Relations Committee, of which I am a 
member, was the issue of organized crime and corruption. I was 
quite taken back in regard to the activity of the Russian mafia 
in the United States. When I asked the question about whether 
or not the FBI has the wherewithal to get the job done, the 
answer was, no. I would like to know whether you have looked at 
the workload and determined whether or not you have got the 
right number of people to get the job done, and if that is 
reflected in your request to the administration for funding?
    Ms. Simms. The answer to your last question is, yes, it is 
reflected in our request for funding. FBI is one of the, if not 
the, largest agency within the Department of Justice. There 
have been many conversations with the leadership, with Mueller, 
with Gephardt, with Mark Bullock, who is my peer there, 
regarding their needs and how they are looking at their 
workforce planning and structuring.
    The one thing that we are most proud of is that the FBI is 
partnering with the rest of the Department in managing their 
skills and providing an analysis of where their skill gaps are, 
their recruitment processes, as well as their ability to not 
only take a look at the overall performance, but how they can 
shift or how they will be shifting their priorities going 
forward. Terrorism is No. 1, but we recognize that the FBI must 
continue to do all of those other things that they are tasked 
with.
    And as much as we are looking at terrorism and 
counterterrorism efforts, we cannot afford not to pay attention 
to those. It is one of their continuing priorities as well.
    Senator Voinovich. Good. The other one I mentioned earlier 
in my remarks, and that is locality pay and the complaint that 
I have. I mentioned Van Harp, from Cleveland, who came here, 
and they give him an extra $26. And you also have a real 
problem in the FBI in terms of the number of people who are 
eligible to retire or take early retirement, which is another 
issue that has to be looked at.
    Ms. Simms. The FBI exercises a number of the flexibilities 
that we have, in terms of recruitment and retention, relocation 
benefits, more so probably than any other component within the 
Department. They have utilized those flexibilities for several 
years now and continue to do so.
    The locality pay issue we know is prime on everyone's plate 
because the FBI moves its agents around in order to gain 
experience, in order to be able to move them forward into their 
SAC positions. Even in looking at the SES Pay for Performance 
effort, we took a look with respect to their SESers and the 
impact that would have because locality pay, given the changes, 
is no longer available for SESers within the FBI. So that has 
been a primary piece of the plan that we have put together and 
received approval from by our Attorney General and are moving 
forward to OPM with.
    Senator Voinovich. Mr. Mihm, we are talking about Pay for 
Performance. We know it is easier said than done. Eight months 
have passed since we passed the legislation and regulations 
have not been issued. Have you seen agencies beginning to 
prepare for the transition? Do they understand what this means?
    Mr. Mihm. Certainly, we are beginning to see them prepare 
for the transition. We, at your request, did a body of work 
looking at leading practices in executive performance 
management both here and overseas, synthesized that down into a 
report and set of practices, and then assessed the performance 
management systems of a number of agencies against those 
practices.
    And we found, not surprisingly, that agencies are making 
good progress in terms of putting in the general or the basic 
infrastructure, but much more needs to be done in order to 
align individual executive performance to the organizational 
goals, and that is the most important part. While pay for 
performance is good, dollars matter, obviously, in the final 
analysis, especially for people in the public sector, they come 
to government to maximize their self worth, not their net 
worth.
    And so the way you motivate, the way you get improved 
performance, is linking individual and unit goals to 
organizational results, at creating this so-called line of 
sight. When that is done, then you can overlay a Pay for 
Performance scheme on top of that, and then you get additional 
benefits. But it is that alignment that takes time, and it is 
the alignment that is so difficult. That is still a work in 
progress for many agencies.
    Senator Voinovich. Well, we are going to continue to ask 
you to look at that because I want to make sure that when they 
move on it, that we have got the training in place so that it 
is done, and it is done right. If it is not done right, it will 
be a disaster, and it will discredit the whole issue, and we 
will not be able to move forward with it.
    I was very glad that, after visiting with the Department of 
Defense, they have reevaluated their October deadline and now 
have, with the help of Navy Secretary Gordon England, put a 
plan in place that they are going to cascade implementation 
over a long period of time.
    Mr. Mihm. Yes, sir.
    Senator Voinovich. But their announcement they were going 
to implement NSPS by October, I thought they would have a 
nuclear explosion. [Laughter.]
    It is interesting that, Dr. Sontag, you were indicating 
that you still cannot hire undergraduates with a baccalaureate, 
that is, you do not have the power to hire them on the spot. I 
know that we have given NASA the authority. Have you used this 
yet?
    Ms. Novak. Yes, sir. We have not used that particular 
provision yet. That is one of the ones that we got in the 
Workforce Flexibility Act that we will be able to use here 
shortly.
    But we used this in our past corporate recruitment effort 
last spring and last fall, we used the Federal Career Intern 
Program, which is an authority that is available to everybody, 
and we were very successful in getting----
    Senator Voinovich. What program did you use again----
    Ms. Novak. It is the Federal Career Intern Program. It is 
one of the programs out of OPM. And we were very successful in 
attracting, as I mentioned, about 100 fresh-outs or entry-level 
employees into the workforce using that. And that, coupled with 
our automated, on-line application system, allowed us to 
actually bring people or make offers to people within 3 to 5 
days and, in some cases, almost on the spot.
    Senator Voinovich. And you do not have that authority, Dr. 
Sontag?
    Mr. Sontag. I do not believe we have that specific 
legislative authority. The issue that I was talking about was 
the fact that when we go to recruit GS-5s and GS-7s, at an 
entry-level level without an internship program, without one of 
the special programs that we utilize, experience weighs very 
heavily in the current assessment instruments that are used. It 
is that weighting of so much experience that almost precludes a 
person just fresh out of a baccalaureate degree.
    Senator Voinovich. I hear that all the time from people. 
They say I get the application--I am talking about young people 
we are trying to get involved--and that is a real problem then, 
is it not?
    Mr. Sontag. Yes, sir. That is one we would like to work 
with OPM and the Congress in addressing.
    Senator Voinovich. I see, Mr. Dovilla, you are in the 
audience here today. Have you heard that complaint, also?
    Mr. Dovilla. From students, sir?
    Senator Voinovich. Yes.
    Mr. Dovilla. It is certainly an issue, and it is one the 
OPM and the agencies are working on, but one of the things I 
was just commenting to my colleague here on was a targeting of 
the people that we are looking to bring in, whether or not they 
are interested in coming in as G-5s or G-7s or at a higher 
grade with a baccalaureate degree.
    So we need to look at, in terms of competitive pay, in 
addition to desire to serve and make a difference in the 
program.
    Senator Voinovich. I would like the council to really work 
on that to see if we cannot do something about it.
    I have lots of other questions, and I would like to wrap 
this hearing up at 11 o'clock. I guess the real important 
question is has legislation and the President's Management 
Agenda worked? Ms. Novak, how long have you been with NASA?
    Ms. Novak. I have been with NASA for about 15 years, and in 
my current position for 6 years.
    Senator Voinovich. Ms. Simms.
    Ms. Simms. I have been with the Department of Justice for 6 
years and my current position for about 2\1/2\ years.
    Senator Voinovich. Dr. Sontag.
    Mr. Sontag. I have been with Health and Human Services for 
3 years, although I started my government career with HEW in 
1972 and worked for Governor Thompson when he was governor of 
Wisconsin.
    Senator Voinovich. The real question is has human capital, 
human resources been elevated during the last couple of years 
so that people are paying attention to it?
    Ms. Simms. I would answer yes to that. Although I have only 
been at the Department for 6 years, I have been in the 
government for 36 years. So I have a long history of taking a 
look at where we were versus where we are. For a number of 
years, the Human Resource Officers were talking about having a 
seat at the table. I think we can honestly say now that we have 
a seat at the table.
    Senator Voinovich. And people do understand at the Justice 
Department how important it is that you have the right people 
with the right knowledge and skills, at the right time, at the 
right place.
    Ms. Simms. Clearly, beginning at the Attorney General's 
level all the way down.
    Ms. Novak. If I may jump in, I would like to say yes, also. 
At NASA, clearly, things are much different. Strategic human 
capital management really matters, and it is not just a human 
resources program, but it is something that starts at the top 
level with our administrator and cascades down. It was not just 
the President's Management Agenda that was the driver; it was 
also a realization, as we looked at the workforce demographics, 
that we needed to attend to some of the problems that we have. 
And it is really right. It is the linchpin of just about 
everything we do now.
    Senator Voinovich. You have a real urgency there. Mr. 
Mihm's how many years was NASA on your high-risk list----
    Mr. Mihm. Pretty much from the beginning, sir. I think that 
probably from the early 1990's on the contract management part 
on the high-risk list.
    Senator Voinovich. Yes.
    Mr. Mihm. It is a heavily contracted agency, and so it has 
been an enormous challenge for them. The question you are 
raising about whether we are giving more attention to human 
capital, the answer to that is unmistakably yes. There is much 
greater attention across government.
    For years the rhetoric has always been people are our most 
important asset, and yet what do we do when times are tough? 
Just as you pointed out in your statement, we cut training, we 
cut recruitment, we cut hiring initiatives during tight budget 
times. We are seeing changes to that now.
    We are beginning to really appreciate that if people are 
our most important asset, if we do the government's work with 
our people, that means we need to invest in them, we need to 
value them, and we need to reward them. And that is what the 
PMA and all of the legislation that you have put in place has 
been about: To underscore that type of thinking within 
agencies. We are seeing it across the board with the Executive 
Branch, notwithstanding the progress that still needs to be 
made. There has been enormous progress made over the last 
couple of years.
    Senator Voinovich. Good. They are serious.
    Mr. Mihm. Yes, sir.
    Senator Voinovich. Good. Because, as I say, if I am around, 
I am going to stay on this issue. I think that it is the most 
important thing that we can possibly do for our country is to 
have these people that we have, to keep the really good people, 
reward them, make the Federal Government an exciting place to 
come to work. We need young people in this country wanting to 
come to work for the Federal Government and not only to make a 
difference and serve their country, but also to be compensated 
fairly and look at the Federal workforce as a chance to grow in 
their lives and continue to make a contribution.
    Mr. Mihm. Well, sir, and just on the oversight point, there 
is that line in large organizations, ``What gets measured gets 
managed.'' There is also a line in Washington, ``What gets 
overseen gets managed.''
    And so the oversight that this Subcommittee has shown, and 
obviously other committees over on the House side, sends clear, 
unmistakable messages to OPM, OMB, GAO, the agencies about the 
importance that Congress puts on investing in people that is, 
questions will be asked, progress will be measured, and people 
will be held accountable. That is exactly the types of messages 
that need to be sent and need to continue to be sent.
    Senator Voinovich. Mr. Mihm, do you think OPM is moving 
fast enough or do you think they still have some problems that 
need to be worked out?
    Mr. Mihm. Well, we think the Chief Human Capital Officers 
Council is vitally important to continuing to make progress on 
that and on the whole range of issues. And that was one of the 
great reforms that was put in place.
    We know from the CFO Council for financial officers, and 
the CIO Council for information officers, that there are models 
of how you can use these councils to both generate ideas and 
test ideas. OPM, in recent months, we have heard, has begun to 
use this council in far more strategic ways. Some of the early 
rollout was seen as a bit of a transmission belt--come, and we 
will tell you what we are doing. Now, it is much more of a 
collegial exchange of ideas.
    Certainly, in the hiring initiatives that you asked about 
earlier, we reported in our April survey, of some of the 
problems that the Chief Human Capital Officers were seeing with 
OPM guidance. Since then, there has just been an explosion of 
initiatives, as you have heard from Deputy Director Blair, in 
terms of the training, the capacity building, the regulations 
that have finally come out. They are active on a whole range of 
issues.
    We think that, just to circle back, that the Chief Human 
Capital Officers Council, using them and recognizing the value 
of the Chief Human Capital Officers as change agents within 
their agencies, needs to continue to be nurtured because that 
is really where we are going to get the leverage points.
    Senator Voinovich. Thank you. I would like to thank all of 
you for coming today. I have not read all of your testimony. I 
want you to know I am going to read it. I have other questions 
that I would have liked to have asked, and I will submit them 
to you in writing, and I would hope that you would respond to 
me.
    Thanks, again, and thanks for the great job that you are 
doing. It is exciting to hear what all of you are doing in your 
respective agencies.
    The hearing is adjourned.
    [Whereupon, at 11:02 a.m., the Subcommittee was adjourned.]



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