[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
NSPS: THE NEW DEPARTMENT OF DEFENSE CIVILIAN PERSONNEL SYSTEM--REACHING 
                               READINESS

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

                                HEARING

                               before the

                 SUBCOMMITTEE ON THE FEDERAL WORKFORCE
                        AND AGENCY ORGANIZATION

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 12, 2005

                               __________

                           Serial No. 109-88

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform


                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
24-712                      WASHINGTON : 2005
_____________________________________________________________________________
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092250 Mail: Stop SSOP, Washington, DC 20402ï¿½090001

                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
GINNY BROWN-WAITE, Florida           C.A. DUTCH RUPPERSBERGER, Maryland
JON C. PORTER, Nevada                BRIAN HIGGINS, New York
KENNY MARCHANT, Texas                ELEANOR HOLMES NORTON, District of 
LYNN A. WESTMORELAND, Georgia            Columbia
PATRICK T. McHENRY, North Carolina               ------
CHARLES W. DENT, Pennsylvania        BERNARD SANDERS, Vermont 
VIRGINIA FOXX, North Carolina            (Independent)
------ ------

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

     Subcommittee on the Federal Workforce and Agency Organization

                    JON C. PORTER, Nevada, Chairman
JOHN L. MICA, Florida                DANNY K. DAVIS, Illinois
TOM DAVIS, Virginia                  MAJOR R. OWENS, New York
DARRELL E. ISSA, California          ELEANOR HOLMES NORTON, District of 
KENNY MARCHANT, Texas                    Columbia
PATRICK T. McHENRY, North Carolina   ELIJAH E. CUMMINGS, Maryland
------ ------                        CHRIS VAN HOLLEN, Maryland

                               Ex Officio
                      HENRY A. WAXMAN, California

                     Ron Martinson, Staff Director
                Chris Barkley, Professional Staff Member
                 Reid Voss, Clerk/Legislative Assistant
          Mark Stephenson, Minority Professional Staff Member


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 12, 2005...................................     1
Statement of:
    Abell, Charles S., Principal Deputy Under Secretary, 
      Personnel and Readiness, Department of Defense; George 
      Nesterczuk, Senior Policy Advisor on the Department of 
      Defense, U.S. Office of Personnel Management; and Neil A.G. 
      McPhie, chairman, U.S. Merit Systems Protection Board......    51
        Abell, Charles S.........................................    51
        McPhie, Neil A.G.........................................    80
        Nesterczuk, George.......................................    70
    Heiser, Karen, organizational development program manager, 
      Federal Managers Association; John Gage, national 
      president, American Federation of Government Employees; and 
      Ron Ault, president, Metal Trades Department...............    94
        Ault, Ron................................................   153
        Gage, John...............................................   117
        Heiser, Karen............................................    94
    Walker, David M., Comptroller General of the United States, 
      U.S. Government Accountability Office......................     6
Letters, statements, etc., submitted for the record by:
    Abell, Charles S., Principal Deputy Under Secretary, 
      Personnel and Readiness, Department of Defense, prepared 
      statement of...............................................    53
    Ault, Ron, president, Metal Trades Department, prepared 
      statement of...............................................   156
    Davis, Hon. Danny K., a Representative in Congress from the 
      State of Illinois, prepared statement of...................     4
    Gage, John, national president, American Federation of 
      Government Employees, prepared statement of................   120
    Heiser, Karen, organizational development program manager, 
      Federal Managers Association...............................    97
    McPhie, Neil A.G., chairman, U.S. Merit Systems Protection 
      Board, prepared statement of...............................    82
    Nesterczuk, George, Senior Policy Advisor on the Department 
      of Defense, U.S. Office of Personnel Management, prepared 
      statement of...............................................    72
    Walker, David M., Comptroller General of the United States, 
      U.S. Government Accountability Office, prepared statement 
      of.........................................................     9


NSPS: THE NEW DEPARTMENT OF DEFENSE CIVILIAN PERSONNEL SYSTEM--REACHING 
                               READINESS

                              ----------                              


                        TUESDAY, APRIL 12, 2005

                  House of Representatives,
      Subcommittee on Federal Workforce and Agency 
                                      Organization,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:03 p.m., in 
room 2154, Rayburn House Office Building, Hon. Jon C. Porter 
(chairman of the subcommittee) presiding.
    Present: Representatives Porter, Davis of Illinois, Norton, 
and Van Hollen.
    Staff present: Ron Martinson, staff director; B. Chad 
Bungard, deputy staff director/chief counsel; Chris Barkley and 
Shannon Meade, professional staff members; Reid Voss, 
legislative assistant/clerk; Patrick Jennnings, detail from OPM 
serving as senior counsel; Mark Stephenson and Tania Shand, 
minority professional staff members; and Teresa Coufal, 
minority assistant clerk.
    Mr. Porter. Welcome, everyone. Thank you for joining me 
today. The hearing will come to order. The Subcommittee on the 
Federal Workforce and Agency Organization is having a hearing 
entitled, ``NSPS: The New Department of Defense Civilian 
Personnel System--Reaching Readiness.''
    But I thought that for the benefit of those who have 
traveled for some distance to be here that I would start the 
meeting. As I said in my opening a moment ago, welcome. Thank 
you for being here.
    Today's testimony focuses on another significant milestone 
in the transformation of the Federal work force. On February 
14, 2005, the Department of Defense and the Office of Personnel 
Management issued proposed regulations for the new National 
Security Personnel System at the Department of Defense. The 
NSPS will be the second major new personnel system for Federal 
employees; the other being the DHS personnel system.
    According to the Department of Defense, when the NSPS is 
fully implemented, approximately 700,000 civilian DOD employees 
will be eligible for coverage under the new system. When the 
new NSPS and the new DHS human resources system are fully 
implemented, over half of the Federal Government will be under 
the pay for performance and other aspects of the new systems.
    As I pointed out in our previous hearing on the DHS system, 
the new human resource systems at DOD and DHS are the first 
major reforms to our Civil Service process in 50 years. It is 
critical that we get this right. And it took many months of 
hard work by the DOD, the OPM and the DOD labor organizations 
to create the proposed regulations for the NSPS, and there are 
still a lot of details to be worked out, which is why we are 
here today.
    We are charged with implementing a large-scale change and 
having to deal with a number of personnel and cultural issues. 
DOD faces nothing short of a major task. This is our chance to 
use the oversight power of the subcommittee to highlight the 
aspects of the regulation efforts that represent steps in the 
right direction and aspects that raise concern or need 
additional work.
    As I have said before, change can be difficult, and I know 
that this is a nerve-wracking experience for the Department's 
work force. However, I can assure everyone here that this 
subcommittee will closely monitor the progress of DOD and OPM 
toward a publication of final reglations and implementation of 
this new system over the next several years. I am confident 
that if the NSPS is implemented in a fair, credible, and 
transparent manner, DOD employees will thrive. Under this new 
system--again, DOD employees will thrive under the new system.
    I would like to express my thanks to the witnesses who have 
agreed to join us today. We have brought together a broad and 
knowledgeable array of voices as we continue our oversight of 
the new system and look forward to hearing all of your 
perspectives, if not today, then in the future.
    I would now like to recognize the ranking member of the 
subcommittee, Mr. Danny Davis. Welcome, and we now have a 
quorum.
    Mr. Davis. Thank you very much, Mr. Chairman, and I want to 
thank you for calling this hearing. I also want to thank the 
witnesses for agreeing to appear and for coming.
    At the Deparment of Homeland Security's hearing our 
subcommittee held last month, I said that DHS's personnel 
regulations and implemented directives were not fair, credible, 
or transparent.
    Today the Defense Department offers us the same kind of 
changes to its personnel system. The difference between DHS and 
the Defense Department is that DOD already has shown us that 
they have no intention of being fair, credible, or transparent. 
There is a saying that actions speak louder than words. And of 
course, my mother used to tell us that ``What you do speaks so 
loudly until I can't hear what you are saying.''
    DOD's actions have given us a good idea of what to expect 
when NSPS is implemented. I will give you two examples of 
actions that demonstrate what we can expect from DOD. First, 
early last year, DOD released a proposal for its new labor 
relations systems to congressional staff. House and Senate 
Democrats expressed concerns about the proposal in the February 
25, 2004 letter to Secretary Rumsfeld. The letter stated that 
the National Defense Authorization Act of 2003 specifically 
stated three things. One, that DOD could not waive Chapter 71 
of Title 5 of the U.S. Code which sets forth the right of 
employees to join unions; that the new personnel system must be 
prescribed jointly with the Director of the Office of Personnel 
Management; and that DOD must provide for an independent third-
party review of agency decisions.
    House and Senate Democrats were not the only congressional 
members who expressed concern. So did many Republicans. Their 
concern was so great that DOD was compelled to go back to the 
drawing board and to start the proposal process all over again. 
Yet DOD presents us with more of the same kind of draft 
regulations and implementation directives that were the source 
of initial concerns. Chapter 71 of Title 5 continues to be 
replaced with provisions that essentially gut collective 
bargaining on most matters that are important to Federal 
employees. Instead of jointly prescribing and implementing the 
proposed regulations, OPM has been reduced to reviewing and 
commenting on DOD regulations that may have governmentwide 
implications.
    Finally, instead of an independent third-party review of 
agency decisions, DOD continues to propose a new Defense Labor 
Relations Board that would be located within the DOD and whose 
members would be selected solely by the Secretary.
    The second example of DOD's it's-our-way-or-the-highway 
attitude has to do with the administration's much-touted and 
well-publicized call for performance-based pay. If we have 
heard nothing else from the administration, we have heard that 
Federal employees should be compensated based on their 
individual performance and that managers should have the 
flexibility to award their best performances with bonuses and 
higher salaries. Concerns about patriotism and politicization 
of the process were dismissed.
    Earlier this year the pay-for-performance debate raged on. 
It came to light that DOD gave political and noncareer 
employees higher pay raises than career employees. These were 
across-the-board pay raises for political appointees, and they 
were not based on merit or on individual performance. The irony 
of DOD's actions is that these political appointees are 
responsible for our national security, but they are not held to 
the same standards to which rank-and-file Federal employees are 
held.
    The second example demonstrates the kind of unfairness that 
makes me concerned that the regulations do not state that 
employee performance expectations must be in writing. These 
expectations will determine whether or not an employee receives 
a pay raise, but not one word of these expectations must be put 
in writing. DOD has shown us that they have no intention of 
being fair or credible. DOD's intentions, however, are 
transparent to anyone paying attention.
    It is no surprise to me that the Comptroller General will 
testify that he has three primary concerns about the proposed 
regulations. These concerns have to do with the fact that the 
proposed regulations lack adequate safeguards to ensure 
fairness and to guard against abuse. Do not specify that 
employee expectations should be communicated to employees in 
writing and do not specify a process to involve employees in 
the planning and development of the new system.
    Mr. Chairman, I share these concerns, and based on DOD's 
actions, the members of this subcommittee and Congress should 
share them as well. I look forward to the testimony of our 
witnesses, and, again, thank you very much for calling the 
hearing.
    [The prepared statement of Hon. Danny K. Davis follows:]

    [GRAPHIC] [TIFF OMITTED] T4712.001
    
    [GRAPHIC] [TIFF OMITTED] T4712.002
    
    Mr. Porter. Thank you. I would like to ask unanimous 
consent that all Members have 5 legislative days to submit 
written statements and questions for the hearing record. Any 
answers to written questions provided by the witnesses will 
also be included in the record. Without objection, so ordered.
    Also ask unanimous consent that all exhibits, documents, 
and other materials referred to by the Members and their 
witnesses may be included in the hearing record and that all 
Members be permitted to revise and extend their remarks. 
Without objection, so ordered.
    It is also the practice of this committee to administer the 
oath to all witnesses. If you could all please stand, those 
that will be testifying, and I will administer the oath.
    [Witnesses sworn.]
    Mr. Porter. Let the record reflect that all witnesses have 
answered in the affirmative. Please be seated. Thank you.
    On our first panel today, we will hear from Mr. David 
Walker, the U.S. Comptroller General for the Government 
Accountability Office. Mr. Walker, it is a pleasure. I know 
that you have a number of other testimonies you have to make in 
the next few days, so we appreciate you being a part of our 
hearing once again. So if you would please--you have 5 minutes.

STATEMENT OF DAVID M. WALKER, COMPTROLLER GENERAL OF THE UNITED 
         STATES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Walker. Thank you, Mr. Chairman and Ranking Member 
Davis. It is a pleasure to be back before you. I would ask your 
consent that my entire statement be included in the record so I 
can move to summarize it now, if you can, Mr. Chairman.
    Mr. Porter. Yes.
    Mr. Walker. Thank you very much.
    Mr. Walker. It feels like deja vu all over again, because 
it wasn't that long ago that I was here before this 
subcommittee testifying about the Department of Homeland 
Security's proposed regulations; and obviously they are both 
matters of significant importance, not only with regard to the 
departments and agencies involved, and their employees, but 
also with regard to our overall effort to try to modernize our 
human capital policies and practices in the Federal Government.
    As I did at that hearing, I would respectfully request 
that--just provide you a few examples of positives, areas of 
concerns and the issues going forward. My testimony has many 
more that has now been provided as a part of the record.
    As you both know, the National Security Personnel System 
did not get off to a good start on Capitol Hill and, frankly, 
didn't get off to a good start initially within the Department 
of Defense.
    As you probably recall, the Defense Department came up to 
Congress 1 day before a recess. I had a very thick bill, with 
no business case and very little justification. The Congress 
held a number of hearings, including this full committee, and 
made a number of improvements to that bill that I think 
represented the progress.
    The Defense Department, after that legislation was enacted, 
initially stated its intention to move quickly to maximize this 
new flexibility as quickly as possible. I am pleased to say 
that since Gordon England has been involved as Secretary 
Rumsfeld's point person on this project, I have noticed a 
significant change; namely, the commitment to so-called 
``spiral development,'' to a more phased approach, and the 
commitment toward more consultation and communication with 
regard to this important initiative. And I think that's 
important. But as Mr. Davis said, you know, it's important that 
continue, and actions do speak louder than words.
    I would give one positive comment, one area of concern and 
one important point as we move forward.
    First, the overall conceptual framework with regard to 
regulations has considerable merit because it proposes to move 
to a more modern, flexible, and market-based and performance-
oriented classification compensation system. So the conceptual 
framework clearly has merit.
    However, with regard to the areas of concern, the details 
do matter very greatly, and there are very many important 
details that have yet to be defined.
    For example, how will performance expectations be set and 
how will that be documented? How will the new pay for 
performance-based compensation system actually be designed and 
implemented? Furthermore, how will the appeals processes 
actually work, and what will be the rights and the limitations 
to those rights, and will they have adequate independence not 
only to be effective but also credible in the eyes of the 
affected parties?
    These details very much do matter, and I think it makes it 
critically important that the meet-and-confer period which is 
about to be undertaken be engaged in by both parties on a--in a 
constructive manner and using a good-faith approach, because 
it's pretty clear that these new authorities are going to be 
implemented. But it's very important that both parties come to 
the table in a good faith manner and with a constructive 
approach to try to make the best out of these regulations and 
to fill in some of these details, because I am a strong 
believer, Mr. Chairman and Mr. Davis, that there clearly is a 
need for additional flexibility in this area. But there must be 
adequate safeguards to provide reasonable assurance and 
consistency and to prevent abuse when that flexibility is 
granted.
    The last point that I would make on going forward is it's 
critically important that there be adequate systems and 
safeguards in place before any additional pay-for-performance 
or other major flexibilities are implemented. It's very, very 
important that they be in place; and that means, among other 
things, a modern, effective, credible, and hopefully validated 
performance appraisal system that results in meaningful 
distinctions of performance and, furthermore, that there be 
adequate internal safeguards as well as external safeguards, 
and that there be an appropriate degree of transparency with 
regard to the degree of results of any related decisions. 
Transparency is a powerful force, and I think that it can play 
an important role here.
    I think it's important that we get this right, rather than 
getting it fast. On the other hand, I think we need to move as 
soon as prudently possible to make these reforms, because it's 
going to take a number of years to effectively do what all 
needs to be done to roll this out departmentwide.
    We at GAO will continue to do our best to lead by example 
and to share our considerable experience and expertise in this 
area. As you know, we went to broad-banding in 1989. We went to 
pay for performance in 1989, and we have continued to try to 
improve to modernize that over the years, and we think that 
some of our both process and policy approaches may have 
conceptual merit for consideration by both the Department of 
Defense as well as Department of Homeland Security.
    And last, but certainly not least, as both of you know, the 
Department of Defense has 14 of 25 high-risk areas on GAO's 
latest high-risk list. It is critically important that DOD 
place additional time, attention, and focus on the much-needed 
business transformation effort. And this National Security 
Personnel System is a critical element of that overall 
transformation effort.
    And we believe and continue to believe, as I will testify 
over the next couple of days before the Armed Services 
Committee, that the Department of Defense needs a chief 
management official, a Chief Operating Officer, if you will, 
the person at the right level within the Department, a level 2, 
reporting to the Secretary, who is dedicated full time to 
addressing the many business transformation challenges, 
including NSPS; because, in the past, the track record is not 
very good and, quite frankly, the stakes are way too high, both 
from the standpoint of money and people, not to do this right.
    Thank you.
    [The prepared statement of Mr. Walker follows:]

    [GRAPHIC] [TIFF OMITTED] T4712.003
    
    [GRAPHIC] [TIFF OMITTED] T4712.004
    
    [GRAPHIC] [TIFF OMITTED] T4712.005
    
    [GRAPHIC] [TIFF OMITTED] T4712.006
    
    [GRAPHIC] [TIFF OMITTED] T4712.007
    
    [GRAPHIC] [TIFF OMITTED] T4712.008
    
    [GRAPHIC] [TIFF OMITTED] T4712.009
    
    [GRAPHIC] [TIFF OMITTED] T4712.010
    
    [GRAPHIC] [TIFF OMITTED] T4712.011
    
    [GRAPHIC] [TIFF OMITTED] T4712.012
    
    [GRAPHIC] [TIFF OMITTED] T4712.013
    
    [GRAPHIC] [TIFF OMITTED] T4712.014
    
    [GRAPHIC] [TIFF OMITTED] T4712.015
    
    [GRAPHIC] [TIFF OMITTED] T4712.016
    
    [GRAPHIC] [TIFF OMITTED] T4712.017
    
    [GRAPHIC] [TIFF OMITTED] T4712.018
    
    [GRAPHIC] [TIFF OMITTED] T4712.019
    
    [GRAPHIC] [TIFF OMITTED] T4712.020
    
    [GRAPHIC] [TIFF OMITTED] T4712.021
    
    [GRAPHIC] [TIFF OMITTED] T4712.022
    
    [GRAPHIC] [TIFF OMITTED] T4712.023
    
    [GRAPHIC] [TIFF OMITTED] T4712.024
    
    [GRAPHIC] [TIFF OMITTED] T4712.025
    
    [GRAPHIC] [TIFF OMITTED] T4712.026
    
    [GRAPHIC] [TIFF OMITTED] T4712.027
    
    [GRAPHIC] [TIFF OMITTED] T4712.028
    
    [GRAPHIC] [TIFF OMITTED] T4712.029
    
    [GRAPHIC] [TIFF OMITTED] T4712.030
    
    [GRAPHIC] [TIFF OMITTED] T4712.031
    
    [GRAPHIC] [TIFF OMITTED] T4712.032
    
    [GRAPHIC] [TIFF OMITTED] T4712.033
    
    [GRAPHIC] [TIFF OMITTED] T4712.034
    
    [GRAPHIC] [TIFF OMITTED] T4712.035
    
    [GRAPHIC] [TIFF OMITTED] T4712.036
    
    [GRAPHIC] [TIFF OMITTED] T4712.037
    
    Mr. Porter. Thank you, Mr. Walker. I appreciate you 
mentioning those three key areas that I know that my friend and 
colleague from Illinois pointed out in his opening statement. 
And I expect you will probably have some more questions with 
regard to those, and I will wait for some of those questions.
    But I have had an opportunity, since we last had a hearing 
and since we chatted, to look at some of the information that 
you provided regarding the Deputy Secretary of Defense for 
Management, and I know you touched upon it in your closing 
comments. Even beyond today's hearing, I look forward to 
looking closer at that. I think it's critical in some shape or 
form that a person of this capacity become a part of the 
process. My concern is that at what point does that happen, and 
what would be optimum as we are looking at, you know, the pay-
for-performance change; first change, as I said, in 50 years.
    At what point should we be spending more time on that 
Deputy Secretary of Defense? Should that be parallel to what we 
are doing today?
    Mr. Walker. Well, I have mixed emotions about this, Mr. 
Chairman, because on the one hand the President, as you know, 
has announced his intention to nominate Gordon England, who is 
the individual I referred to before, as Deputy Secretary of 
Defense. And let me say for the record that in my own actions 
with Secretary England, I believe he is a first-rate 
professional, and I believe that's an excellent nomination.
    At the same point in time, I also believe that the existing 
Deputy Secretary job is a full-time job, and that there is--
continues to be a need for a Deputy Secretary for Management, 
this chief management official if you will, to focus on the 
business transformation. I doubt that there's a human being on 
the planet that can basically deal with both of those jobs. 
Each of them are full-time jobs. The stakes are too high for us 
not to get NSPS right. The stakes are too high for us not to 
make, you know, progress with regard to the other major 
business transformation challenges within the Department of 
Defense, such as financial management, information technology, 
supply chain management, etc. And I think it's going to take 
somebody like this chief management official at the right level 
for--enough time with a proven track record of success in order 
to be successful.
    Mr. Porter. Yes.
    Mr. Walker. So now is what I would say, Mr. Chairman.
    Mr. Porter. Now is the time.
    How would you envision this position being different from 
the newly created Chief Human Capital Officer?
    Mr. Walker. My view is that the new Chief Human Capital 
Officer would report to this position, that a number of key 
players who are involved in the business side of the Department 
of Defense which should inherently not be political. I mean, 
there might be political appointees, but you need to make sure 
that you have the right type of business infrastructure in 
place no matter who the President is, no matter who the 
Secretary of Defense is, and no matter which party controls the 
White House or Capitol Hill.
    And so my view is that the Chief Human Capital Officer 
would report to this person and would work in partnership with 
this person as well as other key players, not just the under 
secretaries, but also the service secretaries and other key 
players in the Department in order to take a more strategic, a 
more integrated, and a more, you know, departmentwide approach 
to this and other key initiatives within the Pentagon.
    Mr. Porter. Do you think that CHCO, or the Chief Human 
Capital Officer, is going to have the tools and the ability to 
manage the change to NSPS?
    Mr. Walker. I think first we have to recognize that, you 
know, that modernizing your human capital policies and 
practices is absolutely key to the overall transformation 
effort within the Department, and that while the Chief Human 
Capital Officer will play a critically important role, this is 
so important to the mission of the Department of Defense that 
even the Secretary of Defense needs to allocate some time to 
this effort.
    And the communications strategy, while it might end up, you 
know, involving the Deputy Secretary or Deputy Secretary of 
Management as playing a key role along with the CHCO, you have 
to involve a number of different line and functional heads, as 
well as the Secretary, in this effort.
    I mean, you know, the stakes here are key, not just for the 
Department of Defense, but also for our overall Civil Service 
reform effort. I mean, we are dealing with a huge part of the 
Federal work force, and it's really critically important that 
we get this right.
    Mr. Porter. I had an opportunity to meet with some of the 
managers yesterday and had kind of a question-and-answer 
session. I think I touched upon it at our last hearing. I know 
there are a lot of folks that are concerned. And now we are 
talking close to 600,000, 700,000 people in DOD and certainly 
those in Homeland Security.
    But I want to reiterate what you mention in your summary, 
that we have to have these safeguards in place to prevent 
abuse. We have to. It's our responsibility, and it's critical 
that it be highlighted in your report.
    Also the process for continuing involvement by the 
employees, I think that, again as you pointed out in your 
report, it's an area of weakness.
    And as my colleague said from Illinois, we have to make 
sure that some of these things are done in writing so that 
people understand.
    I know this isn't a question, it's more of a comment. In my 
short tenure as chairman, I am learning that in many 
departments, agencies, I question who is in charge. And I think 
the system has allowed itself to evolve into a lot of this, a 
lot of finger-pointing. And at least I believe in the watch of 
this subcommittee, we don't want to create more finger-
pointing; we want to have somebody in charge so they are held 
accountable, so that they can respond to these employees that 
need help, to those managers that want to train and make sure 
there is ample training material.
    Again not a question, more a comment. I appreciate what you 
have had to say today.
    Mr. Walker. If I can followup real quickly on that. With 
regard to the overall business transformation effort within the 
Department of Defense, of which NSPS is a subset, a very 
important subset but only in a piece, the answer is nobody is 
in charge. That's the honest answer right now at the 
Department. I am talking about the overall business 
transformation process.
    And you talk about concerns. It is very understandable that 
there would be broad-based and serious concerns about the type 
of changes that are being proposed here. Quite frankly, there 
were broad-based and serious concerns when these same type of 
changes were proposed at the GAO. I mean, these are fundamental 
philosophical changes. But just because they are complex, just 
because they are controversial, just because they are a 
concern, doesn't mean that we shouldn't proceed. We must 
proceed. But how do we proceed? You know, what basis we 
proceed, and to make sure that it is based upon a constructive 
and interactive approach that we have these actual--these 
principles and safeguards in place, and that we have reasonable 
transparency; that's critically important. But we must proceed. 
But how we do it matters.
    Mr. Porter. Thank you. Mr. Davis.
    Mr. Davis of Illinois. Thank you, Mr. Chairman.
    Mr. Walker, let me thank you. As always, I look forward to 
your insight into your testimony, and I agree with you totally 
that the conceptual framework, I think, is excellent. I also 
agree with your assessment of Mr. England.
    But I think that some of these things have to be codified 
in such a way that it doesn't matter, to some degree, who the 
individuals might be relative to the implementation, but that 
the codification is there. You have consistently testified that 
human resource systems must be transparent and credible. I 
mean--and I have certainly appreciated that position.
    And you have also indicated that you believe that employees 
must have confidence in the system if you are going to have the 
kind of work force, the kind of morale, and the kind of 
productivity that you are expecting.
    Would you say that verbal communications could be good 
enough to create that kind of environment and those kinds of 
confidences in the employees?
    Mr. Walker. Well, verbal communications need to occur, and 
they should occur on a frequent basis throughout the year, but 
I believe that you have to have some written expectations.
    And part of that has to do with seriously considering a 
competency-based approach as a means to move forward with 
regard to any new performance appraisal system.
    I know that we at GAO adopted that, and I know others have 
followed a similar approach, including most recently the 
Defense Intelligence Agency, which ended up adopting a number 
of our competencies. And what we found is a competency-based 
approach is a way that can help to set expectations and help to 
assure a reasonable degree of consistency, you know, not only 
within units but also across units in a given department.
    So I think you need to have written expectations, but that 
should be supplemented with frequent oral communications.
    Mr. Davis of Illinois. And you indicated, so--to answer 
another question that I sort of had in mind--and so that you 
would suggest that DOD look seriously at some of the policies 
and practices that your agency has established and been making 
use of and encourage them to follow suit or to certainly look 
at what you have done more as a model than what they have 
perhaps recommended?
    Mr. Walker. Well, Mr. Davis, we are not perfect, and we 
never will be. Nobody is. I think that, you know, we have had a 
considerable amount of experience here, both as it relates to 
the policy framework as well as it relates to the process that 
should be employed to try to get to a positive outcome.
    And in fairness, the DOD and DHS are talking with our 
people, and they are trying to be informed by that. And I hope 
that when they end up engaging in the meet-and-confer process, 
and I hope that when they end up filling in a number of the 
important details, some of which I mentioned, some of which you 
mentioned, some of which the chairman mentioned, I hope that in 
doing that, it will be informed in part by what they learn from 
us and others, because there are a number of important details 
that have to be filled out.
    And if I can come back to your comment about institutional 
versus individual, that's a critically important point. The 
fact of the matter is we are talking about doing something here 
that will span beyond any individual and beyond any 
administration.
    And just as I think it's important that we keep that 
concept in mind for the National Security Personnel System, I 
also think it's important that we keep that concept in mind 
with regard to the chief management official, because we need 
to institutionalize that as well, because we don't know who the 
next set of players might be.
    Mr. Davis of Illinois. Can you think of anything that 
agencies would have to fear by doing that? I am saying 
sometimes, you know, people see demons and things if they open 
them up a bit. Can you think of anything that they would have 
to fear from employees?
    Mr. Walker. Well, obviously anytime you provide more 
discretion, people are concerned about how that discretion is 
going to be used, and want to make sure that discretion is not 
going to be abused.
    There is little doubt in my mind that the DOD and that--you 
know, in this particular case, are wanting to get reasonable 
flexibility, but they are not wanting to abuse employees. It 
would be totally counterproductive to do that. But in order to 
be able to heighten the degree of confidence that that won't be 
done, it just reinforces the needs for the safeguards. It 
reinforces the needs for more specificity. It reinforces the 
need for, you know, more written documentation and adequate 
checks and balances; that that not be based upon a promise but 
it actually be written and codified, if you will.
    Look, no matter what the final rules are, there will be a 
significant percentage of the work force that will remain 
concerned. And part of that is because we are moving from a 
system whereby, under current law, 85 percent-plus of all pay 
increases have nothing to do with skills, knowledge, and 
performance. It's on autopilot. And we are moving from a system 
where, even if you perform at an unacceptable level--where we 
don't have that many people who do--but even if they perform at 
an unacceptable level, they are entitled by law to that 85 
percent of the annual increase. And so that by itself is going 
to cause a great degree of concern.
    But as I said, that doesn't mean we shouldn't move forward.
    Mr. Davis of Illinois. Thank you very much. And I think I 
have some of that 85 percent who work for me who--and we want 
to change it.
    Mr. Porter. I don't think I will comment on that, Mr. 
Davis. We will leave that for you.
    Mr. Walker, on page 20--and you don't need to turn to page 
20, but it has to do with resources for implementing the new 
system and training and helping change this culture--you said 
85 percent has nothing to do with performance.
    Could you spend a little more time this afternoon talking 
about the training aspect and where you see the strengths and 
weaknesses are of the plan regarding the training, making sure 
the managers are trained and employees are trained so they can 
understand how they can achieve these higher levels of 
performance?
    Mr. Walker. Well, first, we haven't done an in-depth study 
of their training plan. Frankly, I don't know that they have an 
in-depth training plan for us to study yet. I will say this: 
that based upon our own experience, which I know best, it takes 
a considerable amount of time and it takes a considerable 
amount of resources to be able to not only help explain what 
you are doing and why you are doing it, but how to do it.
    Again, they have to come up with a modern, effective, 
credible, and hopefully validated performance appraisal system; 
that, after you do that, you have to train not just the 
managers who will rate employees, but also the reviewers who 
will review the ratings, and also the employees who will be 
rated based upon these standards, and also the other key 
players who will have some role to play with regard to the 
checks and balances.
    We spent a considerable amount of time and money after we 
ended up designing the system and training all those different 
key players in what their role was and what we were trying to 
accomplish out of this system and what type of, you know, 
safeguards and means that we had in place to try to achieve all 
of our objectives.
    My understanding is, just through a note that's been passed 
to me by one of our very capable staff, is that the plan hasn't 
been developed yet, which doesn't surprise me, because it's 
hard to develop the plan when you don't have the system yet, 
you know. But no doubt it's--you know, the Department 
contemplates that there will be extensive, you know, training 
efforts.
    Mr. Porter. And with your assistance as this unfolds, I 
would like to put a microscope under that so we watch as that 
unfolds, so that there is proper training and the funding of 
that training. But I would appreciate your assistance in that 
area.
    Mr. Porter. Another question. You know, when I go back to 
the district, I am asked frequently about homeland security, 
international security, because its still in the hearts and 
minds of individuals as they are going to work every day; they 
go to the airport, and there's extra security.
    How do you see the NSPS fulfilling the mission of DOD; and 
that's, of course, the security of the Nation and of the world? 
Is, in fact, this system being put in place going to make our 
Nation a safer place to live and to work and to raise our 
families?
    Mr. Walker. I think it can if it is designed and 
implemented properly. Let me tell you why I say that. Because 
any agency, company, or not-for-profit entity is only as good 
as the people who comprise it. And I think it's important to 
recognize that we do need to move to more modern or flexible, 
more market-based and performance-oriented human capital 
systems. That's critically important. We need to do a better 
job of linking the strategic plan and the desired outcomes of 
the Department of Defense with the measures of success for the 
different units that make up the Department of Defense and the 
individuals who contribute to the mission of the Department of 
Defense.
    And I think that to the extent that we can link those and 
integrate those and move to a more modern set of human capital 
policies and practices where we are making more decisions based 
upon skills, knowledge, and performance, then there's no doubt 
in my mind that we will end up resulting in more positive 
outcomes that will enhance value and will mitigate risk. That 
has clearly been the case at GAO, and I think it can be the 
case in many departments and agencies. But it's, as has been 
said, not just what you do but how you do it that matters.
    Mr. Porter. Thank you. Mr. Davis.
    Mr. Davis of Illinois. Just actually one question, though. 
I was thinking, when I was a kid growing up, my mother and I 
used to have a lot of serious conversations about her 
assessment of my performance. And I remember her telling me one 
time that I hadn't done much. And I asked her, how much is 
much?
    And that leads me to the question of how much detail. How 
detailed do we need to have things in order to create this 
transparent environment that we are talking about? And I know 
it's difficult to assess and measure what sometimes you can't 
see before you see it, but how much detail is necessary?
    Mr. Walker. What I would say, Mr. Davis, is I have found 
that a competency-based approach, where you end up working in 
partnership with employees to define the competencies that are 
necessary for them to be successful and maximize their 
potential in various roles and responsibilities; so you work in 
partnership with the employees to define those competencies, 
and then you have the employees validate what has been come up 
with such that A, you get better buy-in with regard to that 
and, frankly, you mitigate litigation risk as well by doing it 
that way.
    If you do that, and then you couple that with fairly 
clearly defined, you know, performance standards--in other 
words, here is what we want you to do and here is what we 
define as meets expectations, and here is how we define as 
``outstanding,'' ``role model,'' call it what you want. That if 
you do that, you have a very, very solid framework for moving 
forward. And then some of those competencies might end up 
involving competencies like achieving results.
    Then, as a supplement to doing this, you must then define 
what do you mean by that? What do the results mean from the 
standpoint of the unit involved, the individual involved? You 
know, we do that at GAO, and the definition of results will 
vary, based upon the department, based upon the unit, based 
upon the individual, as to how can they contribute to overall 
organizational results.
    But the competencies and the performance standards provide 
the foundation that can be supplemented with additional 
information where there would be a degree of transparency 
associated as well. But the level of detail, obviously, would 
vary based upon the individual facts and circumstances.
    Mr. Davis of Illinois. Thank you very much.
    Mr. Walker. Thank you.
    Mr. Davis of Illinois. I really appreciate your testimony.
    Mr. Porter. I just have one additional question, and it's 
come up a couple of times. It has to do with the Labor 
Relations Board. The question is whether or not having three 
members appointed by the Secretary of Defense really provides 
an independent review. Do you feel that the Department can 
establish an independent committee to review the employee 
problems?
    Mr. Walker. I think if they are all going to be appointed 
by the Secretary of Defense, there has to be a process for 
determining who the candidates are from which the Secretary 
will select. There has to be a participatory process there 
where you are providing reasonable assurance that there's going 
to be some degree of balance on that Board, where employees 
and/or their representatives have input to that process. I also 
think it's important to have term appointments and very 
stringent standards for removal once the person is appointed.
    We have at the GAO something called the Personnel Appeals 
Board. That is something that was established late in the 
1980's to provide credible, reliable, independent and external 
review body for our employees. In the interest of full and fair 
disclosure since day one, the Comptroller General has appointed 
the members of that board.
    However, how we go about it is very important. We do have a 
consultative process. We do try to achieve balance. There are 
fixed terms, and people cannot be removed, you know, once they 
have been appointed. In fact, I can't remove them. They can 
only remove themselves, their colleagues can remove them, if 
they are--if there is a dereliction of duty or some other 
aspect.
    So I think, you know, it's possible for it to work if you 
address the issues that I talked about. But I don't think they 
have been adequately addressed yet.
    Mr. Porter. Thank you. Again, we appreciate you being here 
and providing your insights, we look forward to continued 
communications on these topics. We appreciate it.
    Mr. Walker. Thanks. I will stay for a little while, but I 
won't be able to stay for the whole time.
    Mr. Porter. I understand. Thank you. Thank you.
    I would now like to invite our second panel of witnesses to 
please come forward to the table.
    I will first have opening statements by the Honorable 
Charles S. Abell, Principal Under Secretary of Defense, 
Personnel and Readiness. Following Mr. Abell will be Mr. George 
Nesterczuk, the Senior Policy Advisor on the Department of 
Defense, U.S. Office of Personnel Management. And finally we 
will hear from the Honorable Neil McPhie, the chairman of the 
U.S. Merit Systems Protection Board.
    I would like to begin today by recognizing Mr. Abell. Mr. 
Abell, thank you very much, and you will have 5 minutes.

    STATEMENTS OF CHARLES S. ABELL, PRINCIPAL DEPUTY UNDER 
  SECRETARY, PERSONNEL AND READINESS, DEPARTMENT OF DEFENSE; 
 GEORGE NESTERCZUK, SENIOR POLICY ADVISOR ON THE DEPARTMENT OF 
  DEFENSE, U.S. OFFICE OF PERSONNEL MANAGEMENT; AND NEIL A.G. 
     McPHIE, CHAIRMAN, U.S. MERIT SYSTEMS PROTECTION BOARD

                 STATEMENT OF CHARLES S. ABELL

    Mr. Abell. I thank you, Mr. Chairman and Mr. Davis.
    The National Personnel System is a key part of DOD 
transformation. We will create a total force, uniformed 
military and civilian employees who share a common vision, who 
recognize common strategic and organizational objectives, and 
who operate as one cohesive unit. DOD civilians are unique in 
government in that they are an integral part of an organization 
that has a military mission, a national security mission.
    DOD civilians are at work side by side with our uniformed 
military personnel around the world in every time zone, every 
day. NSPS will bring 21st century human resource management to 
these dedicated public servants.
    NSPS has been designed to meet a number of essential 
requirements. Our guiding principles as we designed them were 
mission first, respect the individual, protect rights 
guaranteed by law, value talent, performance and leadership, 
and commitment to public service. Be flexible, understandable, 
credible, responsive, and executable, and to balance the HR 
system interoperability unique with the mission requirements 
and to be competitive and cost-effective. We have key 
performance parameters and implement these guiding principles 
with measurable metrics.
    NSPS was enacted on November 24, 2003. Since January 2004, 
we have been engaged in a process to design the HR appeals and 
labor relations system in an open, collaborative environment in 
consultation with our employees, the unions and other interest 
groups.
    Since January 2004, we have met face to face with 
employees, unions, and interest groups in many settings, as 
well as maintained two-way communications via written 
correspondence, cover stations, and exchanges of documents. 
Based on feedback from the unions and congressional committees, 
in March 2004 the Department adjusted the process, established 
different governance and enhanced our partnership with OPM.
    The proposed regulations published in the Federal Register 
on February 14 reflect the result of this adjusted process. The 
Federal Register notice is the formal notice required by the 
statute, followed by the 30-day comment period, after which we 
reviewed the comments, and beginning on April 18th, will meet 
in a meet-and-confer process for a minimum of 30 days.
    Mr. Chairman, I stress the word ``minimum.'' We will devote 
the time necessary to adequately discuss and confer on every 
issue raised during the comment period, and this is where the 
details that so many long for will begin to emerge. We have 
asked the Federal Mediation and Conciliation Service to assist 
us in this meet-and-confer process. And at the conclusion of 
the meet-and-confer period we will report the results to our 
congressional oversight committees.
    I suspect that we will spend some time today talking about 
what NSPS does. But let me take a minute to talk about what 
NSPS does not do. It does not change the merit system 
principles that are the foundation of the Civil Service system. 
It does not change prohibited personnel practice rules. It does 
not change whistle-blower protections nor antidiscrimination 
laws. It does not modify nor diminish veterans preference. It 
does not change employee benefits, such as health care, life 
insurance, retirement, and so forth. It does reserve due 
process for employees, and it does not reduce opportunities for 
training and professional development.
    On the other hand, Mr. Chairman, the National Security 
Personnel System will provide a streamlined, more responsive 
hiring process, simplified pay-banding structure, and will 
allow us flexibility in assigning work, performance-based 
management, that is linked to strategic and organizational 
goals, and includes accountability at all levels. It will give 
us--allow us pay increase based on performance rather than on 
longevity; efficient, faster features for adjusting performance 
and disciplinary issues while protecting due process rights, 
and a labor relations system that recognizes our national 
security mission while preserving collective bargaining rights 
of the employees.
    Although we plan to implement the labor relations system 
DOD-wide, we intend to phase in the HR system beginning in late 
summer of this year, as we expect full implementation by late 
2007 or perhaps early into 2008. We recognize that the National 
Security Personnel System is a significant change, but these 
are necessary changes.
    We will meet the challenge of change and change management 
willingly. We are committed to training employees, managers, 
and supervisors. We are committed to the collaborative approach 
that we have used to get to this point. We understand the 
concern and the anxiety of our employees. It would be unnatural 
if they were not concerned or anxious, and we will address 
their concerns.
    NSPS is the right system, based on the right philosophy, at 
the right time in our history. The Department, in partnership 
with the Office of Personnel Management, the unions, interest 
groups, and our employees, will implement it with efficiency, 
effectiveness, transparency, and sensitivity.
    Mr. Chairman, before I close, I would like to recognize the 
great contributions of my partner, Mr. George Nesterczuk, Dr. 
Ron Sanders of OPM, and Ms. Mary Lacy of our personnel--of our 
program executive office. They have been invaluable to getting 
us to where they are, and they are going to be part of the team 
that takes us all the way home.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Abell follows:]

    [GRAPHIC] [TIFF OMITTED] T4712.038
    
    [GRAPHIC] [TIFF OMITTED] T4712.039
    
    [GRAPHIC] [TIFF OMITTED] T4712.040
    
    [GRAPHIC] [TIFF OMITTED] T4712.041
    
    [GRAPHIC] [TIFF OMITTED] T4712.042
    
    [GRAPHIC] [TIFF OMITTED] T4712.043
    
    [GRAPHIC] [TIFF OMITTED] T4712.044
    
    [GRAPHIC] [TIFF OMITTED] T4712.045
    
    [GRAPHIC] [TIFF OMITTED] T4712.046
    
    [GRAPHIC] [TIFF OMITTED] T4712.047
    
    [GRAPHIC] [TIFF OMITTED] T4712.048
    
    [GRAPHIC] [TIFF OMITTED] T4712.049
    
    [GRAPHIC] [TIFF OMITTED] T4712.050
    
    [GRAPHIC] [TIFF OMITTED] T4712.051
    
    [GRAPHIC] [TIFF OMITTED] T4712.052
    
    [GRAPHIC] [TIFF OMITTED] T4712.053
    
    [GRAPHIC] [TIFF OMITTED] T4712.054
    
    Mr. Porter. Thank you very much.
    George, that was quite an opening right there from Mr. 
Abell. Maybe I don't need to say much more. He said great 
things about you.

                 STATEMENT OF GEORGE NESTERCZUK

    Mr. Nesterczuk. I will see if I can reciprocate toward the 
end of my testimony as well. He has been a great partner.
    Thank you, Mr. Chairman, for holding this hearing and for 
giving us the opportunity to clarify a number of issues 
surrounding the NSPS. I have provided a longer statement for 
the record. I would just like to, orally, briefly summarize 
some of the key points.
    It's my privilege to represent the Office of Personnel 
Management today to discuss the proposed implementation of the 
NSPS. The proposed regulations will establish a new human 
resources management system that we believe is as flexible, 
contemporary, and responsive as the President and the Congress 
originally envisioned. The regulations are still in a proposed 
stage. We still have much left to do. Right now we are 
assessing the thousands of comments that came in during the 
public comment period, and we are about to enter into the meet-
and-confer process with DOD's unions, during which we expect to 
get into a great deal of detail concerning the regulations.
    Subsequently, we expect a great deal of additional work in 
the continued collaboration with the unions over implementing 
issuances within the Department. We have stipulated a 
continuing collaboration process in the regulations and expect 
to refine it during the meet-and-confer period beginning next 
week.
    As to the content of the regulations, I think we will 
probably get into details during the question-and-answer 
period, but I would like to summarize a few key points. On pay 
and performance, we took a very employee-oriented approach. We 
are proposing a simplified classification system that will 
actually enhance career growth for employees. We are 
simplifying the pay structure using broad pay bands that will 
allow greater employee growth within each band, and we are 
making clearer distinctions on entry into supervisory and 
managerial tracts.
    On staffing flexibilities, we believe that the regulations 
will better support the Department in matching its work force 
to its mission requirements. There are provisions for expedited 
hiring and targeted recruitment. Performance-based retention is 
built into the system with less organizational disruption 
whenever they need to be enforced. We have also guaranteed full 
veterans preference as veterans enjoy today in the work force.
    On due process of accountability, we have assured due 
process safeguards for employees, while balancing the greater 
deference to DOD's mission requirements that the current 
system--where the current system has been lacking.
    Finally, in the labor relations arena, we are proposing a 
system that provides the Department with more predictability 
and greater uniformity in the issuance of internal management 
directives.
    Let me conclude with the following, Mr. Chairman. If DOD is 
to be held accountable for national security, it must have the 
authority and flexibility essential to that mission. That's why 
Congress gave the Department and OPM the authority to waive and 
modify the laws governing staffing, classification, pay, 
performance management, labor relations, adverse actions and 
appeals, a broad array of flexibilities.
    In developing the proposed regulations, we believe that we 
have succeeded in striking a better balance between union and 
employee interests, on the one hand, and the Department's 
mission imperatives on the other. At the same time, we made 
sure the core principles of the Civil Service were preserved.
    Mr. Chairman, that concludes my statement. Thanks for the 
opportunity to appear before the subcommittee, and I will be 
pleased to respond to any questions you might have.
    Mr. Porter. Thank you, anything nice you might want to say 
about Charles while you are here?
    Mr. Nesterczuk. He has been terrific, a very understanding 
fellow. Thank you.
    [The prepared statement of Mr. Nesterczuk follows:]

    [GRAPHIC] [TIFF OMITTED] T4712.055
    
    [GRAPHIC] [TIFF OMITTED] T4712.056
    
    [GRAPHIC] [TIFF OMITTED] T4712.057
    
    [GRAPHIC] [TIFF OMITTED] T4712.058
    
    [GRAPHIC] [TIFF OMITTED] T4712.059
    
    [GRAPHIC] [TIFF OMITTED] T4712.060
    
    [GRAPHIC] [TIFF OMITTED] T4712.061
    
    [GRAPHIC] [TIFF OMITTED] T4712.062
    
    Mr. Porter. Mr. McPhie.

                 STATEMENT OF NEIL A.G. McPHIE

    Mr. McPhie. I was hoping he would say something nice about 
me, but----
    Mr. Porter. There is still time.
    Mr. McPhie. Chairman Porter and Ranking Member Davis and 
Member Van Hollen, My name is Neil McPhie, and I have the honor 
of serving as chairman of the U.S. Merit Systems Protection 
Board.
    Thank you for the opportunity to appear before you and 
participate in this hearing on the proposed Department of 
Defense National Security Personnel System [NSPS]. First, I 
want to congratulate DOD and OPM, the designers of the NSPS, 
for proposing an appeals process that guarantees due process to 
public employees.
    MSPB's formal statutory role in design process is to 
consult DOD and OPM to assist those agencies in ensuring that 
all employees are afforded the protections of due process. The 
Board consulted with DOD and OPM to develop the regulations to 
implement the NSPS.
    Members of my staff participated in working groups and 
attended numerous meetings throughout this process. Some of 
that staff is present here today. The proposed regulations 
reflect some of the suggestions generated from the 
collaborative process. For example, I appreciate DOD's and 
OPM's recognition of the need for carefully defined mandatory 
removal offenses.
    As an independent adjudicatory agency, MSPB is not in a 
position to judge among the various personnel systems that 
policymakers may devise. Rather, MSPB's role is to adjudicate 
employee appeals pursuant to the system applicable to a 
particular department or agency.
    MSPB is pleased that the DOD has chosen to retain MSPB's 
adjudicatory services. I believe that MSPB's participation is 
critical to establishing the credibility of the process. The 
DOD appeals system envisions MSPB's involvement at two stages. 
An employee has a right to appeal an adverse action to an MSPB 
administrative judge. After DOD finalizes the administrative 
judge's decision, either taking no action or by modifying it 
within the prescribed period, the employee has the statutory 
right to petition the full board for review.
    MSPB has a distinguished history of providing fair 
proceedings and sensible decisions. The full Board at MSPB and 
administrative judges will bring integrity and objectivity to 
the NSPS employee appeals process and will continue MSPB's 
tradition of providing fair proceedings and objective 
decisions. I am confident that the Board will provide the same 
high quality of services for which it has become known.
    The compressed timeframes in the proposed system will 
create a more efficient appeals system, but may pose a 
challenge to current Board resources as it strives to reduce 
its processing time for all board cases.
    However, several provisions of the proposed regulations may 
prove especially helpful in reducing the amount of time it 
takes to adjudicate DOD cases. For example, the provision 
grants the Board to issue a summary judgment when there are no 
material facts in dispute, will facilitate the expedited 
adjudication of DOD appeals.
    The Board understands the challenges it faces and has 
already begun to examine ways to reduce case processing times. 
That study is not complete, but indications are that case 
processing times can be significantly reduced by streamlining 
processes, instituting technological innovations, implementing 
more efficient management practices and securing additional 
resources.
    My goal as head as the MSPB is to treat all cases equally. 
That is why the Board has requested additional funds as part of 
its budget request for fiscal year 2006, to enable the Board to 
hire more staff and provide appropriate training and enhance 
technology. These additional resources will facilitate the 
Board's efforts to adjudicate DOD and DHS employee appeals 
within the required timeframes, while continuing to provide 
efficient and timely adjudicatory services to other client 
agencies.
    In conclusion, I'm optimistic of the future of the Federal 
Civil Service. The service is poised to undergo a significant 
transformation that may culminate in far-reaching changes in 
how the government operates. I believe that in the end, the 
Federal Civil Service will be a more attractive place to work. 
The Board recognizes that its role in safeguarding Civil 
Service protections is an important component in the current 
transformation of human resource management practices 
governmentwide. The implementation of the NSPS will be a 
significant early step in this process.
    We look forward to continued opportunities for consultation 
with our colleagues at DOD and OPM as they move toward final 
regulations and ultimately to implement the NSPS.
    That ends my oral statement. And I will be happy to take 
any questions you may have.
    Mr. Porter. Thank you very much.
    [The prepared statement of Mr. McPhie follows:]

    [GRAPHIC] [TIFF OMITTED] T4712.063
    
    [GRAPHIC] [TIFF OMITTED] T4712.064
    
    [GRAPHIC] [TIFF OMITTED] T4712.065
    
    Mr. Porter. I would now like to open up our Q and A period. 
I would like to ask my friends at DOD and OPM, Mr. Walker has 
discussed for a number of years, but specifically today, about 
the creation of a Deputy Secretary of Defense for Management. 
What do you think about that idea?
    Mr. Abell. Mr. Chairman, I think that over the history of 
the Department, the role that the Secretary of Defense has laid 
out for the Deputy Secretary of Defense has varied. Many times, 
the Deputy Secretary of Defense is the Chief Operating Officer. 
Other times, he's been--another role has been defined for him. 
I think the organization and management of the Department of 
Defense should be one that fits the style and the talents of 
the Secretary of Defense.
    So I would urge that you and your colleagues engage the 
Secretary of Defense on this question and see how he would do 
that or what he would suggest to you. I would note that a 
bifurcation of the chain of command is almost always a bad 
thing. So if the Department of Defense was split and some 
things going to one Deputy Secretary and some things going to 
another, I would suspect that we would end up with gaps and 
seams, but that is just my personal view on that one.
    Mr. Porter. I think there are gaps and seams the way it is. 
And I appreciate your comments and I understand in your 
capacity, as you should be, of being selective in your 
comments, but it's something I want to spend some time on and 
look forward to continued discussions on that subject.
    Mr. Nesterczuk.
    Mr. Nesterczuk. We don't really have an institutional 
position on that, and so I would rather not speak for OPM. That 
really is an issue for the Executive Office of the President 
together with the Secretary of Defense to sort out.
    I can comment personally on it, having been an observer on 
these matters for loath 25, 30 years, that I tend to share 
Charlie's view on that; that bifurcation really doesn't serve 
the Department or any department well. We tend to integrate 
both policy and resource responsibilities in the second, third, 
and fourth-level chains of command. All managers are 
responsible for integrating their resource requirements with 
their policy consideration and evaluate it as such. That kind 
of dynamic decisionmaking, as it works its way up the chain, I 
think serves the organization as a whole the best.
    Mr. Porter. Back to, I guess, a question I had earlier, and 
that is regarding some of the concerns from employees and 
management and funding of that training and making sure they 
understand the new culture and the direction. What assurances 
can we give to your employees that, in fact, the managers will 
be trained to manage, and employees will then understand the 
processes, and whether it's in writing or verbal? What 
assurances do we have that you are going to be able to take 
this work force and modify it into a pay for performance?
    Mr. Abell. First of all, Mr. Chairman, it's not in our 
ethos or not in our interest to fail, so we want to succeed, 
and training is the key to success. It's also one of the things 
that the Department does well every day. For NSPS in 
particular, we have developed several training courses, core 
training courses essentially. They will be administered in a 
decentralized way by the services and defense agencies. 
Managers and supervisors will get a minimum of 18 hours of 
training; employees, a minimum of 13 hours of training; HR 
practitioners, up to 40 hours of training; and senior leaders, 
senior supervisors, a minimum of 6.
    We have a lot of experience with our alternative personnel 
systems and various demonstration projects. We are developing 
now an evaluation system to ensure that the training took, so 
it will be standards-based as opposed to hours-based. Merely 
completing the program doesn't necessarily get you a go. Before 
anyone has their pay subject to a performance Board, we will 
have mock payouts, where the employees and the managers and the 
supervisors will get to practice this all at once in a 
transparent way so we can see where the competencies are and 
get that credibility, if you will, but also tell us where we 
need additional training resources. We are going to track the 
training in our automated system so we know who has been 
trained and who has not. And we plan to have a readiness 
checklist. Before NSPS is deployed to an organization, the 
organization must have met the standards on a checklist. We 
think we have a good program. We won't put an organization into 
NSPS until they are ready.
    Mr. Porter. Mr. Davis.
    Mr. Davis of Illinois. Thank you very much, Mr. Chairman.
    Mr. Secretary, let me ask you, DHS has contracted with 
Northrop Grumman to write the details to implement its new 
personnel system. Will the details of DOD's system be crafted 
by agency, human resources management staff, or do you see that 
being contracted or outsourced out?
    Mr. Abell. Sir, we don't plan to contract the creation of 
those regulations out. Again, we have extensive experience. We 
are using working groups which are not just HR practitioners 
but also employees and supervisors to assist us as we do that.
    Mr. Davis of Illinois. Chairman McPhie, you heard the 
discussion with Mr. Walker relative to more detailed 
expectations. Would that help you and your colleagues when it's 
time for you to do a review on appeal? Would that help you to 
be in a better position, you think, to make the best decisions?
    Mr. McPhie. Well, let me answer it this way, Mr. Davis. I 
have practiced law myself, and it seems to me I have always 
gotten better outcomes when I had objective pieces of evidence 
in the record. I can't speak for every MSPB judge, but I assume 
a judge wants to have a fully explicated record.
    The thing I would urge, though, this is a brand-new system. 
You know, lots of things have to be worked out, even at the 
level of MSPB in hearing a specific case. I believe MSPB judges 
are going to try to get into the record or urge the parties to 
provide the record with all the documentation so that the judge 
may render a fair and good decision.
    Mr. Davis of Illinois. Sounds to me--and I'm not a lawyer--
that you're saying that the clearer the evidence or the 
expectations, the more comfortable one can be that the 
decisions they arrive at are rendered based upon evidence that 
two people looking at would see the same way, as opposed to one 
person looking at the glass and perhaps saying, that glass is 
half empty and another person saying it's half filled?
    Mr. McPhie. Documentary evidence is documentary evidence. 
Oral evidence is different, and there you go to credibility of 
people and so on. Additional documents won't help you. But it 
seems to me as I sit here and think of it, if you're going to 
have de novo review, that is, review based on the record 
developed below, I believe it's very important to have a fully 
developed record below, so that the Board, when it reviews it, 
ultimately the Federal circuit court when it reviews it, would 
have a full record before it so it can render, I believe, an 
objective, usable decision.
    Mr. Davis of Illinois. Thank you very much. And I think 
people who kind of follow the way I think about some of these 
situations know that I kind of feel that OPM plays a junior 
partner role in some of these deliberations as opposed to being 
an equal partner. And I'm looking at the general provisions 
section 9901-105 in coordination with OPM, and it says that the 
OPM Director will be provided an opportunity as part of DOD's 
normal coordination process to review and comment on 
recommendations and officially concur or not concur with all or 
part of them. The Secretary of Defense will take the Director's 
comments and concurrence or nonconcurrence into account and 
advise the Director of his determination with reasonable 
advanced notice of its effective date. Thereafter, the 
Secretary and the Director may take such action or actions as 
they deem appropriate consistent with their respective 
statutory authorities and responsibilities.
    This section does not read as though the Secretary and 
Director are equal partners. Is there any recourse, Mr. 
Secretary, Mr. Nesterczuk, for OPM--I mean when there's 
disagreement--let's say you can't arrive at an agreement, what 
happens? Who prevails in this kind of situation?
    Mr. Abell. The process you described--and they are in the 
proposed regulations--is not different than the processes that 
are in place today, in that two officers who are appointed by 
and report to the President have their conversations through 
their staffs, make their points. And should they ultimately not 
agree, the disagreement is adjudicated in the Executive Office 
of the President. That's what that says.
    The practical effect of all that is that very few 
disagreements would ever reach the Secretary and Director level 
of adjudication. Folks like George and I, or Dr. Sanders and 
Mary Lacy, will work those out. But if there is something so 
fundamental to the core responsibilities of either and it does 
reach that level, it will be adjudicated in the Executive 
Office of the President, not unlike a disagreement between 
Treasury and Commerce.
    Mr. Nesterczuk. Let me comment on that, Mr. Davis, if I 
may. The language you specifically cited addresses an issue 
that goes way beyond the enabling regs, way beyond implementing 
issuances into practical day-to-day decisions where we have 
reserved basically some role for OPM. In issuing enabling 
regulations, we are full partners. There's no question of that 
in the enabling regulations that we're discussing, which 
require both signatures of the Director of OPM and the 
Secretary of Defense. And following that with more detail in 
implementing issuances, we will be working with the Department 
in implementing those issuances.
    Once they are in effect, we have reserved for OPM an 
additional consultative role, and how that consultative role 
plays out is the language you specifically read.
    We don't anticipate collisions in those areas very often. 
These will be practical issues of setting pay levels based on 
surveys, pay surveys, market conditions, and things of that 
sort or when it comes time to implementing hiring authorities, 
specific details on that, we would be consulting with DOD 
before they issue those. But we listed the specific instances 
where those provisions would kick in, and those are in the 
regulations as well.
    Mr. Davis of Illinois. The National Defense Authorization 
Act specifically states ``jointly prescribe,'' but I certainly 
appreciate the practicality of the Executive Office sort of 
adjudicating any disputes.
    Thank you very much.
    Mr. Porter. Mr. Van Hollen.
    Mr. Van Hollen. Thank you, Mr. Chairman. And thank you, 
gentlemen, for your testimony.
    I just wanted to followup on a couple of issues that have 
been raised, especially the testimony by Mr. Walker. I was not 
able to be present when he delivered the testimony, but I have 
been reviewing the testimony. And much of the concerns he 
raised there have been raised in earlier hearings with respect 
to regulations and Department of Homeland Security as they 
relate to pay for performance. And pay for performance is 
something I think everyone agrees with in concept. We want to 
reward employees who perform better. And certainly employees 
who are not up to par should not be rewarded. The key is coming 
up with a system that does that in a fair, predictable manner, 
one that the employees have faith and confidence in, one that 
is not going to be used for political purposes or one that is 
not going to be there to reward the pet of the manager.
    And the devil is in the details and the details are 
absolutely critical in this area. This committee reviewed the 
pay-for-performance plans that were put in place by GAO some 
time ago and decided that based on the way they phased it in in 
a predictable manner in the oversight and the ability for 
employees to have input into that process and know the 
standards which they were being asked to perform, that is 
something we can move forward with.
    In reviewing the regulations with respect to the Department 
of Defense, there are a couple of issues that have been raised 
here. First was the issue of defining the details of 
implementation of the system. Now, as I understand your 
testimony, Mr. Secretary, you agree that needs to be spelled 
out and you are going to be sure that before this is actually 
fully implemented in any particular agency, that you're going 
to flush out the details; is that correct?
    Mr. Abell. Yes, sir. We will flush out details during the 
meet-and-confer process which begins on April 18. At the end of 
that process, I think the detail that many have asked for will 
be apparent. But we will also make sure that we have moved from 
regulation to execution by--through training, and we will have 
a mock payout.
    I agree with you, it is essential to the system that good 
performance be rewarded, that bad performance be incentivized 
to turn to good performance, that the system is credible and 
has the trust of the employees. I agree with you on all those 
points.
    Mr. Van Hollen. With respect to predictability and the 
expectations we are going to measure against, one of the other 
issues raised in Mr. Walker's testimony is that while the 
regulations allow the core competencies to be spelled out in 
writing, it doesn't require it. And I ask you, would you object 
to them requiring they be spelled out?
    Mr. Abell. Sir, it's my expectation, we will flush this out 
during meet and confer, but my expectation is that written 
performance standards will be part of the final regulations, 
but it is something that we are anxious to talk to our union 
counterparts in the meet-and-confer process.
    Mr. Van Hollen. Finally, the issue of making sure there is 
a formal or an established process for continuous input from 
employees, that is going to be I hope part of your proposal 
going forward; is that right?
    Mr. Abell. I would go beyond that. The continuing and 
informal process will go both ways. We need supervisors to 
counsel and mentor their employees. We need employees to be 
able to express their views to their supervisors and perhaps 
make suggestions as to how their performance should be judged. 
It goes both ways; and that is continuous, I agree.
    Mr. Van Hollen. I know this committee will continue to work 
with you in this area. If things get off on the wrong track, it 
becomes very difficult to regain the confidence and faith of 
employees.
    Mr. McPhie, if I could ask you, because we had an earlier 
hearing on the Department of Homeland Security's regulations; 
and, as I recall, your testimony at that time was more critical 
of their proposals going forward than your testimony seemed 
today of the Department of Defense's provisions regarding 
employee ability to appeal. What are the differences here? Are 
there some differences here that you are concerned of? Could 
you elaborate on the differences?
    Mr. McPhie. I don't think they were more critical or less 
critical. I think what got buried was the statements that good 
things will happen in the DHS system.
    The criticism that I made and continue to make here, if you 
want to call it that, I think it's more of a reality check. The 
MSPB is going to have to overcome some challenges to maintain 
its part of the bargain. Now, clearly, that brings into 
question some of the things I testified at the DHS hearing and 
now. Resources is an issue I stressed then and I made the point 
here again. The compressed timeframes are going to have--they 
require great efficiencies in the system. And the point I tried 
to make there, perhaps I will make a little bit more clearer 
here, is that MSPB is critical in ensuring credibility. That's 
what I think a lot of people are alluding to at this hearing.
    You know, most DHS and DOD require a more efficient system. 
There's no question about that. And to get those efficiencies 
will require MSPB to change the way it does business. That's a 
challenge. And we are trying to solve that challenge as we 
speak. We are looking at different ways to do business 
differently so that we not only do DHS or DOD cases promptly, 
but we do everybody else's case promptly. The last time I was a 
little bit more detailed about two tracks and so on. That's not 
the goal. The goal is one case-processing system.
    Mr. Van Hollen. Thank you, Mr. Chairman. I don't have other 
testimony, but this is a much shorter set of testimony than 
before. And my sense is that there are not that many 
differences between the two proposals. And you in your previous 
testimony were critical of the standard of review and some 
other things as well. There is one thing in the DOD regulations 
that actually is less protective of employee appeal rights as I 
read this than in the Department of Homeland Security, and this 
is raised not in your testimony but in the GAO testimony. And I 
was just surprised that I didn't hear you mention it, which I 
understand is in contrast to DHS's final regulations. These 
proposed regulations permit an internal DOD review of the 
initial decisions issued by MSPB adjudicating officials. And 
under this internal review, DOD can modify or reverse an 
initial decision or remand the matter back to the adjudicating 
official for further consideration.
    Doesn't that significantly undercut the existing power and 
independence of the Merit Systems Protection Board? And there 
are no regulations at all that offer additional details on the 
Department's initial review process; how they are going to 
handle that. What is your response to that?
    Mr. McPhie. That point is covered in my written testimony 
and my oral comments here today. I noted that. But this review 
body, somebody who is not satisfied--either party who is not 
satisfied with what the review body does, as I note, has the 
right to appeal that decision to the full Board. And why is 
that important? Because any review beyond that to the circuit 
court has to be from a final Board decision. That's how the 
NSPS is drafted.
    Mr. Van Hollen. I look forward to continuing to discuss 
this issue. It's not clear in the regulations as to how that 
process would unfold.
    Mr. Porter. Congresswoman Norton.
    Ms. Norton. Thank you, Mr. Chairman. I apologize. I have 
been detained in an important meeting, but I wanted to come by. 
And I have listened to the questioning thus far and asked staff 
about the clarification--I heard some clarification on pay for 
performance.
    And I want to issue a warning that I think any lawyer in 
the room will agree with me will be the case. Pay for 
performance is something that I certainly prefer. In my office, 
some people get bonuses at the end of the year and some people 
get higher bonuses than other people. We can do that in the 
Congress. So, you might wonder, why didn't the Congress go to 
this sooner? And let me tell you why, so everybody understands 
what you're walking straight into. Why are they stuck with this 
system which seems so uniform? My friends, it's because of 
State action and due process. Unlike other employers, a State 
employer is bound by the Constitution to offer due process. 
That's very different from if you work for a private employer.
    What does that mean here? You are radically moving to a 
different system where the Federal Government has not protected 
itself as the present system does against State action 
lawsuits. If you get dismissed from the Federal Government, how 
you get promoted, very different from how you do it at GM. And 
my friends, in case you think it's because Uncle Sam is the 
fairest employer, you know, or in case you think it's because 
the unions made him do it, let's understand that we're talking 
about an employer that is bound by the 14th amendment and all 
that implies about due process.
    OK. Then let us move to a pay-for-performance system where, 
at least so far, the employer must convey somehow or other--we 
have to assume because we have seen nothing in writing or 
orally--what the expectations are. The first time that this 
system goes into place large scale, and there are differences 
in how people are paid and evaluated without written 
expectations beforehand, you will not be able to count the 
lawsuits. And there will not be any distinction between so-
called conservative judges and liberal judges. It will be a 
straight-out whether there has been due process to deprive 
somebody of pay he might otherwise have received because that 
person has not met expectations which have not been 
communicated to him in writing.
    So I don't care what you think about it. Understand you are 
moving to a system that is the way it is because the Federal 
Government recognizes the great difference between it and any 
private employer, that State action is involved every time it 
handles an employment matter with an employee.
    Now, if you want to move radically from that, fine. But 
don't think you are going to be able to move off of due process 
14th amendment requirements. And my friend, you are not going 
to be able to differentiate who gets what pay when you are 
hauled into court without pulling out a piece of paper saying, 
``I told them what the expectations were.'' And you will be 
called into court. You are still the United States of America. 
You are still subject to the due process clause of the 14th 
amendment. You will be hauled into court. You have to be able 
to say, she didn't do this, that, or the other, and she did. 
And that's why she got more pay than she got. And if you say, 
look, I told her so, you're out of court right there.
    So whatever you think of our view here about the fairness 
of telling somebody in advance in writing what you expect 
before you evaluate them and either give them a certain amount 
of pay or don't, regardless of whether you are for that or not, 
understand that it is not for you to decide. That has been 
decided for you by the Constitution of the United States. We 
can argue about how much you have to do, but this much is 
clear. Oral communication--unless you got a tape recorder there 
so that the employer can take it down and have a copy--on its 
face does not meet due process requirements if pay is to be 
based on what you have, ``told the employee.''
    I want to leave that with you, Mr. Chairman, quite apart 
from what we ought to do. I think there is a serious problem of 
possible litigation unless we get some greater clarity on 
written evaluations. I speak not only from a matter of 
fairness, but constitutional fairness. Thank you very much.
    Mr. Porter. I would like to have the witnesses respond to a 
few of your thoughts. I think it is a good opportunity.
    Ms. Norton. Anybody with a bar card want to disagree with 
what I just said?
    Mr. McPhie. Maybe it's only fair--I touched on it early on, 
not in as much detail, but due process, the fundamentals of due 
process is notice of what you are being accused of and an 
opportunity to defend yourself in a meaningful fashion. I 
believe, as I said early on, this process guarantees that, and 
therefore it guarantees the due process that's expected in the 
Constitution, which is minimum due process. Beyond that, I 
can't comment.
    Ms. Norton. Can you clarify what the notice is here?
    Mr. McPhie. Right now, employees are told what they are 
being accused of.
    Ms. Norton. You think any court--first of all, you are not 
accused of anything. You didn't get the same pay as anybody 
else.
    Mr. McPhie. Accused of or being disciplined for, somebody 
crafts an order and hands it to the employee consistent with 
prevailing judicial precedent that's required. There's no 
question that it is required; it is. And there is no question 
that the Federal Government follows it; it does. And at some 
point in time, the employee is entitled to a hearing and 
whatnot in this process.
    The hearing is initially going to be in front of an MSPB 
judge with appeal, with an in-between step to an internal 
review body, and then an appeal upstream to the full MSPB 
Board. And if you follow the life of a case beyond the Board, 
there is always review by the Federal circuit court. So you 
know, except for some details, there's not much difference, 
say, between this process and some other due process--some 
other due process processes.
    Ms. Norton. I understand the notice. You have the notice 
that you aren't going to get your pay. I'm talking about the 
notice as to what the expectations were that resulted in your 
not getting your pay. And I say if you cannot point to that 
notice, you have violated due process and it's a slam-dunk loss 
to the government.
    Mr. Nesterczuk. Let me address some of the comments that 
you made, Ms. Norton. I can't imagine Federal work force not 
having written performance standards. The question is, how 
many, how much, how frequently are they updated? If you're 
dealing with a problem employee, you would be insane as a 
supervisor or manager not to document every instance of poor 
performance; otherwise you won't meet the standards that Mr. 
McPhie has just been speaking about.
    However, you cannot impose that kind of evidentiary 
standard on every employee in the work force. Thank goodness, 
the overwhelming majority perform very well. We even have 
outstanding performers. They don't need a great deal of 
documentation. So the notion is to find the right amount of 
documentation for the right circumstances.
    And I believe there's no question that under NSPS as we 
have been practicing today, the standard for poor performers or 
difficult performers or problem employees is going to be a 
great deal of paperwork to document the problems. But in the 
case of outstanding performers, that requirement will tail off 
rapidly. When you are dealing with good employees, quite 
frequently, they know better than you do the details and the 
day-to-day requirements of their job. So it's a matter of 
communicating back and forth on a regular basis. And as you 
assign tasks to be completed, that there is a feedback 
mechanism provided so the employees know where they stand.
    But in the case of difficult employees, there's no 
question, Mrs. Norton, that the requirement to document and 
document thoroughly will still be there.
    Ms. Norton. You know, I'm inclined to say that I know that 
it isn't true; that you all just don't get it, because you keep 
answering another question. I never raised the question about 
poor performers. I know what to do. I ran a Federal agency. I 
had to clean out a whole lot of poor performers. I know how to 
keep records. I'm talking about the following--and I agree with 
you it has to be at a level so that we're not completely 
drowned in paperwork. But I'm saying that if you come to work 
for me as a legislative assistant in my office, you get in my 
office a written notion of what it is that a legislative 
assistant does. Now, that has to be broken down, obviously, to 
individual jobs, but those jobs cover a whole lot of folks. So 
I really don't think this is onerous. You are not going to pay 
for performance for poor employees. You're not going to pay for 
performance for outstanding employees. You are going to pay for 
performance for everybody. You have never done it before.
    I am telling you what I believe as a lawyer who continues 
to be a lawyer, if I may, so I continue to teach at Georgetown 
and teach a course over there every year. I believe that there 
is a terrible problem if you don't defend yourself by making 
sure that these employees have a written expectation, not down 
to you, Mary, what I would like you to do is this; John, what I 
would like you to do is that; but what are the expectations for 
this job, so when that person comes up for the pay period, you 
can say you have met the expectations less than somebody else 
and that is why you are getting less pay than somebody else.
    All I'm saying is the best defense is an offense. The 
offense here is to have written expectations for job categories 
so that everybody understands up front what is expected of her 
and cannot be on your back when she gets less than she would 
like.
    Mr. Nesterczuk. I agree with you.
    Mr. Porter. Mr. Abell.
    Mr. Abell. I agree with my colleague from OPM. As we go 
through the meet-and-confer process, we will flush out the 
details in this area. And it is my expectation that there will 
be written performance standards for all employees and then the 
degree of the detail, as you've said and Mr. Nesterczuk has 
said, is something that we'll have to work out.
    I will take exception to one thing you said. In fact, the 
Department of Defense does do pay for performance today in our 
demonstration projects and in our alternative personnel 
systems, quite successfully, we believe. We have not faced the 
lawsuits and the recriminations you have described. So we 
intend to use those lessons as we move forward in the rest of 
the Department.
    Ms. Norton. I won't bother to ask him what those 
circumstances are, but I do want to warn you, how many 
employees do you have at the Department of Defense?
    Mr. Abell. About 600,000 or so.
    Ms. Norton. And I could find out a great deal more, if we 
had more time, about what that involves, the level that 
involves, how that particular section was chosen to be the 
demonstration. But my problem is this: We are talking about the 
Department of Defense and 600,000 Federal employees, and you 
better not forget it. And I don't see why anybody--your best 
lawyers would say to you, certainly if you were in the private 
sector, protect yourself against litigation. This is a fairly 
easy way to do it.
    Mr. Porter. Thank you, gentlemen. We appreciate your 
testimony.
    I would like to invite our third panel of witnesses to come 
forward today. First we will hear from Karen Heiser, 
organizational development program manager at the Federal 
Managers Association; Mr. John Gage, national president at the 
American Federation of Government Employees; and, finally, we 
will hear from Mr. Ron Ault, President of the Metal Trades 
Department.
    Like the previous panels, I would like to recognize each of 
you for your opening statements and please summarize your 
statements in approximately 5 minutes.
    I would like to recognize Ms. Heiser. You are recognized 
for 5 minutes.

STATEMENTS OF KAREN HEISER, ORGANIZATIONAL DEVELOPMENT PROGRAM 
  MANAGER, FEDERAL MANAGERS ASSOCIATION; JOHN GAGE, NATIONAL 
PRESIDENT, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES; AND RON 
            AULT, PRESIDENT, METAL TRADES DEPARTMENT

                   STATEMENT OF KAREN HEISER

    Ms. Heiser. Chairman Porter and Congressman Davis, thank 
you all. As a member of the Federal Managers Association, thank 
you for allowing me this opportunity to express our views on 
the proposed regulations for the new DOD National Security 
Personnel System.
    Our mission at FMA is simple. We promote excellence in 
public service by creating an efficient and effective Federal 
Government. We are grateful to be here and look forward to 
continuing this important dialog.
    I currently manage organizational development programs at 
Watervliet Arsenal, just outside Albany, NY. I have an MBA in 
human resources and several years of private sector experience 
as an HR manager in manufacturing and health care. However, the 
bulk of my experience has been with the Federal Government in 
labor relations and quality programs.
    As you are aware, managers and supervisors are in a unique 
position under these proposed regulations. They will be 
responsible for implementation of the Department's new 
personnel system and also subjected to its requirements. As 
such, managers and supervisors are pivotal to ensuring the 
success of the new system.
    We at FMA recognize that change does not happen overnight 
and we remain cautiously optimistic that the new system may 
help bring together the mission and the goals of the Department 
with on-the-ground functions of the defense work force. Two of 
the most important components to successfully implementing the 
new system are training and funding. Managers and employees 
need to see leadership from the Secretary on down that supports 
a collaborative training program and budget proposals that make 
room to do so. We also need consistent oversight and 
appropriation of proper funding levels from Congress to ensure 
that both employees and managers receive sufficient training in 
order to do their jobs most effectively.
    There are two primary areas in which we see the need for 
performance management training. Operations training is 
required in order for managers to understand the nuts and bolts 
of the new system, their responsibilities and authorities, and 
the rights and responsibilities of their employees and their 
supervisors.
    Of equal or more importance is the training required to 
enable managers at all levels to understand how to translate 
organizational goals into performance standards. The process 
begins with an organization understanding its goals and 
objectives and making them clear to members of their 
organization. Goals and objectives are transmitted down through 
the organization, translated into executable plans and then to 
performance elements and standards of employees on the ground 
floor.
    Theoretically, since organizational goals are the result of 
a desire to meet customer requirements, this is how performance 
management directly links employee's success to organizational 
success. Our consistent message is this: As managers and 
supervisors, we cannot do this alone. Collaboration between 
manager and employee must be encouraged to debunk myths and 
create the performance and results-oriented culture that is so 
desired by the proposed regulations.
    As any Federal employee knows, the first item cut when 
budgets are cut is training. It is crucial this not happen in 
the implementation of these regulations. Not to be 
underestimated is the effect of more than 10 years of Federal 
work force downsizing. During this time, missions have 
continued to be accomplished because of dedicated skilled 
managers and employees. However, performance management during 
this time has taken the form of a survival mode: Do what it 
takes, do more with less. It has not been as formal or as 
consistent as what is required or envisioned by the NSPS.
    Making a change to pay for performance without first 
addressing the need to refine these organizational and 
management skills in this area will have serious detrimental 
consequences. DOD is the largest employer in the Federal 
Government. For Civil Service reform to be implemented 
throughout government, it must be successful in DOD.
    FMA further supports a fair and open labor relations 
process that protects the rights of employees and creates a 
work environment that allows employees and managers to do their 
jobs without fear of retaliation or abuse. The past 10 years 
have seen improvements in labor/management partnership across 
DOD. At my site, for example, much organizational progress has 
been possible because of a strong cooperative relationship of 
labor and management with a shared goal of organizational 
success.
    Let us not lose sight of this type of growth in the pending 
implementation. The new system has relegated the authority for 
determining collective bargaining rights to the Secretary. In 
this regard, the recognition of management organization such as 
FMA is a fundamental part of maintaining a collaborative and 
congenial work environment.
    Title 5 CFR 251, 252 allows FMA, as an example, to come to 
the table with DOD leadership and discuss issues that affect 
managers and supervisors. While this process is not binding 
arbitration, the ability of managers and supervisors to have a 
voice in a policy development better enables them to support 
accomplishment of DOD's mission and goals and is crucial to the 
Department's long-term vitality.
    We are cautiously hopeful that the new DOD system will be 
dynamic, flexible, and responsive to modern threats and as 
positive as its vision. The proposed regulations, however, 
remain vague and academic. Current guidance provides the bones 
of what we believe to be a workable plan. And while we remain 
concerned with some areas at the dawn of the system's rollout, 
the willingness of OPM and DOD to reach out to employee 
organizations such as FMA is a positive indicator of 
collaboration and transparency. We look forward to continuing 
to work closely with Department and agency officials.
    Thank you for this opportunity to allow our views to be 
heard. And I will be happy to answer any questions you may 
have.
    [The prepared statement of Ms. Heiser follows:]

    [GRAPHIC] [TIFF OMITTED] T4712.066
    
    [GRAPHIC] [TIFF OMITTED] T4712.067
    
    [GRAPHIC] [TIFF OMITTED] T4712.068
    
    [GRAPHIC] [TIFF OMITTED] T4712.069
    
    [GRAPHIC] [TIFF OMITTED] T4712.070
    
    [GRAPHIC] [TIFF OMITTED] T4712.071
    
    [GRAPHIC] [TIFF OMITTED] T4712.072
    
    [GRAPHIC] [TIFF OMITTED] T4712.073
    
    [GRAPHIC] [TIFF OMITTED] T4712.074
    
    [GRAPHIC] [TIFF OMITTED] T4712.075
    
    [GRAPHIC] [TIFF OMITTED] T4712.076
    
    [GRAPHIC] [TIFF OMITTED] T4712.077
    
    [GRAPHIC] [TIFF OMITTED] T4712.078
    
    [GRAPHIC] [TIFF OMITTED] T4712.079
    
    [GRAPHIC] [TIFF OMITTED] T4712.080
    
    [GRAPHIC] [TIFF OMITTED] T4712.081
    
    [GRAPHIC] [TIFF OMITTED] T4712.082
    
    [GRAPHIC] [TIFF OMITTED] T4712.083
    
    [GRAPHIC] [TIFF OMITTED] T4712.084
    
    [GRAPHIC] [TIFF OMITTED] T4712.085
    
    Mr. Porter. Next we will have John Gage, national president 
of the American Federation of Government Employees.

                     STATEMENT OF JOHN GAGE

    Mr. Gage. Good afternoon. I'm appearing today on behalf of 
my union, AFGE, as well as the United DOD Workers' Coalition 
which represents 36 unions covering DOD workers all across the 
Department.
    We have numerous concerns with the draft regulations, but I 
want to talk about what I consider the most serious problems. 
First, DOD has proposed radically reducing the scope of 
collective bargaining. The proposal effectively eliminates 
collective bargaining by expanding the manager's rights clause 
as compared to current law and rendering most previously 
negotiable issues to be off the table. Such issues include 
procedures and arrangements for overtime, shift rotation, 
flexible and compressed work schedules, safety and health 
programs, deployment away from the work site, and on and on. In 
addition, DOD will be able to unilaterally override provisions 
of collective bargaining agreements simply by sending out 
issuances. The scope of bargaining must be restored so that 
meaningful participation can continue to exist in DOD.
    Proposed regulations do not follow the authorizing legal 
mandate to safeguard collective bargaining rights for DOD 
employees. When the legislation authorizing NSPS was under 
consideration in 2003, Secretary Rumsfeld assured the Congress 
that his only intent with regard to collective bargaining was 
to establish national level bargaining over most issues. We can 
live with that and we can make that work, but we can't live 
with the NSPS draft because it reduces the scope of bargaining 
to virtually nothing, far beyond any real or imagined national 
security concern.
    Second, the Board that hears labor management disputes 
arising from NSPS must be independent of DOD management. In the 
proposed regulations, DOD would establish an internal Board 
made up entirely of individuals appointed by the Secretary. 
This Board will be paid by and beholden to DOD management. It 
would have no independence or credibility with the work force.
    Secretary Rumsfeld promised the Congress, prior to the 
enactment of the law authorizing the establishment of NSPS, 
that any Board established to hear labor/management disputes 
would be independent. There is no reason for DOD to have an 
internal labor board which duplicates the functions and costs 
of the Federal labor relations authority, but if it must exist 
as a safeguard, it is absolutely critical that it be entirely 
separate and distinct from DOD management.
    Third, the standard for mitigation and discipline in 
adverse action cases under NSPS in the proposed regulations is 
virtually impossible to meet and effectively removes the 
possibility of mitigation. DOD must change the standard from 
``wholly without justification'' to ``unreasonable,'' which is 
the court-imposed standard established over 25 years ago in 
order for employees to have meaningful due process and 
safeguard against arbitrary and capricious actions. DOD must 
stop the game-playing with long-established legally recognized 
standards.
    Further, and in contrast to current law, the proposed NSPS 
adds additional bureaucratic delay by declaring that adverse 
action in arbitrations will no longer be final and binding. 
Instead, they will have to be reviewed by the MSPB, thereby 
reducing the authority of arbitrators. This is entirely 
insupportable and contrary to congressional intent and weakens 
an important safeguard for employees.
    Fourth, under the NSPS, employees' performance appraisals 
will be the crucial determinant of salary, salary adjustment, 
and job security. Yet under the proposed regulations, there is 
no requirement for management to propose written standards 
against which performance will be measured. And in addition, 
employees are denied the right which is now available to all 
current Federal employees, including those under the new 
homeland security personnel system to use and negotiate a 
grievance and arbitration system, to present evidence to an 
impartial body as a critical safeguard for fairness and 
transparency.
    Fifth, the proposed pay regulations open the door for a 
general reduction in salaries for all DOD personnel compared to 
the rates they would have been paid under current statutory 
systems. An ability to reduce entry-level salaries in addition 
to an ability to refuse annual adjustment of salaries for those 
who perform satisfactorily as permitted in the regulations 
will, by definition, conspire to reduce overall DOD salaries. 
Strong and unambiguous safeguards must be in place to prevent 
overall lowering of pay for the DOD civilian work force. There 
must be constraints on the ability of DOD to lower salaries or 
withhold salary adjustments across the Board. These safeguards 
must be established not only to protect the living standards of 
the civilian DOD work force relative to the rest of the Federal 
work force, but also to guarantee the ongoing economic vitality 
of communities with DOD installations.
    Finally, procedures for deciding who would be affected by a 
reduction in force must be based on more than a worker's most 
recent performance appraisal. Incredibly, the proposed NSPS 
regulation would allow an employee with 1 year of service and 
an outstanding rating to have superior retention rights to an 
employee with 10 years of outstanding appraisals and 1 year of 
having been rated nearly above average. Such rules are patently 
unfair and must not be allowed to stand.
    In conclusion, it cannot be emphasized strongly enough that 
the approach DOD has taken thus far, exhibited by the above 
examples, has been profoundly demoralizing for its civilian 
work force. These dedicated and patriotic Americans are 
extremely unsettled by the harsh prospects set forth in the 
proposed regulations because they are not fooled by words like 
``modern,'' ``flexibility,'' ``market-based.'' They see 
fundamental rights stripped away and a pay system rigged to 
lower overall DOD pay.
    We strongly urge the committee to take action either 
legislatively or through oversight to require DOD to correct 
the many problems with the regulations and provide the 
safeguards I have mentioned. Unless substantial changes are 
made to the regulations, the NSPS
will become a recruitment and retention problem rather than a 
solution that will deflect the agency from its important 
mission in years to come.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Gage follows:]

    [GRAPHIC] [TIFF OMITTED] T4712.086
    
    [GRAPHIC] [TIFF OMITTED] T4712.087
    
    [GRAPHIC] [TIFF OMITTED] T4712.088
    
    [GRAPHIC] [TIFF OMITTED] T4712.089
    
    [GRAPHIC] [TIFF OMITTED] T4712.090
    
    [GRAPHIC] [TIFF OMITTED] T4712.091
    
    [GRAPHIC] [TIFF OMITTED] T4712.092
    
    [GRAPHIC] [TIFF OMITTED] T4712.093
    
    [GRAPHIC] [TIFF OMITTED] T4712.094
    
    [GRAPHIC] [TIFF OMITTED] T4712.095
    
    [GRAPHIC] [TIFF OMITTED] T4712.096
    
    [GRAPHIC] [TIFF OMITTED] T4712.097
    
    [GRAPHIC] [TIFF OMITTED] T4712.098
    
    [GRAPHIC] [TIFF OMITTED] T4712.099
    
    [GRAPHIC] [TIFF OMITTED] T4712.100
    
    [GRAPHIC] [TIFF OMITTED] T4712.101
    
    [GRAPHIC] [TIFF OMITTED] T4712.102
    
    [GRAPHIC] [TIFF OMITTED] T4712.103
    
    [GRAPHIC] [TIFF OMITTED] T4712.104
    
    [GRAPHIC] [TIFF OMITTED] T4712.105
    
    [GRAPHIC] [TIFF OMITTED] T4712.106
    
    [GRAPHIC] [TIFF OMITTED] T4712.107
    
    [GRAPHIC] [TIFF OMITTED] T4712.108
    
    [GRAPHIC] [TIFF OMITTED] T4712.109
    
    [GRAPHIC] [TIFF OMITTED] T4712.110
    
    [GRAPHIC] [TIFF OMITTED] T4712.111
    
    [GRAPHIC] [TIFF OMITTED] T4712.112
    
    [GRAPHIC] [TIFF OMITTED] T4712.113
    
    [GRAPHIC] [TIFF OMITTED] T4712.114
    
    [GRAPHIC] [TIFF OMITTED] T4712.115
    
    [GRAPHIC] [TIFF OMITTED] T4712.116
    
    [GRAPHIC] [TIFF OMITTED] T4712.117
    
    [GRAPHIC] [TIFF OMITTED] T4712.118
    
    Mr. Porter. I would like to recognize Mr. Ron Ault, who is 
president of the Metal Trades Department.

                     STATEMENT OF RON AULT

    Mr. Ault. Thank you, Mr. Chairman and members of the 
committee. My name is Ron Ault. I'm the president of the Metal 
Trades Department at the AFL-CIO. On behalf of the more than 
40,000 civilian employees at the Department of Defense 
represented by the Metal Trades Department, I thank you for the 
opportunity to testify today. I'm also pleased to appear on 
behalf of some 700,000 represented by the 36 unions in the 
united DOD Workers' Coalition. And I want to say we are here 
speaking for the DOD workers.
    I've got prepared testimony I would like to enter into the 
record, but I want to deviate from it for a couple of seconds, 
because I want to put a human face on all this. This is the 
public comments CD that was provided to us by the NSPS office, 
and I would strongly recommend that every member of the 
committee get a copy of this and just look at the comments from 
the people in your district. And I won't tell anybody here that 
I have looked at all, some 50,000 that's reported on here, but 
I've looked at a lot of them; and I would suggest that if you 
just go through here and randomly select on any basis that you 
would like to select and read these comments, you would 
understand the upheaval that's going on and the morale of the 
Federal work force that we represent and speak for today.
    Particularly, I would say that I've discovered seven so far 
in favor of NSPS, and there may be more, but I've only 
discovered seven. So that is indicative of the people's opinion 
of what's going on with NSPS.
    The recent wave of adulation for the late Pope John Paul 
II, especially his role in collaboration with his countryman 
Lech Walesa in igniting the spark that destroyed the Soviet 
communism, is a sharp reminder to all of us, especially those 
of us involved in shipyard labor, of the importance of free 
trade unions to the fabric of freedom in our Nation. Some may 
recall that Mr. Walesa was a mere shipyard electrician before 
he became head of the first free Polish state since before 
World War II.
    I mentioned the Pope and the Polish labor movement as a 
reminder to all that anything that comprises right of free 
trade unions to represent the aspirations of working families 
is an anathema to America. And I strongly suggest that NSPS 
represents an eminent threat to that freedom. The workers we 
represent are patriotic. Many like myself are veterans of 
military service, and we are proud of the work we perform and 
the reason we perform it.
    One of our affiliated organizations, the International 
Brotherhood of Electrical Workers, recently had one of their 
members seriously wounded while performing work as a Federal 
employee in Iraq. Gary York, the vice president of local union 
1688, is a power plant controller working at the Gavins Point 
Power Plant in Yankton, SD. He volunteered for Operation 
Restore Iraqi Power in October 2003. On Christmas Eve, his 
convoy was attacked and he was wounded. Actually was shot in 
the head. Lucky for him, the bullet passed through the doorpost 
before striking him. He also received a shrapnel wound in the 
shoulder, which was a minor injury compared to the head wound. 
He spent several weeks in hospitals in Germany and here at 
Walter Reed in D.C. He returned to his job around May 2004. 
Gary received the Medal of Freedom from the Corps of Engineers 
for his service. He was also featured in one of the issues of 
the IBEW Journal and one of the Corps publications. Gary just 
returned to Iraq for his second tour of duty on April 20, 2005.
    Since NSPS was first proposed, I have met with rank-and-
file workers in almost every DOD work location where we hold 
recognitions and collective bargaining agreements. On their 
behalf, I want to register my most strenuous objection to the 
inference and implication that underlies the National Security 
Personnel System, that is that we oppose this plan because we 
are obstructionists and because it represents a departure from 
the status quo.
    Ladies and gentlemen, we do not like status quo. We believe 
that constructive change in the work site is long overdue. One 
of the primary reasons that working people select union 
representation is because they want to see change and they 
expect us to help them implement it; change that brings about a 
more open, objective, atmosphere in the workplace; that enables 
working people to perform their jobs effectively without 
interference and impediment; change that removes subjective 
elements of personality, prejudice, and ambiguity from the 
workplace and supplements those elements with clear rules and 
standards of evaluation.
    In other words, we support high-performing workplaces, 
clearly defined performance standards, assignments which are 
understandable and achievable. We support individual and 
organizational growth, equal opportunity and fair treatment on 
the job. We welcome change when it enhances our ability to have 
a voice on the job, where it enables us to attain improved 
training, improve our safety and health on the job, where it is 
accompanied by respect and dignity that our contributions 
warrant. We are skeptical of change that is initiated for the 
purpose of undermining our freedom of association. We are 
dubious about change that is unilaterally initiated for the 
purpose of curtailing our potential for wage growth and 
personal achievement.
    Now, I wanted to stop there and say one of the key points 
that I want to emphasize today: that I personally attended 
every single meeting of the Department of Defense from the get-
go on NSPS.
    I want to stop there and say one of the key points that I 
want to emphasize today that I personally attended every single 
meeting of the Department of Defense on NSPS. And I will say 
this, we have yet to be involved in this process.
    The information has been provided to the public and the 
other information that has been provided to you and Members of 
Congress is not accurate. We have not had any part of forming 
any portion of this. It's been a secret, it's like a Stealth 
airplane that's been designed by someone working in secret.
    You heard the MSPB person testify today about the working 
groups. We have asked to be part of the working group's 
deliberations, and to be involved in this and we have been 
denied this. We have been denied every opportunity to help 
implement and form and share this program that is now out here 
on the street that has caused all these problems.
    So I want you to understand that we are skeptical of what's 
going to happen from here forward. Is OPM and DOD just going to 
run the clock out on us for 30 days and then implement what 
they have written in secret for months and months, or are we 
going to have real dialog?
    I keep hearing the words from the folks that come up and 
testify, but they are not reassuring words to us. And we 
represent the people that are the experts in this field. They 
are not experts. We do this every day for a living.
    Our folks are the people that make it work. I agree with 
Comptroller Walker, only the workers can make this thing work. 
We have a crew today working on the USS San Francisco. No one 
had to make those folks go out there and work together as a 
team. If we implement the pay-for-performance element as it is 
currently designed, I fear that you are going to destroy all 
the teamwork and all the expertise of those folks.
    And let me just say this: We are coming up on the 
anniversary of the USS Thresher disaster. Our folks make, 
repair and operate on those nuclear submarines and all kinds of 
weapons systems that we can't really talk about today.
    You know, the very first atomic bomb was hoisted out in the 
desert in White Sands by a crane operator that was one of our 
chief shop stewards during the Manhattan project. We do nothing 
but national security. Everything is national security to us.
    So it's an insult for our folks to hear the words that they 
cannot have the freedom that we are espousing in Iraq because 
they are Federal employees, and they are somehow less than 
patriotic for having a union in their workplace or for using 
that.
    All we are asking for is a fair shake. We are asking that 
Congress would take control and mandate that the intent of 
Congress, as well as the letter of the law, is followed in 
NSPS.
    Thank you. I will be happy to answer any questions.
    [The prepared statement of Mr. Ault follows:]

    [GRAPHIC] [TIFF OMITTED] T4712.119
    
    [GRAPHIC] [TIFF OMITTED] T4712.120
    
    [GRAPHIC] [TIFF OMITTED] T4712.121
    
    [GRAPHIC] [TIFF OMITTED] T4712.122
    
    [GRAPHIC] [TIFF OMITTED] T4712.123
    
    [GRAPHIC] [TIFF OMITTED] T4712.124
    
    [GRAPHIC] [TIFF OMITTED] T4712.125
    
    [GRAPHIC] [TIFF OMITTED] T4712.126
    
    Mr. Porter. Thank you, Mr. Ault, we appreciate your 
comments today and to all of you for your additional backup 
testimony.
    I would like to ask the first question, having to do with 
the Managers Association. We have heard consistently that 
Federal managers are categorized as having the lack of 
necessary skills based on this new system that is being 
proposed. What kind of training will managers need to be most 
successful in his system?
    Ms. Heiser. For pay? For performance? For performance 
management in general?
    Mr. Porter. Yes.
    Ms. Heiser. I think that the whole idea of translating 
organizational goals to performance standards of an employee is 
the general framework of the training that would be required. 
What the gentleman was just talking about is right on point, 
really that the Federal workers do their jobs.
    And I think in the workplace, a lot of times supervisors 
come from a technical pool, or rather come to a supervisory 
position from a technical level rather than a managerial level, 
and work well with employees to manage and get the work done. 
But as far as actually leading them and coordinating the 
individual work of those people toward a higher goal, I don't 
think that's--that's not common to the Federal sector.
    And I think that type of a bigger focus is what's primarily 
required. And the whole idea of communicating, the whole 
concept of written standards versus verbal standards, I hope 
that's going to go away. I never understood the idea of having 
verbal opposed to rather than written, but they are both moot, 
because the point is to communicate standards effectively in 
whatever way it takes and it may be a combination.
    I think that OPM originally thought that managers were 
somehow bound by a performance appraisal that listed a set of 
duties and that was the only discussion that took place until 
performance appraisal time, and I fear that has really become 
the way things are in government. And that's what has to go 
away, the idea of having continuous communication with 
employees about how they are doing in terms of their 
performance.
    And it's got to be a bi-way, it has to be a two-way 
communication. It has to be--have the supervisor to the 
employee in terms of here is what I perceive. It sounds like 
basic communication, but I think that's what is missing.
    Mr. Porter. Do you think there would be adequate funding.
    Ms. Heiser. We took a little survey there this norning, you 
weren't there today--we took a little survey to see what level 
of confidence our folks had that the money would be there. It 
wasn't very high. You know, I don't know.
    Mr. Porter. Thank you. Mr. Ault, I know that your 
information regarding Mr. York is very germane. And please let 
him know he is an American hero, and we appreciate what he is 
doing. And having been to Yankton many times, I know exactly 
where he works or was working, but give him our best.
    And I know that you are quite bashful and your comments are 
reserved and subdued, and I say that with a smile, because I 
appreciate your candor.
    But let's talk for a moment about the labor relations board 
that's being proposed. Tell me what you think.
    Mr. Ault. As proposed, it leaves a lot to be desired, when 
you have an in-house program, we sometimes call these in-house 
unions or company unions, where, you know, you are subservient. 
There's no equality here. There's no--first of all, it wouldn't 
be transparent, it wouldn't be objective, if the Secretary can 
appoint and make those kinds of things happen.
    Currently, there is some objectivity and there is the 
systems of checks and balances of impartial grievance 
arbitration out there, where both parties have to, by 
preponderance of the proof, are a just cause standard of proof, 
have to prove their case that this person is actually guilty or 
has done something that would warrant the action.
    I don't see any of that going on with the system that is as 
proposed.
    Now, I have listened to management side of the House saying 
we are going to work that out in collaboration. Well, I sure 
hope so because we haven't worked anything out up till now. We 
have just been meeting for the sake of meeting so that they 
could come up to them on the Hill and say, hey, we met with the 
unions today.
    Mr. Porter. Thank you.
    Mr. Davis.
    Mr. Davis. Thank you, Mr. Chairman. Ms. Heiser.
    Ms. Heiser. Sir.
    Mr. Davis. I have been told often that the devil is in the 
details, when you look at proposals and movements and changes. 
And I heard Mr. Gage and Mr. Ault both delineate, I guess, what 
I would call a lot of devils in this proposal. Are there any 
that you see that are apparent devils in the proposal?
    Ms. Heiser. I think the largest apparent devil is truly the 
funding. We did take part of our vote this morning with--we are 
having the FMA national convention, so we have all folks in one 
place--and asked how confident they and their managers would be 
that this money would be there to see the programs, through, 
let's say, in the 3 to 7 years that it would take for full 
program implementation. And there was not a lot of confidence.
    I think that detail is truly the most significant, because 
managers cannot sell the potential value of this program to 
their employees, nor believe it themselves, unless they have 
confidence that the reward, I guess, would be there.
    Mr. Davis. Mr. Ault, I was moved by your description of 
patriotism as you talked about the gentleman who obviously is 
patriotic. And yet we knew that much of this action supposedly 
has been driven with an emphasis on national security. And 
early on, when the conversations got started, people were 
saying, well, we need to look at this especially in DOD because 
of national security.
    We need to look at it in homeland security because of 
national security, and, I mean, there are people like myself 
who suggest that it was essentially an opportunity to try and 
turn back the clock in many ways, and that is turn back the 
clock on the employee rights, turn back the clock on 
collaboration, turn back the clock on democracy in the 
workplace. I mean, we talk about democracy. And yet it appears 
as though, in many instances, we are not willing to practice 
what we preach.
    How important do you think a sense of democracy is in the 
work environment?
    Mr. Ault. I think it's critical. The folks we represent are 
more than arms and legs. They are the real experts. Whenever 
you are going into a nuclear reactor compartment hot, you have 
to be able to know that the people that have worked with you 
are dependable, I mean, it's the democracy of workplace is just 
critical.
    We have a unique perspective. We also represent the private 
sector that build these ships. So, I mean, we come from a 
unique perspective. And when we talk about a contemporary 
system and a flexible system, when we set out and negotiate, 
for example, with Northrop Grumman ship systems, the first 
thing they want in their labor relations is the involvement of 
the employees.
    They want what DOD is throwing away. They want the 
employees to be part of the team. A contemporary labor 
relations system today is more about employee involvement and 
less about supervision. They want to see more self-directed 
work force. They want to see fewer supervisors. They want to 
see more people directly involved in production. They want to 
see cost savings from employees, ideas being implemented on the 
floor without going through a long and tedious process. So, Mr. 
Davis, to speak directly to it, it's the answer.
    Unfortunately, no one from DOD is asking the question.
    Mr. Davis. I would concur with you.
    Mr. Gage, it seemed to me that you indicated that 
collaboration has been less than democratic, or I guess you get 
the impression that you don't feel that there has been 
partnership in the evolution and development of the proposed 
changes relative to your union and other unions interaction 
with DOD. Is that an accurate characterization?
    Mr. Gage. That's exactly accurate. We are disappointed 
about it. The way we read the authorizing legislation, we were 
supposed to be part of the design of this thing. And we have 
been shut out completely. We are still, you know, I am looking 
at it, you know, we are going to go into this meeting and 
confer. And we know what we think we need as safeguards, and I 
would really like to hear that word being used so often today.
    Because if this system is so good, it should be able to 
stand up to scrutiny and have safeguards for employees for that 
transparency. So we are going into the meeting and confer, and 
we think we have our very good arguments, and we are hoping 
that DOD will look at them.
    But so far they seem to have their mind made up. It's a 
very theoretical approach they are taking rather than the 
practical one that Ron is talking about and that our workers 
are looking for. So we are trying to get this out of the sky 
and out of ideology, maybe, and down to the practical, 
practical things that work on the worksite.
    Mr. Davis. Well, I have no further questions, Mr. Chairman, 
I want to thank all of the witnesses for appearing and for 
their participation. And, again, I thank you for holding this 
hearing.
    Mr. Porter. Thank you, Mr. Davis. That would conclude my 
questions also. We appreciate your comments and know that many 
Members will be submitting questions later. They have time to 
do so, and actually, I do have some questions that we will be 
submitting.
    But let me say for the record that this committee is going 
to be very thoughtful in its deliberation, as we follow the 
process of implementation. And I know a number of points were 
brought up this morning that have to be addressed and haven't 
been, and know that many of the stages of implementation can 
take 8 or 9 years, if my understanding is correct. But we want 
to make sure that it is done right and that the employees and 
managers, those that are directly impacted have a say in this 
process.
    So we appreciate all of your testimony today and look 
forward to following this in the future, and we will adjourn 
the meeting. Thank you.
    [Whereupon, at 4:15 p.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
follows:]

[GRAPHIC] [TIFF OMITTED] T4712.127

[GRAPHIC] [TIFF OMITTED] T4712.128

[GRAPHIC] [TIFF OMITTED] T4712.129

[GRAPHIC] [TIFF OMITTED] T4712.130

[GRAPHIC] [TIFF OMITTED] T4712.131

[GRAPHIC] [TIFF OMITTED] T4712.132

[GRAPHIC] [TIFF OMITTED] T4712.133

[GRAPHIC] [TIFF OMITTED] T4712.134

[GRAPHIC] [TIFF OMITTED] T4712.135

[GRAPHIC] [TIFF OMITTED] T4712.136

[GRAPHIC] [TIFF OMITTED] T4712.137

[GRAPHIC] [TIFF OMITTED] T4712.138

[GRAPHIC] [TIFF OMITTED] T4712.139

[GRAPHIC] [TIFF OMITTED] T4712.140

[GRAPHIC] [TIFF OMITTED] T4712.141

[GRAPHIC] [TIFF OMITTED] T4712.142

[GRAPHIC] [TIFF OMITTED] T4712.143

[GRAPHIC] [TIFF OMITTED] T4712.144

[GRAPHIC] [TIFF OMITTED] T4712.145

[GRAPHIC] [TIFF OMITTED] T4712.146

[GRAPHIC] [TIFF OMITTED] T4712.147

[GRAPHIC] [TIFF OMITTED] T4712.148

[GRAPHIC] [TIFF OMITTED] T4712.149

[GRAPHIC] [TIFF OMITTED] T4712.150

[GRAPHIC] [TIFF OMITTED] T4712.151

[GRAPHIC] [TIFF OMITTED] T4712.152

[GRAPHIC] [TIFF OMITTED] T4712.153

[GRAPHIC] [TIFF OMITTED] T4712.154

[GRAPHIC] [TIFF OMITTED] T4712.155

[GRAPHIC] [TIFF OMITTED] T4712.156

[GRAPHIC] [TIFF OMITTED] T4712.157

[GRAPHIC] [TIFF OMITTED] T4712.158

[GRAPHIC] [TIFF OMITTED] T4712.159

[GRAPHIC] [TIFF OMITTED] T4712.160

[GRAPHIC] [TIFF OMITTED] T4712.161

[GRAPHIC] [TIFF OMITTED] T4712.162

[GRAPHIC] [TIFF OMITTED] T4712.163

[GRAPHIC] [TIFF OMITTED] T4712.164

[GRAPHIC] [TIFF OMITTED] T4712.165

[GRAPHIC] [TIFF OMITTED] T4712.166

[GRAPHIC] [TIFF OMITTED] T4712.167

[GRAPHIC] [TIFF OMITTED] T4712.168

[GRAPHIC] [TIFF OMITTED] T4712.169

[GRAPHIC] [TIFF OMITTED] T4712.170

[GRAPHIC] [TIFF OMITTED] T4712.171

[GRAPHIC] [TIFF OMITTED] T4712.172

[GRAPHIC] [TIFF OMITTED] T4712.173

[GRAPHIC] [TIFF OMITTED] T4712.174

[GRAPHIC] [TIFF OMITTED] T4712.175

                                 
