[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
     ADDRESSING THE DEPARTMENT OF HOMELAND SECURITY'S MORALE CRISIS 

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

                                HEARING

                               before the

                      SUBCOMMITTEE ON MANAGEMENT,
                     INVESTIGATIONS, AND OVERSIGHT

                                 of the

                     COMMITTEE ON HOMELAND SECURITY
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 19, 2007

                               __________

                           Serial No. 110-24

                               __________

       Printed for the use of the Committee on Homeland Security
                                     
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                     COMMITTEE ON HOMELAND SECURITY

               BENNIE G. THOMPSON, Mississippi, Chairman

LORETTA SANCHEZ, California,         PETER T. KING, New York
EDWARD J. MARKEY, Massachusetts      LAMAR SMITH, Texas
NORMAN D. DICKS, Washington          CHRISTOPHER SHAYS, Connecticut
JANE HARMAN, California              MARK E. SOUDER, Indiana
PETER A. DeFAZIO, Oregon             TOM DAVIS, Virginia
NITA M. LOWEY, New York              DANIEL E. LUNGREN, California
ELEANOR HOLMES NORTON, District of   MIKE ROGERS, Alabama
Columbia                             BOBBY JINDAL, Louisiana
ZOE LOFGREN, California              DAVID G. REICHERT, Washington
SHEILA JACKSON LEE, Texas            MICHAEL T. McCAUL, Texas
DONNA M. CHRISTENSEN, U.S. Virgin    CHARLES W. DENT, Pennsylvania
Islands                              GINNY BROWN-WAITE, Florida
BOB ETHERIDGE, North Carolina        MARSHA BLACKBURN, Tennessee
JAMES R. LANGEVIN, Rhode Island      GUS M. BILIRAKIS, Florida
HENRY CUELLAR, Texas                 DAVID DAVIS, Tennessee
CHRISTOPHER P. CARNEY, Pennsylvania
YVETTE D. CLARKE, New York
AL GREEN, Texas
ED PERLMUTTER, Colorado
VACANCY

        Jessica Herra-Flanigan, Staff Director & General Counsel

                     Rosaline Cohen, Chief Counsel

                     Michael Twinchek, Chief Clerk

                Robert O'Connor, Minority Staff Director

                                 ______

       SUBCOMMITTEE ON MANAGEMENT, INVESTIGATIONS, AND OVERSIGHT

             CHRISTOPHER P. CARNEY, Pennsylvania, Chairman

PETER A. DeFAZIO, Oregon             MIKE ROGERS, Alabama
YVETTE D. CLARKE, New York           TOM DAVIS, Virginia
ED PERLMUTTER, Colorado              MICHAEL T. McCAUL, Texas
VACANCY                              PETER T. KING, New York (Ex 
BENNIE G. THOMPSON, Mississippi (Ex  Officio)
Officio)

                    Jeff Greene, Director & Counsel

                         Brian Turbyfill, Clerk

                    Michael Russell, Senior Counsel

                                  (ii)






































                            C O N T E N T S

                              ----------                              
                                                                   Page

                               STATEMENTS

The Honorable Christopher P. Carney, a Representative in Congress 
  From the State of Pennsylvania, and Chairman, Subcommittee on 
  Management, Investigations, and Oversight......................     1
The Honorable Mike Rogers, a Representative in Congress From the 
  State of Alabama, and Ranking Member, Subcommittee on 
  Management, Investigations, and Oversight......................     3
The Honorable Bennie G. Thompson, a Representative in Congress 
  From the State of Mississippi, and Chairman, Committee on 
  Homeland Security..............................................     4
The Honorable Yvette D. Clarke, a Representative in Congress From 
  the State of New York..........................................    45
The Honorable Peter A. DeFazio, a Representative in Congress From 
  the State of Oregon............................................    47
The Honorable Ed Perlmutter, a Representative in Congress From 
  the State Colorado.............................................    43

                               WITNESSES

Mr. J. David Cox, National Secretary--Treasurer, American 
  Federation of Government Employees:
  Oral Statement.................................................    21
  Prepared Statement.............................................    23
Ms. Colleen M. Kelley, National President, National Treasury 
  Employees Union:
  Oral Statement.................................................    10
  Prepared Statement.............................................    12
The Honorable Marta Brito Perez, Chief Human Capital Officer, 
  Department of Homeland Security:
  Oral Statement.................................................     5
  Prepared Statement.............................................     7
Mr. Max Stier, President and CEO, Partnership for Public Service:
  Oral Statement.................................................    29
  Prepared Statement.............................................    31

                               Appendixes

Appendix A:  An Overview of Civil Service Reform Efforts.........    55
Appendix B:  Questions and Responses:
  Mr. J. David Cox Responses.....................................    57
  Ms. Colleen M. Kelley Responses................................    60
  The Honorable Marta Brito Perez Responses......................    64
  Mr. Max Stier Responses........................................    81


     ADDRESSING THE DEPARTMENT OF HOMELAND SECURITY'S MORALE CRISIS

                              ----------                              


                        Thursday, April 19, 2007

             U.S. House of Representatives,
                    Committee on Homeland Security,
                                Subcommittee on Management,
                             Investigations, and Oversight,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:11 a.m., in 
Room 311, Cannon House Office Building, Hon. Christopher Carney 
[chairman of the subcommittee] presiding.
    Present: Representatives Carney, Thompson, DeFazio, Clarke, 
Perlmutter, and Rogers.
    Mr. Carney. [Presiding.] The subcommittee will come to 
order.
    The subcommittee is meeting today to receive testimony on 
``Addressing the Department of Homeland Security's Morale 
Crisis.''
    I would like to take this opportunity to thank the 
witnesses for joining us today to discuss the employee morale 
issue at the Department of Homeland Security.
    I had an opportunity earlier this year to speak with Chief 
Human Capital Officer Perez. It was a brief meeting, and I hope 
we can really delve a bit deeper into some of these issues with 
concerns of morale at DHS.
    I also would like to thank my colleague from Alabama, Mr. 
Rogers. I know during his tenure in Congress earlier, under his 
leadership the committee began examining this issue.
    Frankly, I am very worried about the job satisfaction at 
DHS. It has literally gone from bad to worse.
    When the administration first proposed the creation of DHS, 
the leadership in the House rubber-stamped a proposal to allow 
DHS to experiment with a personnel system and ignore the 
traditional civil service system.
    The proposed system was touted as a system of the future, a 
surefire way to increase productivity and keep employees happy. 
It is and was an utter failure.
    In the OPM personnel study, DHS went from third-worst in 
terms of employee satisfaction to dead last in the most recent 
survey.
    I believe, along with countless others, that this 
dissatisfaction is a direct result of not only the mashing of 
22 different agency cultures in the formation of DHS but of the 
one thing that really has tied everyone together when DHS 
couldn't seem to integrate anything else. That is MaxHR.
    I wish we weren't still talking about MaxHR. In fact, I am 
sure there are thousands upon thousands of people who wish 
MaxHR was a moot point.
    That said, during our earlier meeting this year with Ms. 
Perez, she basically told me that simply the name MaxHR was 
being laid to rest.
    Most of the human resources practices that were part of 
MaxHR were being rolled into a new human capital management 
system, HCOP.
    We know both from the OPM survey and directly from DHS 
employees that the experimental H.R. system at DHS is what has 
caused many of their headaches and much of their disappointment 
with the department.
    So it seems wrong to just change the name of the system 
without making some radical changes to the system.
    I believe that Mr. Stier's organization will be releasing a 
study today that simply confirms that OPM data, and may be 
giving us a little more insight into this dissatisfaction.
    While the OPM survey is a snapshot in time, a few years ago 
satisfaction was higher, and now it is lower. [inaudible] DHS 
is already in last place, it is difficult to give the level of 
dissatisfaction a value.
    But I am sensing a trend where dissatisfaction continues, 
and unhappiness of employees usually begets further unhappiness 
when not properly addressed by management.
    I am hopeful that under the leadership of the current 
undersecretary for management, DHS will begin to listen better 
to its employees. He has already assured me that he will stop 
referring to valued DHS employees as ``human capital.''
    Also, I look forward to hearing from Ms. Kelley and Mr. 
Cox. I don't know whether Ms. Perez has had the pleasure of 
meeting with the NTEU or the AFGE representatives yet.
    Hopefully, this hearing can begin the process of DHS 
listening to the concerns of its human capital and make real 
changes that will bring about a positive change in the 
satisfaction levels of DHS employees.
    We cannot afford to have such staggeringly low morale at 
the department tasked with protecting our nation. It is time we 
roll up our sleeves and really get down to business righting 
the wrongs of DHS.
    Congress, DHS leadership, the rank and file employees of 
DHS and the administration must work toward pulling DHS toward 
the top of the OPM survey.
    I know human resources isn't the sexiest issue to explore, 
but I really believe--I truly believe that if we can address 
and correct the personnel management side of the equation, 
morale will vastly improve as well.
    It will certainly not be accomplished overnight, but happy 
DHS employees will ultimately lead to a better department and a 
more secure nation.
    Additionally, I would like to remind the department that 
our committee as a whole requires that testimony be submitted 
48 hours prior to the hearing. I would like to thank Ms. 
Kelley, Mr. Cox and Mr. Stier for getting that testimony in on 
time.
    I would appreciate it if DHS would comply with the 
committee rules from this point forward.
    Thanks again to all of you for your cooperation and candor.
    The chair now recognizes the ranking member of the 
subcommittee, the gentleman from Alabama, Mr. Rogers, for an 
opening statement.
    Mr. Rogers. Thank you, Chairman Carney, and thank you for 
holding this hearing.
    And I want to thank each of the panelists for taking the 
time to join us and interact with us on this very important 
topic of personnel happiness or morale.
    And this is the first time I understand that we are going 
to have the new chief human capital officer with us before this 
committee, and I hope it is the last time you are before this 
committee with that title.
    We have directed in the authorization bill the Secretary to 
come up with a new title for that position. We don't care what 
it is, but human capital is just not the way we want to 
personalize that job.
    So, welcome here.
    We also welcome back two employee unions which appeared 
before this subcommittee last year.
    Today we build on that hearing that this subcommittee held 
in the 109th Congress on personnel challenges facing the 
department. While progress has been made since then, much more 
needs to be done.
    As the chairman noted, the Office of Personnel Management 
recently released its employee survey which ranked DHS at or 
near the bottom of the various job satisfaction categories.
    The department's deputy secretary, Michael Jackson, wrote 
to all DHS employees indicating the survey rankings are 
unacceptable. He, along with the secretary and undersecretary 
for management, are taking steps to address these results.
    In addition, last year Secretary Chertoff requested that 
the Homeland Security Advisory Council conduct a review of the 
department's culture.
    The Council's so-called Culture Task Force issued its 
recommendations in January, and the department's leadership is 
now considering which ones to implement.
    Experts have testified that a major merger, even one less 
complex as DHS, takes approximately 7 years to be successful.
    DHS employees have been through three reorganizations in 
just 4 years: the creation of the department in 2003, the 
second stage review in 2005, and the reform of FEMA this year.
    Such reorganizations have a negative impact on employee 
morale, and the department's current structure should be given 
time to work.
    Today we will hear about two new departmental initiatives, 
the Human Capital Operational Plan and a Learning and 
Development Strategy. We look forward to hearing from our 
witnesses as to what impact these initiatives will have on DHS 
employees.
    We also will hear from the president of the Partnership for 
Public Service on the importance of creating a performance-
based culture at DHS and how this approach would help the 
department fulfill its mission.
    It has been over 4 years since the department was 
established, and it still has significant personnel challenges. 
These challenges need to be addressed to ensure that the 
dedicated folks who work at DHS are best able to protect our 
nation from terrorist attacks and natural disasters.
    With that I yield back, Mr. Chairman.
    Mr. Carney. Thank you, Mr. Rogers.
    The chair now recognizes the chairman of the full 
committee, the gentleman from Mississippi, Mr. Thompson, for an 
opening statement.
    Mr. Thompson. Thank you very much, Mr. Chairman. Thank you 
for convening this hearing.
    I welcome the witnesses to this hearing this morning. We 
appreciate your willingness to provide us with your input on 
how we can fix the Department of Homeland Security.
    This week's event at Virginia Tech clearly demonstrates the 
need for achieving this goal quickly.
    It is no secret that morale in the department is low, one 
of the lowest of all federal agencies, and that is a huge 
problem. But what really worries me is that this is not a new 
problem. This department cannot continue to score last or near 
last in leadership, performance, talent and satisfaction on the 
job.
    A former director of the department's cultural task force 
said it best: ``Stop talking about Team DHS and start talking 
about Team Homeland Security.'' Why? Because this team is 
united for a common goal.
    That goal is to protect, secure and strengthen this great 
country. Every job within the department is important to 
achieving that goal, and employees must feel, believe and know 
that, in order to accomplish it.
    Today we will address why employees within the department 
are plagued with low morale and what the department is doing to 
address this crisis.
    We must afford the department employees the same 
protections afforded other civil service employees [inaudible] 
protecting the nation.
    We have seen the survey results, and they are bad. We have 
heard from the culture task force, and they said the 
department's conditions are bad. We have listened to employees, 
and they have said MaxHR was bad.
    We must turn this around, because too much is at stake. 
Team Homeland Security cannot fail. We are dedicated to seeing 
[inaudible] to success.
    Mr. Chairman, I yield back, but I want to say at the outset 
that I am, like you, very concerned about morale. This 
committee is concerned. And if our partners in this effort will 
work with us, I am sure that in time we can overcome this.
    And I yield back.
    Mr. Carney. I thank the chairman of the full committee for 
his comments.
    Of course, he and I are very concerned, as is Mr. Rogers, 
as is the entire committee is, is quite concerned. And it is 
critical that the morale improve, that we move forward and make 
this nation safer.
    Other members of the subcommittee are reminded that under 
committee rules opening statements may be submitted for the 
record.
    I welcome the witnesses.
    Our first witness is Marta Brito Perez, chief human capital 
officer of the Department of Homeland Security. Ms. Perez came 
to the department late last year from the Office of Personnel 
Management, where she led the human capital leadership and 
merit system, accountability division.
    Prior to her federal service, Ms. Perez was the director of 
the office of human resources for the Montgomery County, 
Maryland government, where she oversaw all aspects of human 
resource management for more than 10,000 employees and 4,000 
retired employees and their dependents.
    Our second witness is Colleen M. Kelley, president of the 
National Treasury Employees Union. NTEU represents over 150,000 
federal employees, 15,000 of whom are Customs and Border 
Protection employees within the Department of Homeland 
Security.
    President Kelley has been an NTEU member since 1974 and has 
served in various NTEU chapter leadership positions. She was 
first elected president in August of 1999 and was reelected for 
a second 4-year term in August of 2003.
    Our next witness is J. David Cox, the secretary-treasurer 
of the American Federation of Government Employees, AFL-CIO. 
AFGE represents more than 600,000 federal employees, including 
60,000 who work in the Department of Homeland Security.
    Mr. Cox was elected secretary-treasurer in August 2006. 
Prior to this, he served more than 11 years as first executive 
vice president of the AFGE national veterans affairs council.
    Our final witness is Max Stier, president and CEO of the 
Partnership for Public Service. The Partnership for Public 
Service seeks to revitalize the federal civil service by making 
the government an employer of choice for talented Americans.
    Mr. Stier has worked previously in all three branches of 
the federal government, including clerking for Supreme Court 
Justice David Souter. Most recently, Mr. Stier was deputy 
general counsel for litigation with the Department of Housing 
and Urban Development.
    Without objection, the witnesses' full statements will be 
inserted into the record.
    I now ask each witness to summarize his or her statement 
for 5 minutes, beginning with Chief Human Capital Officer 
Perez.

   STATEMENT OF HON. MARTA BRITO PEREZ, CHIEF HUMAN CAPITAL 
            OFFICER, DEPARTMENT OF HOMELAND SECURITY

    Ms. Perez. Good morning. And thank you very much, Chairman 
Carney, Representative Rogers, Chairman Thompson and members of 
the subcommittee. It is an honor for me to appear before the 
committee today for the very first time.
    During my short tenure at the department, I have had the 
opportunity to experience the dedication of employees across 
the department. And I agree completely with you that the work 
that they do is extremely important to our nation and the 
reason I came to work at homeland security.
    I have also worked very closely with our components to 
develop a human capital strategy and a direction for a human 
resources program that is consistent with the vision of the 
country and the expectations they have
    My role is to ensure the capacity of the department 
relative to employees, their morale, the way they do their 
work, their training, and I hope to contribute in that area.
    When DHS was created, it was one of the largest mergers to 
ever take place in the federal government. And you are 
absolutely right, many suggest that a reorganization of that 
nature takes 5 years to 7 years to complete. We are only 4 
years into that journey.
    It will take time to fully integrate, but I am very happy 
to say that in the time that I have been here, I have had the 
opportunity(and I traveled last week, as an example, down to 
the border on the southern border and saw how many of our 
legacy components are working together to make sure they get 
the mission done. And we have much of which to be proud.
    And although the general results of the Federal Human 
Capital Survey were very disappointing, we know that our 
employees have a very strong passion for our mission.
    Eighty-nine percent of them said that they believe in the 
work that they do. Eighty percent said that they like the work 
that they do. And we need to capitalize on that.
    The survey also showed that there are challenges, and we 
have began already to address many of the challenges. And in 
fact, we have rolled out a human capital operational plan--it 
is just a plan--for 2007 and 2008. The plan serves as a roadmap 
for integrating the department's human resources programs and 
activities and to identify priorities for the coming years.
    The priorities that we have identified with the components 
are hiring and retaining a diverse workforce, ensuring that we 
have a culture of performance that impacts our employees, 
offering learning and development opportunities, facilitating 
the use of development and integration, service excellence--
these are all things that the committee has already expressed 
as are important.
    The five priorities signal an evolution in the areas of 
emphasis in the Department of Homeland Security. We have 
discontinued the use of the term ``Max.'' This is not, however, 
just a name change. The areas that Max emphasized were limited.
    We have expanded the areas that we are now addressing as 
being important to us, areas--for instance, hiring, retaining, 
developing employees. Those are areas that [inaudible] MaxHR. 
That is the reason why the name is no longer relevant to us.
    There is nothing in the human capital operational plan that 
diminishes our employee rights, and it is my responsibility--
and I was head of oversight at the Office of Personnel and 
Management. I had the opportunity to audit federal departments 
and their human capital practices to the ensure compliance of 
merit system and rights.
    We are responding to the surveys with a two-prong approach, 
department-wide and as a component. Department-wide we are 
conducting focus groups--the components are also conducting 
focus groups--to learn more for employees about what--you know, 
about what actions do we need to take and how should we address 
their concerns.
    We have already increased our accountability by requiring 
that our executives and our managers in their performance plan 
address integrity, leading employees, communications, 
diversity, performance, innovation, collaboration and 
stewardship of the public resources.
    The homeland security advisory council that you have 
alluded to said that accountability is the most important area, 
and we agree with that.
    We are increasing the use of capacity in facilitating 
integration by delivering new leadership programs that address 
those areas that were identified this week in the survey.
    We have trained over 14,000 managers and supervisors in how 
to establish new goals, how to talk to employees, how to 
provide feedback, how to reward our employees.
    We are expanding the coverage and will work with employee 
representatives, employee unions, and hopefully get their 
support to roll out the program and better communication for 
employees in 2007 and beyond.
    In the hiring side, we are working very closely with our 
partners in the Office for Civil Rights and Civil Liberties to 
make sure that whatever initiatives we have relative to 
outreach and recruitment incorporate strong program relative to 
bringing diversity to the department.
    Just recently we had conducted a summit, a recruitment 
summit, with national organizations from places like the 
National Black MBA, Hispanic Association of Colleges and 
Universities, Women in Law Enforcement, to make sure that every 
program that we have in place is a program that addresses not 
only the recruitment needs but the diversity needs of the 
department.
    We are also developing a comprehensive diversity strategy 
for the department and have a new learning and development 
strategy to ensure that our employees have the skills that they 
need to accomplish the mission.
    In conclusion, I believe that the programs that we have 
initiated and the action plans that are in place will have a 
significant impact on improving the survey results.
    I am passionate about the work that I do. I take my 
responsibility at DHS very seriously. And I, too, want the DHS 
to be a best place to work. Thank you for the opportunity. I 
will be happy to respond to any questions.
    [The statement of Ms. Perez follows:]

                Prepared Statement of Marta Brito Perez

    Thank you, Chairman Carney, Representative Rogers and Members of 
the Subcommittee. It is an honor to appear before you today to discuss 
current and planned Department of Homeland Security (DHS) human capital 
initiatives and programs.
    I was appointed as the Department's Chief Human Capital Officer on 
September 18,2006. Prior to joining DHS, I headed the Human Capital 
Leadership and Merit System Accountability Division with the Office of 
Personnel Management. In this capacity, I led the government-wide 
effort to transform human management so that agencies are held 
accountable for managing their workforce effectively and efficiently. I 
was the architect of the Human Capital Assessment and Accountability 
Framework, a set of standards and measures designed to evaluate human 
capital management practices in the federal government. I have also had 
the opportunity to work in labor negotiations and have trained domestic 
and international law enforcement professionals.
    As the Department's Chief Human Capital Officer, I provide 
direction and oversight for all elements of the Department's human 
resources management programs. In my six months serving the Department, 
I believe I have gained a sound understanding of the complexities of 
the organization and the challenges we face in ensuring we have the 
high-quality workforce needed to achieve our critical mission.
    I have had the opportunity to meet with and observe the hard work 
and dedication of employees across the Department of Homeland Security. 
I have also observed that our ability to deliver on our critical 
mission depends upon the hard work, knowledge, diligence and insights 
of these employees.
    My office plays an important role in ensuring and supporting DHS' 
capacity to build and sustain a high-performing workforce and provide 
programs to give employees at all levels the knowledge and tools they 
need to drive mission success.

Organizational Transformation
    When DHS was created it was one of the largest ``mergers``to ever 
take place in the Federal government. GAO, in a report released this 
past February, stated that ``successful transformations of large 
organizations, even those faced with less strenuous reorganizations 
than DHS, can take five to seven years to achieve.'' We also know from 
the research that mergers create a great deal of anxiety for the 
workforce and that initial resistance is common. DHS is only four years 
into this journey. While we are making great progress, it will take 
time to become a fully-integrated organization. We understand that this 
work is on-going and provides us the opportunity to achieve our goals. 
I do not want to minimize the excellent progress that has been made. 
Just last week I spent three days with our employees on the border 
discussing how the various legacy organizations have integrated. We 
have much of which to be proud.

Federal Capital
    Although the general results of the Federal Human Capital Survey 
were disappointing we are encouraged by the fact that DHS employees 
have a strong passion for our mission. 89% percent of employees report 
that they believe the work they do is important, and 80% percent like 
the Department of Homeland Security Testimony Work that they do. We 
also need to be mindful that the survey is only one source of data, 
which reflects the attitudes of our workforce at a single point in 
time. It is important information that we are taking seriously, but 
should be considered with other data. Our employees' passion for their 
jobs provides a strong foundation for future improvement.
    The survey did show that DHS faces many challenges. Addressing the 
issues raised in the Federal Human Capital Survey, and similar issues 
raised by the Homeland Security Culture Task Force, is one of the 
highest priorities of the Secretary and the entire DHS leadership team 
is committed to this end. And make no mistake; we recognize that moving 
the needle in the Federal Human Capital Survey is a leadership 
responsibility. Many of these challenges are being addressed through a 
number of initiatives, including the 2007--2008 Human Capital 
Operational Plan.
    The Plan supports the DHS mission, DHS Strategic Plan and the 
Secretary's goals and serves as for our efforts to integrate the 
Department's human resources management programs.
    It allows DHS to adjust to new and changing priorities while 
maintaining focus on five key priorities:
        1. Hiring and retaining a talented and diverse workforce
        2. Creating a DHS-wide culture of performance-Team DHS
        3. Creating high-quality learning and development programs
        4. Implementing a DHS-wide integrated leadership service
        5. Becoming a model of human capital service excellence
    These five priorities signal an evolution in the areas of emphasis 
in DHS human resource programs. We have discontinued the use of the 
term However, we continue to deploy the more employee-centric 
performance management program and we are exploring with OPM labor 
relations flexibilities and will work with employee representatives as 
appropriate in the implementation of changes to our program.
    Our response to the Federal Human Capital Survey is two-pronged, 
with ongoing data analysis and action planning taking place at both the 
enterprise and the component level. I am meeting with employee 
representatives and visiting employees in field offices where more than 
85% of our employees work. We will conduct focus groups with employees 
across the Department in order to learn more and act on their concerns 
on key issues such as leadership and communication. Our components will 
hold focus groups as well. These focus groups will represent a cross-
section of the Department and will be vital in obtaining information to 
better understand the results of the survey. Information obtained 
during these sessions will be further analyzed. We are also leveraging 
best practices from the components across the Department. Finally, my 
office will track and report on the progress made across the Department 
toward executing activities identified in action plans.
    Even before the focus groups take place, we are taking steps to 
improve communications, leadership and performance. Some examples 
include:
        - Increasing accountability by incorporating in the performance 
        plans of executives and managers key DHS skills/values--
        Integrity, Leadership, Communications, Diversity, Performance, 
        Innovation, Collaboration and Stewardship of the public 
        resources;
        - Enhancing DHS websites; and
        - Offering a DHS 101 module that explains DHS, what it does, 
        who is in it, the Secretary's priorities and how each 
        organization relates to them.

    To enhance leadership capacity and facilitate integration, we are:
        - Delivering new leadership training programs to focus on core 
        skills identified in the survey;
        - Incorporating rotational assignments and mentoring in our 
        leadership program; and
        - Creating a Speakers Bureau made up of the best and brightest 
        leaders from across the Department.

        - With regard to our new Performance Management Program:
        - We have trained over 14,000 managers and supervisors on sound 
        performance management principles;
        - We are expanding coverage and our tools; and
        - Ensuring employees in the new performance system understand 
        what is expected of them.
    It is equally important to acknowledge that our components have 
been very active in their own organizations in addressing 
communications, leadership and performance issues. We are confident 
through these coordinated efforts we are addressing the areas for 
improvement identified by the survey throughout the Department.

Finding;, Hiring and Keeping; a Qualified, Diverse Workforce
    Another area which we believe to be of critical importance is 
continuing to recruit and retain the right talent. The Department is 
focused on hiring and retaining a talented and diverse workforce. We 
are improving our hiring processes by educating our hiring managers and 
human resource officials on existing hiring flexibilities, as well as 
implementing an enterprise e-Recruitment system to facilitate the 
recruiting process. We have also established a corporate branding 
initiative to fill mission support vacancies that cross component lines 
in areas such as information technology, acquisition and human 
resources. We are also working with the Partnership for Public Service 
to improve our vacancy announcements to make our jobs sound more 
appealing.
    We are committed to ensuring that the DHS talent pool is 
representative of our Nation as a whole and are implementing Department 
and component recruitment strategies designed to find, hire and keep a 
qualified, diverse workforce.
    To this end, we are working closely with the Office for Civil 
Rights and Civil Liberties. Examples of our partnership include a 
recently held Recruitment Summit to which the Officer for Civil Rights 
and Civil Liberties and I invited leaders of national organizations 
serving minorities and women to meet and discuss strategies for 
recruitment; and our joint meetings with DHS component heads to discuss 
employment and capacity building for minority serving institutions.

Learning and Development
    Building on the HCOP, a Learning and Development Strategy for 
establishing a Department of Homeland Security University System, sets 
the course for how the Department will support a DHS-wide community of 
learning to develop our employees. The DHS University System supports 
program-specific skill development while also fostering a core set of 
homeland security preparedness, managerial and leadership skills.
    Implementation of the DHS University System will foster a single, 
unified DHS and help to create a ``Team DHS'' culture.

Conclusion
    We believe that the programs we have initiated and the action plans 
we are developing will have a significant impact on improving employee 
morale, sustaining a high-performing workforce and providing DHS 
employees with the knowledge and tools they need to be successful. We 
are laying the foundation but it will require a significant investment 
not only in DHS employees but also in the human capital programs that 
support these goals, as reflected in the President's `08 Budget 
request.
    Thank you for your leadership and your continued support of the 
Department of Homeland Security and the programs that support our 
employees. I would be happy to answer any questions you may have.

    Mr. Carney. Thank you for your testimony.
    I now recognize President Kelley to summarize her statement 
for 5 minutes.

 STATEMENT OF COLLEEN M. KELLEY, NATIONAL PRESIDENT, NATIONAL 
                    TREASURY EMPLOYEES UNION

    Ms. Kelley. Thank you, Chairman Carney, Ranking Member 
Rogers, Chairman Thompson and Mr. Perlmutter, I appreciate the 
opportunity to testify on the morale crisis at the Department 
of Homeland Security.
    As we all know, DHS once again received these low scores, 
the lowest in any federal agency, in job satisfaction, 
leadership and workplace performance.
    Widespread dissatisfaction with DHS management and 
leadership has created a morale problem that impacts employees' 
ability to do the job they want to do and that our country 
needs them to do.
    A significant source of the morale crisis is the 
uncertainty DHS created when it proposed its seriously flawed 
new human resource system.
    The Homeland Security Act that created the department 
required that any new human resource management system ensure 
that employees may organize, bargain collectively and 
participate through labor organizations of their own choosing 
in decisions which affect them.
    Because the final personnel regulations failed to meet 
these statutory requirements, NTEU challenged those in court.
    In 2005 the federal district court ruled that the 
regulations did not provide for collective bargaining or fair 
treatment of employees as required by the act.
    And in 2006, the federal appeals court upheld that 
decision. DHS did not appeal that decision to the Supreme 
Court.
    Despite the court rulings, DHS announced on March 7th, 2007 
that it intends to implement provisions of the regulations that 
were not specifically struck down by the courts.
    These provisions include limitations on employees' due 
process and appeal rights that were ruled as ``not ripe'' for a 
final decision, since no employee had yet been subject to 
discipline under them.
    But the fact that the appeals court agreed with the 
district court's conclusion that these regs lacked basic 
fairness should have caused DHS to drop these compromised 
provisions.
    DHS also intends to move forward with a new performance 
management system. We have had a preview of what a DHS pay-for-
performance system would look like when Customs and Border 
Protection unilaterally eliminated the union management-
administered performance award system.
    For the last 2 years, CBP management unilaterally made 
performance award decisions behind closed doors, with those 
receiving and the reasons for the awards kept secret.
    NTEU objected to the secretive process, and an arbitrator 
ruled in our favor, ordering the performance awards program to 
be redone in an open an transparent manner.
    Inexplicably, DHS appealed this decision and repeated the 
unilateral secretive performance award process. Litigation 
continues on this.
    NTEU strongly opposes the implementation of these 
compromised personnel regs and supports the provision in H.R. 
1648 to repeal the DHS system in its entirety.
    Another significant source of low morale is scheduling of 
employee work shifts. In the past, employees had input into 
which qualified employee would work which shift based on such 
criteria as seniority, expertise and volunteers.
    Now CBP management unilaterally makes all such decisions 
without any employee input and without a credible, transparent 
decision-making process.
    Many employees believe that CBP has used shift 
determination as an instrument of discipline and retaliation.
    Another area of concern for CBP officers is the One Face at 
the Border initiative that consolidates immigration, customs 
and agriculture inspection specialties into a single front line 
security position at ports of entry.
    Congress must ensure that expertise is retained with 
respect to these functions. The One Face at the Border 
initiative does not do that, and it thereby jeopardizes our 
nation's security.
    It is clear that CBP sees its One Face at the Border 
initiative as a means to increase management flexibility to 
increasing CBPO staffing levels.
    Air, land and sea ports remain woefully understaffed. NTEU 
is grateful to both the House and Senate Authorization 
Committees for proposed increases in the number of CBPOs.
    NTEU is also grateful to the committee for addressing in 
H.R. 1648 an equity issue at CBP. Section 501 grants 
prospective law enforcement officer status and benefits to 
CBPOs as of March 2003.
    Clearly, CBPOs deserve LEO status. But NTEU has concerns 
that Section 501 will create a two-tier system where CBPOs 
doing the exact same job will receive different retirement 
benefits based on when they began their service.
    NTEU is working with the committee to try to mitigate this 
inequity, and we strongly support H.R. 1073, the bipartisan Law 
Enforcement Officers Equity Act.
    This legislation treat all CBPOs as law enforcement 
officers and include prior service in legacy agencies in the 
20-year LEO retirement calculation.
    Finally, NTEU strongly supports collective bargaining 
rights for TSA officers as approved by Congress in H.R. 1 and 
S. 4.
    With that, I look forward to working with this committee on 
any and all issues that will help to make the Department of 
Homeland Security more effective and the work environment in 
which these homeland security officers are trying to do the 
best possible work for our country--and I would be glad to 
answer any questions you have. Thank you.
    [The statement of Ms. Kelley follows:]

                  Prepared Statement Colleen M. Kelley

    Chairman Carney, Ranking Member Rogers, I would like to thank the 
subcommittee for the opportunity to testify on the ongoing employee 
morale crisis at the Department of Homeland security (DHS).
    As President of the National Treasury Employees Union (NTEU), I 
have the honor of representing over 150,000 federal employees, 15,000 
of whom are Customs and Border Protection (CBP) employees at the 
Department of Homeland Security. I am also pleased to have served as 
the representative of NTEU on the DHS Senior Review Committee that was 
tasked with presenting to then-DHS Secretary Tom Ridge and then-Office 
of Personnel Management (OPM) Director Kay Coles James, options for a 
new human resources (HR) system for all DHS employees. NTEU was also a 
part of the statutorily mandated ``meet and confer'' process with DHS 
and OPM from June through August 2004.
    It was unfortunate that after two years of ``collaborating``with 
DHS and OPM on a new personnel system for DHS employees that NTEU was 
unable to support the final regulations when they were announced in 
2004. While some positive changes were made because of the 
collaboration between the federal employee representatives and DHS and 
OPM during the meet and confer process, NTEU was extremely disappointed 
that the final regulations fell short on a number of the Homeland 
Security Act's (HSA) statutory mandates. The most important being the 
mandates that DHS employees may, ``organize, bargain collectively, and 
participate through labor organizations of their own choosing in 
decisions which affect them,``(5 U.S.C. 9701(b)(4)) as well as the 
mandate that any changes to the current adverse action procedures must 
``further the fair, efficient and expeditious resolutions of matters 
involving the employees of the Department.''(5 U.S.C. 9701(f)(2)(C)).
    Because the final personnel regulations failed to meet the 
statutory requirements of the HSA in the areas of collective 
bargaining, due process and appeal rights, NTEU, along with other 
federal employee unions, filed a lawsuit in Federal court. On August 
12,2005, the federal district court ruled the labor-management 
relations and appeals portions of the DHS final personnel regulations 
illegal and enjoined their implementation by DHS. The found that the 
regulations did not provide for collective bargaining or fair treatment 
of employees as required by the Act. DHS appealed the district court's 
decision to the U.S. Court of Appeals for the District of Columbia 
Circuit. In June 2006, the Appellate Court upheld the lower court 
decision and DHS declined to appeal the ruling to the Supreme Court.

DHS PERSONNEL REGULATIONS ISSUES
    The Homeland Security Act requires that any new human resource 
management system ``ensure that employees may organize, bargain 
collectively, and participate through labor organizations of their own 
choosing in decisions which affect them.''
    In a number of critical ways, the personnel system established by 
the Homeland Security Act and the subsequent regulations issued by the 
Department of Homeland Security (DHS) have been a litany of failure 
because the law and the regulations effectively gut employee due 
process rights and put in serious jeopardy the agency's ability to 
recruit and retain a workforce capable of accomplishing its critical 
missions.
    When Congress passed the Homeland Security Act in 2002 (HSA), it 
granted the new department very broad discretion to create new 
personnel rules. It basically said that DHS could come up with new 
systems as long as employees were treated fairly and continued to be 
able to organize and bargain collectively.
    The regulations DHS came up with were subsequently found by the 
Courts to not even comply with these two very minimal and basic 
requirements. Much to consternation, on March 7,2007, DHS announced 
that it will put into effect portions of its compromised personnel 
system. Just a few weeks earlier, DHS outlined plans to move slower on 
its controversial personnel overhaul, formerly known as MaxHR, but now 
called the Human Capital Operations Plan. The President's fiscal year 
2008 budget calls for only $15 million to fund the renamed MaxHR 
personnel plan.
    In February of this year, DHS received the lowest scores of any 
federal agency on a federal survey for job satisfaction, leadership and 
workplace performance. Of the 36 agencies surveyed, DHS ranked on job 
satisfaction, on leadership and knowledge management, on results-
oriented performance culture, and on talent management. As I have 
stated previously widespread dissatisfaction with DHS management and 
leadership creates a morale problem that affects the safety of this 
nation.
    It should be clear to the Committee that the Department of Homeland 
Security has learned little from these Court losses and repeated survey 
results and will continue to overreach in its attempts to implement the 
personnel provisions included in the Homeland Security Act of 2002.
    With the abysmal morale and extensive recruitment and retention 
challenges at DHS, implementing these personnel changes now will only 
further undermine the agency's employees and mission. From the 
beginning of discussions over personnel regulations with DHS more than 
four years ago, it was clear that the only system that would work in 
this agency is one that is fair, credible and transparent. These 
regulations promulgated under the statute fail miserably to provide any 
of those critical elements. It is time to end this flawed personnel 
experiment.
    On March 28, the House Homeland Security Committee acted. The 
Committee approved an amendment to the fiscal year 2008 DHS 
Authorization bill that repeals the DHS Human Resources Management 
System and subsequently approved H.R. 1684, the DHS Authorization 
legislation, by a vote of 26-0.
    Despite Congress' clear intent to stop implementation of the failed 
DHS Human Resources Management System, DHS continues to persist in 
implementing these compromised personnel regulations.
    NTEU objects to the regulations on the following grounds.

Labor Relations/Collective Bargaining
    Under the final personnel regulations, the responsibility for 
deciding collective bargaining disputes will lie with a three-member 
DHS Labor Relations Board appointed by the Secretary of the Department 
of Homeland Security. Senate confirmation will not be required, nor is 
political diversity required among the Board members. Currently, 
throughout the federal government, collective bargaining disputes are 
decided by the Federal Labor Relations Authority (FLRA), an independent 
body appointed by the President and confirmed by the Senate. A true 
system of collective bargaining demands independent third party 
determination of disputes. The final regulations do not provide for 
that, instead creating an internal system in which people appointed by 
the Secretary will be charged with deciding matters directly impacting 
the Secretary's actions. The district court ruled this section of the 
regulations illegal.
    Under the final regulations, not only will management rights 
associated with operational matters (subjects that include deployment 
of personnel, assignment of work, and the use of technology) be non-
negotiable, but even the impact and implementation of most management 
actions will be non-negotiable. In other words, employee 
representatives will no longer be able to bargain on behalf of 
employees concerning the procedures that will be followed when DHS 
management changes basic conditions of work, such as employees' 
rotation between different shifts or posts of duty, or scheduling of 
days off.
    The final regulations further reduce DHS' obligation to 
collectively bargain over the already narrow scope of negotiable 
matters by making department-wide regulations non-negotiable. 
Bargaining is currently precluded only over government-wide regulations 
and agency regulations for which a ``compelling need'' exists. The new 
DHS personnel system would also allow management to void existing 
collective bargaining agreements, and render matters non-negotiable, 
simply by issuing a department-wide regulation. The district court 
ruled this section of the regulations illegal.
    A real life example of the adverse effect of the negotiability 
limitations on both employees and the agency will be in the area of 
determining work shifts. Currently, the agency has the ability to 
determine what the shift hours will be at a particular port of entry, 
the number of people on the shift, and the job qualifications of the 
personnel on that shift. The union representing the employees has the 
ability to negotiate with the agency, once the shift specifications are 
determined, as to which eligible employees will work which shift. This 
can be determined by such criteria as seniority, expertise, volunteers, 
or a number of other factors.
    CBP Officers around the country have overwhelmingly supported this 
method for determining their work schedules for a number of reasons. 
One, it provides employees with a transparent and credible system for 
determining how they will be chosen for a shift. They may not like 
management's decision that they have to work the midnight shift but the 
process is credible and both sides can agree to its implementation. 
Two, it takes into consideration lifestyle issues of individual 
officers, such as single parents with day care needs, employees taking 
care of sick family members or officers who prefer to work night 
shifts. The new personnel system's elimination of employee input into 
this type of routine workplace decision-making has had a negative 
impact on morale.

Due Process and Appeal Rights
    One of the core statutory underpinnings of the HSA was Congress' 
determination that DHS employees be afforded due process and that they 
are treated in a fair manner in appeals they bring before the agency. 
In fact, the HSA clearly states that the DHS Secretary and OPM Director 
may modify the current appeals procedures of Title 5, Chapter 77, only 
in order to, ``further the fair, efficient, and expeditious resolution 
of matters involving the employees of the Department.''(5 U.S.C. 9701 
(f) (2) (C)). Instead the final regulations undermine this statutory 
provision in a number of ways.
    The final regulations undercut the fairness of the appeals process 
for DHS employees by eliminating the Merit Systems Protection Board's 
(MSPB) current authority to modify imposed penalties. The result is 
that DHS employees will no longer be able to challenge the 
reasonableness of penalties imposed against them, and the MSPB will now 
only be authorized to modify agency-imposed penalties under very 
limited circumstances where the penalty is ``wholly unjustified,``a 
standard that will be virtually impossible for DHS employees to meet.
    The final regulations exceed the authority given in the HSA to the 
Secretary and OPM Director, by giving the Federal Labor Relations 
Authority (FLRA) and the MSPB new duties and rules of operation not set 
by statute. The FLRA and the MSPB are independent agencies, and DHS and 
OPM are not authorized to impose obligations on either independent 
agency, or dictate how they will exercise their jurisdiction over 
collective bargaining and other personnel matters.
    In the final regulations, the FLRA is assigned new duties to act as 
an adjudicator of disputes that arise under the new labor relations 
system and the regulations also dictate which disputes the FLRA will 
address and how they will address them.
    By going far beyond the statutory parameters of the HSA, and 
drastically altering the collective bargaining, due process and appeal 
rights of DHS personnel, the district court ruled these sections of the 
proposed regulations illegal. The overreaching by DHS in formulating 
these personnel regulation and the subsequent court ruling leaves CBP 
employees with little or no confidence that they will be treated fairly 
by the agency with respect to labor-management relations, appeals or 
pay by the department.
    These regulations include permitting the Secretary with unfettered 
discretion to create a list of Mandatory Removal Offenses (MRO) that 
will only be appealable on the merits to an internal DHS Mandatory 
Removal Panel (MRP) appointed by the Secretary.
    They also allow the Secretary to designate a preliminary list of 
seven potential mandatory removal offenses but are not the exclusive 
list of offenses. The final regulations also provide that the Secretary 
can add or subtract by the use of the Department's implementing 
directive mechanism and that the Secretary has the sole, exclusive, and 
unreviewable discretion to mitigate a removal penalty and restricts the 
Merit System Protection Board (MSPB), to act as an appellate body to 
review, on a deferential basis, findings of the new Mandatory Removal 
Panel (MRP). Chapter 12 of Title 5, which sets out jurisdiction, does 
not authorize this kind of action by the Board and the DHS Secretary 
and OPM Director are not empowered to authorize it through regulation.
    The MSPB Chairman in March 2,2005 testimony before the Subcommittee 
on the Federal Workforce and Agency Organization of the House Committee 
on Government Reform stated, ``We believe that this mitigation 
limitation is based on a perception that the Board's practice is to 
second guess the reasonableness of an agency's penalty decision without 
giving deference to the agency's mission or the manager's discretion. 
In fact, the Board considers a number of relevant factors in 
determining whether a penalty should be sustained, including whether it 
is within the range of penalties allowed for the offense in the 
agency's table of penalties. The MSPB only mitigates a penalty if it 
finds that the penalty clearly exceeds the maximum reasonable 
penalty.''
    These adverse action and appeals provisions were ruled illegal and 
a stay was imposed on the rule in 2005 by U.S. District Judge Rosemary 
Collyer, who said ``the regulations put the thumbs of the agencies down 
hard on the scales of justice in [the agencies'] favor.'' The appeals 
court, however, said the planned changes in adverse action and appeal 
rights were not yet ripe for a decision since no one has been subject 
to discipline under them. Still, the appeals court agreed with 
Collyer's basic conclusion regarding the lack of fairness. Should DHS 
put these compromised regulations into place, NTEU can file another 
court case as soon as an employee is harmed by the new adverse actions 
and appeals procedures.
    Despite the Court rulings, DHS announced on March 7,2007 that they 
intend to implement provisions of the regulations not specifically 
struck down by the Courts including these provisions limiting due 
process and appeal rights.

MaxHR Pay-for-Performance Proposal
    While not a part of the lawsuit filed by NTEU and other federal 
employee representatives, the final regulations as they relate to 
changes in the current pay, performance and classification systems of 
DHS employees must be brought to the attention of this subcommittee. 
While the final regulations lay out the general concepts of a new pay 
system, they remain woefully short on details.
    Too many of the key features of the new system have yet to be 
determined. The final regulations make clear that the agency will be 
fleshing out the system's details in issued implementing directives 
while using an expensive outside contractor that will cost the agency 
tens of millions of dollars that could be used for additional front 
line personnel. Among the important features yet to be determined by 
the agency are the grouping of jobs into occupational clusters, the 
establishment of pay bands for each cluster, the establishment of how 
market surveys will be used to set pay bands, how locality pay will be 
set for each locality and occupation, and how different rates of 
performance-based pay will be determined for the varying levels of 
performance.
    The House and Senate Appropriations Committees have been extremely 
thoughtful and deliberative in allocating funds for implementing MaxHR 
in the fiscal year 2006 and fiscal year 2007 DHS Appropriations bill 
and the Continuing Resolution for fiscal year 2007. Acknowledging that 
NTEU-initiated litigation had stalled implementation of portions of 
MaxHR and in response to request to redirect scarce federal dollars for 
DHS staffing and programs that benefit the nation's security, the 
Committee allocated $29.4 million in fiscal year 2006, $25 million in 
fiscal year 2007 and then reallocated $5 million of that $25 million to 
other programs in the fiscal year 2007 Continuing Resolution 
legislation. These appropriations were well below the President's 
fiscal year 2006 and fiscal year 2007 budget request.
    Because of Congress' actions, DHS outlined plans to move slower on 
its controversial personnel overhaul and even renamed the discredited 
MaxHR program to now be called the Human Capital Operations Plan 
(HCOP). And the President's fiscal year 2008 budget calls for only $15 
million to fund the renamed HCOP personnel plan.
    NTEU is especially mindful of the fact that the more radical the 
change, the greater the potential for disruption and loss of mission 
focus, at a time when the country can ill-afford DHS and its employees 
being distracted from protecting the security of our homeland. However, 
before any changes are made to tie employees' pay to performance 
ratings, DHS must come up with a fair and effective performance system.
    CBP employees got a preview of this in 2005 and 2006 as to how DHS 
will administer a new pay-for-performance program when it terminated 
the negotiated Awards and Recognition procedures and unilaterally 
imposed its own awards system. At the conclusion of the fiscal year 
2005 awards process, CBP, contrary to the parties' seven year practice 
of publicizing the names and accomplishments of award recipients as 
determined by a joint union-management committee, embarked on a policy 
of refusing to reveal the results of its awards decisions, the amount 
of the awards, and the accomplishments that resulted in the granting of 
the award so that employees in the future could emulate these 
accomplishments and too win an award.
    Not only were the unilaterally decided award results not 
publicized, but NTEU Chapters report that some employees were 
specifically told not to reveal that they had received an award. CBP 
has refused to provide NTEU at the national level with the results of 
its awards decisions. NTEU has informed DHS that CBP's strenuous 
efforts to hide its awards decisions make a mockery of promise that any 
pay-for-performance system it implements will be transparent and 
trusted by its employees.
    NTEU has received a favorable arbitration decision concluding that 
CBP terminated the joint union-management Awards and Recognition 
program and unilaterally imposed its own awards system. The arbitrator 
ordered CBP to return to the prior joint awards process and to rerun 
the fiscal year 2005 awards process using the negotiated procedure. CBP 
has delayed the ultimate resolution of this issue by appealing the 
arbitrator's decision to the FLRA asking the Authority to overturn the 
arbitrator's decision ``in order to improve employee morale.'' And DHS 
utilized the outlawed unilateral Awards process again this year.

Transportation Security Administration Personnel System
    The Aviation and Transportation Security Act (ATSA), enacted in 
November 2001, removed screening responsibility from air carriers and 
the private sector contractors who conducted screening for them and 
placed this responsibility with the Transportation Security 
Administration (TSA). As a result, TSA hired and deployed about 55,000 
federal passenger and baggage Transportation Security Officers (TSO) 
formerly known as screeners--to more than 400 airports nationwide based 
largely on the number of screeners the air carrier contractors had 
employed. Since August 2002, TSA has been prohibited by statute from 
exceeding 45,000 full-time equivalent positions available for 
screening.
    Congress' intention in federalizing the screening workforce was to 
replace a poorly trained, minimum-wage private contract screening 
workforce with professional, highly trained security screening 
officers. Congress, however, included in ATSA, Section that codified as 
a note to 49 44935, the following:
    ``Notwithstanding any other provision of the law, the Under 
Secretary of Transportation for Security may employ, appoint, 
discipline, terminate, and fix the compensation, terms and conditions 
of employment of Federal service for such a number of individuals as 
the Under Secretary determines to be necessary to carry out the 
screening function of the Under Secretary under section 44901 of title 
49, United States Code. The Under Secretary shall establish levels of 
compensation and other benefits for individuals so employed.''
    This section permitted the establishment of a federal personnel 
management system that is unique to TOs. SThe Federal Labor Relations 
Authority construed Section 111(d) as granting unfettered discretion to 
TSA to determine the terms and conditions of employment for federal 
screener personnel. Accordingly, a directive issued by then Under 
Secretary James Loy on January 8,2003 barred screeners from engaging in 
collective bargaining.
    The goal of providing screeners with adequate pay, benefits and 
training and thereby creating a professional and dedicated TSO 
workforce has been undermined by capricious and arbitrary management 
and the denial of the most basic workplace rights.
    To date, basic management programs have been massive failures. The 
training and certification program, performance appraisal system, and 
health and safety programs all lack accountability and therefore lack 
credibility with employees. This lack of oversight and accountability 
has resulted in one of the highest voluntary attrition rates in the 
entire federal government as well as the highest workplace injury 
rates.
    For example, the TSA Performance Accountability and Standards 
System (PASS) remains one of the largest concerns for TSA employees. 
Let us consider the implementation of the Agency's pay for performance 
system at JFK International Airport in 2006 as an example. Under the 
PASS system, employees are rated at four (4) levels--Role Model, 
exceeds expectations, meets expectations or did not meet expectations. 
Employees could receive merit raises if they attained ratings at the 
two higher levels. Only 1 % to 2% of all at JFK received ratings at the 
highest level and only about 20% of the total number of JFK TSOs 
received any merit raise at all. In other words, 80% of the screener 
workforce at JFK received no merit raise in 2006.
    Furthermore, allegations of favoritism and cronyism surround the 
system because there is no meaningful way for employees to challenge 
their ratings. They fear that if they speak up they will be fired--and 
they have been. If they were to challenge their dismissal before the 
Agency's Disciplinary Board, they know they have a statistically 
insignificant chance of winning-perhaps one in twenty. The lack of 
Agency accountability in its personnel systems fosters a culture of 
employee fear that in turn leads to unreported management incompetence. 
This culture of fear threatens the security of our country.
    The 110th Congress has recognized the failings of the TSA personnel 
system that prohibits collective bargaining and the House of 
Representatives in H.R. 1 and the Senate in S. 4 voted to repeal 
Section 111(d) of ATSA. Reversing this unequal treatment of TSOs will 
help restore morale and strengthen mission and personnel dedication at 
the Department of Homeland Security.
    Both MaxHR and PASS pay systems lack the transparency and 
objectivity of the General Schedule. If the proposed system is 
implemented, employees will have no basis to accurately predict their 
salaries year to year. They will have no way of knowing how much of an 
annual increase they will receive, or whether they will receive any 
annual increase at all, despite having met or exceeded all performance 
expectations identified by the Department. The for-performance'' 
element of the proposal will pit employees against each other for based 
increases. Making DHS employees compete against each other for pay 
increases will undermine the spirit of cooperation and teamwork needed 
to keep our country safe from terrorists, smugglers, and others who 
wish to do America harm.
    One thing is clear. The proposed pay systems will be extremely 
complex and costly to administer. A new bureaucracy will have to be 
created, and it will be dedicated to making the myriad, and yet-to-be 
identified, pay-related decisions that the new system would require. 
That is a concern for taxpayers. New management systems cost money--the 
Pentagon has spent $65 million so far on the new National Security 
Personnel System--and most experts say such systems succeed only when 
employees perceive them as fair and credible. Fortunately, taxpayer 
exposure for the discredited MaxHR system has been limited because 
Congress responded to the Court's action and limited appropriations for 
the discredited MaxHR program. Now it is time for Congress to repeal 
the entire DHS personnel program and cut all funding.

IMPEDIMENTS TO MISSION ACCOMPLISHMENT
    The second part of my testimony addresses DHS staffing and 
personnel policies that have deleteriously affected CBP employee morale 
and threaten the agency's ability to successfully meet its critical 
missions.

OPM 2004 and 2006 Federal Human Capital Survey Results
    In 2004, the OPM survey of federal employees revealed that 
employees rated DHS out of 30 agencies considered as a good place to 
work. On key areas covered by the survey, employees' attitudes in most 
categories were less positive and more negative than those registered 
by employees in other federal agencies. Employee answers on specific 
questions revealed that 44% of DHS employees believe their supervisors 
are doing a fair to a very poor job; less than 20% believe that 
personnel decisions are based on merit; only 28% are satisfied with the 
practices and policies of senior leaders; 29% believe grievances are 
resolved fairly; 27% would not recommend DHS as a place to work; 62% 
believe DHS is an average or below average place to work; only 33% 
believe that arbitrary action, favoritism, and partisan political 
action are tolerated; over 40% are not satisfied with their involvement 
in decisions that affect their work; 52% do not feel that promotions 
are based on merit; and over 50% believe their leaders do not generate 
high levels of motivation and commitment. On the other hand, most 
employees feel there is a sense of cooperation among their coworkers to 
get the job done.
    The 2006 Federal Human Capital Survey ratings were released in 
January 2007 and not much has changed. Nearly 10,400 Homeland Security 
employees participated in the survey and gave the department rock-
bottom scores in key job satisfaction, leadership and management areas 
in relation to 35 other agencies in the survey. Of the 36 agencies 
surveyed, DHS ranked on job satisfaction, on leadership and knowledge 
management, on results-oriented performance culture, and on talent 
management.
    The results of this OPM survey raise serious questions about the 
department's ability to recruit and retain the top notch personnel 
necessary to accomplish the critical missions that keep our country 
safe. According to OPM, 44 percent of all federal workers and 42 
percent of non-supervisory workers will become eligible to retire 
within the next five years. If the agency's goal is to build a 
workforce that feels both valued and respected, the results from the 
OPM survey clearly show that the agency needs to make major changes in 
its treatment of employees. And widespread dissatisfaction with DHS 
management and leadership creates a morale problem that affects the 
safety of this nation.
Staffing Shortages at the Ports of Entry
    One of the most significant reasons for low morale at CBP is the 
continuing shortage of staff at the 317 POEs. The President's fiscal 
year 2008 budget proposal requests $647.8 million to fund the hiring of 
3000 Border Patrol agents. But, for salaries and expenses for Border 
Security, Inspection and Trade Facilitation at the 317 Ports of Entry 
(POEs), funding is woefully inadequate.
    The President's fiscal year 2008 budget calls for an increase of 
only $8.24 million, for annualization of 450 appropriated in the fiscal 
year 2007 DHS Appropriations Conference Report. NTEU is extremely 
grateful that the Appropriations Conference Report included funding for 
an additional 450 CBPOs in the fiscal year 2007 DHS Appropriations 
bill. In that bill, the House and Senate Appropriations Conferees 
agreed to ``provide $181,800,000 for an additional 450 CBP officers and 
critical non-intrusive inspection equipment and fully fund the budget 
request for all cargo security and trade facilitation programs within 
CBP.''
    On March 15,2007, the House Appropriations Committee approved an 
Emergency Supplemental Appropriations bill for fiscal year ending 
September 30,2007, that among other things, ``recommends an additional 
$100,000,000 to improve significantly the ability of CBP to target and 
analyze US-bound cargo containers, achieve a capacity to screen 100 
percent of such cargo overseas, and double the number of containers 
that are subject to physical inspections. The funding would support 
hiring up to 1,000 additional CBP Officers, Intelligence Analysts and 
support staff, to be located at Container Security Initiative locations 
overseas, U.S. ports of entry, or the National Targeting Center.''
    The Senate Appropriations Committee approved similar language in 
its version of the Supplemental on March 22,2006. NTEU again is 
extremely grateful to the Committee for funding the hiring of 
additional CBPOs at sea ports and land ports. In addition, the SAFE 
Port Act requires CBP to hire a minimum of 200 additional CBP Officers 
in fiscal year 2008 for ports of entry around the nation.

CBP Understaffing at Airports
    First let me comment on the severe security risks our nation takes 
by understaffing. Customs and Border Protection has two overarching and 
sometimes conflicting goals: increasing security while facilitating 
trade and travel. NTEU has noted the diminution of secondary inspection 
in favor of passenger facilitation at primary inspection since the 
creation of the Department of Homeland Security. Why has there been 
this decrease in secondary inspections? NTEU believes that it is 
because of a decrease in CBP staffing levels. According to the 
Government Accountability Office (GAO) Report (GAO-05-663), 
International Air Passengers Staffing Model for Airport Inspections 
Personnel Can Be Improved, there is much evidence that airports are 
experiencing staffing shortages.
    There has been expressed to NTEU and Congress considerable concern 
about clearing international passengers within 45 minutes which is 
being done at the expense of specialized secondary inspection. Prior to 
9/11 there was a law on the books requiring INS to process incoming 
international passengers within 45 minutes. The Enhanced Border 
Security and Visa Protection Act of 2002 repealed the 45 minute 
standard, however ``it added a provision specifying that staffing 
levels estimated by CBP in workforce models be based upon the goal of 
providing immigration services within 45 minutes (page 12-13).'' See 
footnote #l.
    It has also come to attention that the U.S. Travel and Tourism 
industry has called for a further reduction in passenger clearance time 
to 30 minutes. The and industry's recently announced plan, called ``A 
Blueprint to Discover America,'' includes a provision for ``modernizing 
and securing U.S. ports of entry by hiring customs and border 
[protection] officers at the top 12 entry ports to process inbound 
visitors through customs within 30 minutes.'' This CANNOT be achieved 
at current staffing levels without jeopardizing security.
    On pages 16-19, GAO states ``The number of CBP staff available to 
perform primary inspections is also a primary factor that affects wait 
times at airports. . . For example, CBP and airline officials in 
Houston stated that the increase in the number of inspection stations 
at George Bush Intercontinental Airport, in combination with the 
addition of new CBP officers has reduced passenger wait times. . 
.However, the benefit of adding inspection stations has been limited 
because, as of June 2003, CBP has not increased staffing levels.''
    Regarding the building of new inspection stations, GAO states, 
airline officials said that these projects were planned, funded, and 
completed with the expectation that CBP would increase staff for the 
new facilities as passenger volume increased. However, CBP officials 
stated that the agency is not legally or contractually required to 
allocate new staff when inspection facilities are constructed or 
expanded and the agency is to make no commitment implicitly or 
explicitly regarding the future staffing levels in approving new 
inspection facility design proposals.''(page 21)
    NTEU is very grateful that the Congress in its fiscal year 07 DHS 
appropriations conference report directed CBP to submit by January 
23,2007 a resource allocation model for current and future year 
staffing requirements as specified by the House and Senate 
Appropriations Conference Report. Specifically, this report should 
assess optimal staffing levels at all land, air and sea ports of entry 
and provide a complete explanation of methodology for aligning staffing 
levels to threats, vulnerabilities, and workload across all mission 
areas.''(See September 28,2006 Congressional Record page H7817) It is 
understanding that, to date, the Appropriations Committee has not 
received this report from CBP.
    Congress also mandated CBP to perform a Resource Allocation Model 
in Section 402 of the SAFE Port Act. This report is due June 2007. NTEU 
will look to Congress to continue oversight in reviewing how CBP is 
conducting staff allocations.
    It is instructive here to note that the former U.S. Customs 
Service's last internal review of staffing for Fiscal Years 2000-2002 
dated February 25,2000, known as the Resource Allocation Model or 
R.A.M., shows that the Customs Service needed over 14,776 new hires 
just to fulfill its basic mission-and that was before September 11. 
Since then the Department of Homeland Security was created and the U.S. 
Customs Service was merged with the Immigration and Naturalization 
Service and parts of the Agriculture Plant Health Inspection Service to 
create Customs and Border Protection and given an expanded mission of 
providing the first line of defense against terrorism, in addition to 
making sure trade laws are enforced and trade revenue collected.

One Face at the Border Initiative:
    On September 2,2003, CBP announced the misguided One Face at the 
Border (OFAB) initiative. The initiative was designed to eliminate the 
pre-9/11 separation of immigration, customs, and agriculture functions 
at US land, sea and air ports of entry. In practice the OFAB initiative 
has resulted in diluting customs, immigration and agriculture 
inspection specialization and quality of passenger and cargo 
inspections. Under OFAB, former INS agents that are experts in 
identifying counterfeit foreign visas are now at seaports reviewing 
bills of lading from foreign container ships, while expert seaport 
Customs inspectors are now reviewing passports at airports. The 
processes, procedures and skills are very different at land, sea and 
air ports, as are the training and skills sets needed for passenger 
processing and cargo inspection.
    It is apparent that CBP sees its One Face at the Border initiative 
as a means to ``increase management flexibility``without increasing 
staffing levels. For this reason, Congress, in the Immigration and 
Border Security bill passed by the House in the 109th Congress, HR 
4437, section 105, requires the Secretary of Homeland Security to 
submit a report to Congress ``describing the tangible and quantifiable 
benefits of the One Face at the Border Initiative. . .outlining the 
steps taken by the Department to ensure that expertise is retained with 
respect to customs, immigration, and agriculture inspection functions. 
. .''
    Also, the Homeland Security Appropriations Committee added report 
language to the fiscal year 2007 DHS Appropriations bill that, as part 
of One Face at the Border Initiative, directs ``CBP to ensure that all 
personnel assigned to primary and secondary inspection duties at ports 
of entry have received adequate training in all relevant inspection 
function.'' And, GAO will be issuing a report in the next few months 
evaluating the One Face at the Border Initiative and its impact on 
legacy customs, immigration and agricultural inspection. NTEU urges the 
Committee to take action to ensure that inspection specialization is 
not further diminished by the misguided One Face at the Border 
Initiative.

Trade Operations Staffing
    CBP has the dual mission of not only safeguarding our nation's 
borders and ports from terrorist attacks, but also the mission of 
regulating and facilitating international trade; collecting import 
duties; and enforcing U.S. trade laws. In 2005, CBP processed 29 
million trade entries and collected $3 1.4 billion in revenue.
    Section 412(b) of the Homeland Security Act of 2002 (P.L. 107-296) 
mandates that ``the Secretary [of Homeland Security] may not 
consolidate, discontinue, or diminish those functions. . .performed by 
the United States Customs Service. . .on or after the effective date of 
this Act, reduce the staffing level, or reduce the resources 
attributable to such functions, and the Secretary shall ensure that an 
appropriate management structure is implemented to carry out such 
functions.''
    When questioned on compliance with Sec. 412(b) then-CBP 
Commissioner stated in a June 16,2005 letter to Representative that 
``While overall spending has increased, budget constraints and 
competing priorities have caused overall personnel levels to decline.'' 
The bottom line is that DHS is non-compliant with Section 412(b) of the 
HSA. As stated in the June 16,2005 letter, ``CBP employed 1,080 non-
supervisory import specialists in fiscal year 2001 and 948 as of March 
2005.''
    NTEU continues to have concerns that most recent data shortchanges 
how many trade operations personnel should be in place to be compliant 
with Section 412(b) For example, most recent data shows 892 full-time, 
plus 21 part-time Import Specialists--913 total employed by CBP. In the 
Resource Allocation Model issued by the U.S. Customs Service in 2000, 
there were 1249 Import Specialists employed by the federal government 
to ensure trade compliance. The same Resource Allocation Model calls 
for the hiring of 240 additional Import Specialists by 2002 to maintain 
trade workload.
    At a hearing in the last Congress, CBP Commissioner stated that 
they need only 984 Import Specialists to be in compliance with Section 
NTEU challenges that assertion and Congress in the SAFE Port Act of 
2006 calls for a new Resource Allocation Model to be completed by the 
Agency. GAO has also been commissioned by the SAFE Port Act to conduct 
a study to determine if the Agency trade function is indeed being 
maintained. Both these reports are due later this year. NTEU asks the 
Committee to carefully scrutinize these studies in determining CBP 
trade function funding needs. Customs revenues are the second largest 
source of federal revenues that are collected by the U.S. Government. 
Congress depends on this revenue source to fund federal priority 
programs. The Committee should be concerned as to how much DHS non-
compliance with Section of the HSA costs in terms of revenue loss to 
the U.S. Treasury.
    NTEU also represents the highly skilled trade attorneys at the CBP 
Office of International Trade, Regulations and Rulings (ORR) division. 
ORR attorneys take part in every phase of the negotiation and 
implementation of all free trade agreements--from participating in 
negotiating sessions through issuing binding rulings regarding the 
proper interpretation of the CBP regulations implementing the 
agreement. Even though these attorneys have negotiated a popular 
employee telework program, CBP management refuses to fully implement 
the program so that all eligible attorneys are able to participate. 
Continuity of governance concerns alone should put DHS on the forefront 
of encouraging telework programs for their non-uniformed employees.
    DHS also has not embraced a student loan repayment program as 
authorized by Congress. Many ORR attorneys are burdened by mortgage-
sized student loans from law school. New attorneys who struggle to meet 
their education debt obligations on level government salaries often 
leave the public sector after a couple of years for higher paying 
salaries. As a result, ORR has effectively become a spring training 
camp for private sector law firms seeking experienced customs trade 
attorneys. Both the telework and student loan repayment programs have 
shown proven success in recruiting and retaining federal workers. 
Congress should inquire as to why these programs that also contribute 
to higher employee morale are not personnel priorities at DHS.

Law Enforcement Status
    The most significant source of consternation for CBPOs is the lack 
of law enforcement officer (LEO) status for CBP Officers. LEO 
recognition is of vital importance to CBPOs. CBPOs perform work every 
day that is as demanding and dangerous as any member of the federal law 
enforcement community, yet they have long been denied LEO status.
    Within the CBP there are two classes of federal employees, those 
with law enforcement officer status and its benefits and those without. 
Unfortunately, CBPOs and Canine Enforcement Officers fall into the 
latter class and are denied benefits given to other federal employees 
in CBP.
    CBPOs carry weapons, and at least three times a year, they must 
qualify and maintain proficiency on a firearm range. CBPOs have the 
authority to apprehend and detain those engaged in smuggling drugs and 
violating other civil and criminal laws. They have search and seizure 
authority, as well as the authority to enforce warrants. All of which 
are standard tests of law enforcement officer status.
    Every day, CBPOs stand on the front lines in the war to stop the 
flow of drugs, pornography and illegal contraband into the United 
States. It was a legacy Customs Inspector who apprehended a terrorist 
trying to cross the border into Washington State with the intent to 
blow up Los Angeles International Airport in December 1999.
    A remedy to this situation exists in an important piece of 
legislation involving the definition of law enforcement officer 
introduced in this Congress, H.R. 1073, the Law Enforcement Officers 
Equity Act of 2007. NTEU strongly supports this bipartisan legislation 
introduced by Representatives Bob Filner (D-CA) and John (R-NY) which 
has 68 cosponsors to date. This legislation would treat CBPOs and 
legacy Customs Inspectors and Canine Enforcement Officers as law 
enforcement officers for the purpose of 20-year retirement.
    On March 28,2007, the House Homeland Security Committee approved 
H.R. 1684 that included Section 501, a provision that grants LEO status 
to CBPOs as of the creation of CBP in March 2003. CBPOs are extremely 
grateful for this recognition of their law enforcement activities at 
CBP. Unfortunately, Section 501 does not recognize previous law 
enforcement service in the legacy agencies that were merged to create 
CBP. Therefore, in order for CBPOs with legacy service to qualify for 
the enhanced LEO retirement benefit, they must serve an additional 20 
years starting in March 2003.
    This will result again in a two-tier system at CBP, where younger 
and newly hired CBPOs will be able to qualify for the LEO retirement 
benefit and older CBPOs working side-by-side will not. This is because 
many CBPOs will not be able to serve these additional 20 years needed 
to qualify, especially if they already put 10, 15 or 20 years as a 
legacy employee. Under Section 501, the LEO clock starts on March 2003. 
March 2023 is when the first CBPOs will be able to retire at 50 years 
with 20 years with the 1.7% benefit. There is no retroactive coverage 
in this provision. This will have a detrimental effect on employee 
morale.
    The Committee is sympathetic to this unfortunate consequence of 
Section 501 and is working with NTEU on hybrid-LEO coverage proposals 
that would mitigate this result.
    Section 501 is a start. It is a breakthrough in that the House 
Homeland Committee recognizes that CBPOs should have LEO coverage and 
NTEU members are very appreciate of the Committee's efforts.

CONCLUSION
    Each year, with trade and travel increasing at astounding rates, 
CBP personnel have been asked to do more work with fewer personnel, 
training and resources. The more than 15,000 CBP employees represented 
by the NTEU are capable and committed to the varied missions of DHS 
from border control to the facilitation of trade into and out of the 
United States. They are proud of their part in keeping our country free 
from terrorism, our neighborhoods safe from drugs and our economy safe 
from illegal trade.
    These men and women deserve more resources and technology to 
perform their jobs better and more efficiently. These men and women 
also deserve personnel policies that are fair. The DHS personnel system 
has failed utterly and should be repealed by the full Congress. 
Continuing widespread dissatisfaction with DHS management and 
leadership creates a morale problem that affects the safety of this 
nation.
    The American public expects its borders and ports be properly 
defended. Congress must show the public that it is serious about 
protecting the homeland by fully funding CBP staffing needs, extending 
LEO coverage to all CBPOs, reestablishing CBPO inspection 
specialization at our 317 and repealing the compromised DHS personnel 
system.
    I urge each of you to visit the land, sea and air ports of entry in 
your home districts. Talk to the CBPOs, canine officers, and trade 
entry and import specialists there to fully comprehend the jobs they do 
and what their work lives are like.
    Again, I would like to thank the committee for the opportunity to 
be here today on behalf of the 150,000 employees represented by NTEU to 
discuss these extremely important federal employee issues.

    Mr. Carney. Thank you, President Kelley.
    I now recognize Secretary-Treasurer Cox to summarize his 
statement for 5 minutes.

   STATEMENT OF J. DAVID COX, NATIONAL SECRETARY-TREASURER, 
          AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES

    Mr. Cox. Thank you, Mr. Chairman and members of the 
committee. On behalf of the more than 600,000 federal employees 
we represent, including 60,000 at DHS, I want to thank you for 
the opportunity to testify today.
    Before I begin, however, I would like to thank the 
committee for its extraordinary leadership on behalf of DHS 
workers with regard to MaxHR and TSA collective bargaining 
rights.
    OPM survey results came as no surprise to AFGE. We are 
painfully aware of low morale at DHS, and we know what has 
caused it.
    Merging 22 agencies and 170,000 employees would have been 
an enormous challenge under the best of circumstances, but 
trying to do so while orchestrating a radical upheaval in the 
personnel system that employees experienced as hostile and 
punitive was a recipe for failure.
    In fact, because of politics and bad decisions, the merger 
produced fear, suspicion and anxiety at every time that 
everyone should have been focused on the agency's mission and 
on integration.
    Members of the committee are no doubt aware of the troubled 
history of DHS and its new personnel system.
    Like everyone else, we were gratified when DHS announced 
that it was backing away from much of the notorious MaxHR, 
including changing the name, since it was so closely associated 
with fear, intimidation, delays and chastisement.
    But no sooner did they tell us they were dropping MaxHR 
than, without warning, they announced they were going to 
implement agency-wide some of the most controversial elements 
regarding adverse actions and appeals.
    This behavior on the part of management has had a 
predictable impact on the already dismal level of morale at the 
agency.
    The Homeland Security Act allowed DHS to change its appeals 
procedures, but they did so in a way that drastically 
undermined the employees' process of rights, due process 
rights.
    The DHS system tries to prevent the MSPB from mitigating a 
penalty it considers too harsh or out of proportion to the 
offense by saying it can only act when the punishment is wholly 
without justification, a new legal standard for DHS workers 
that may never be met.
    And these are not just the views of AFGE. They are the 
views of the federal judge who ruled that DHS's new system 
nullified collective bargaining and defied Congress's 
requirement that the new system be fair. Again, is it any 
wonder that morale is low in this environment?
    DHS's insistence on implementing a patently unfair system, 
despite the court's warnings, makes all DHS employees 
understandably wary and uncertain, especially about the new 
system for so-called performance management.
    Since the system is linked to pay, its negative impact on 
employee morale is especially large. In this new system, a 
worker's failure to meet just one single expectation requires a 
rating of unacceptable, which in turn requires him or her to be 
fired, demoted or reassigned.
    But expectations in the new system is so vaguely defined 
that it could mean anything at all, including things that were 
never given to the employee in writing.
    Again, is it any wonder that morale is low, in an 
environment where anything can be used to denigrate an 
employee's performance and where managers don't have to spell 
out what is expected?
    My written testimony addresses DHS initiatives such as One 
Face at the Border, a terrible mismanaged attempt to combine 
immigration, customs and agricultural inspection into one job 
that robs the agency of benefit of expertise in these crucial 
areas in favor of cross training that runs a mile wide and an 
inch deep.
    My written statement also describes our union's continuing 
efforts to win union rights for transportation security 
officers at TSA, who have overwhelmingly demonstrated their 
interest in union representation and whose rights have been 
wrongfully denied by the administration.
    I discuss the agency's illegal efforts to privatize jobs 
for food service workers in ICE detention centers that our 
union is trying to reverse.
    And finally, I have discussed the tragic undermining of the 
Federal Emergency Management Agency, FEMA, through 
politicization, privatization, budget reductions and the 
decision to de-link emergency preparedness from emergency 
response when DHS's merger was designed.
    In a separate attached document, I have also addressed the 
disaster in the making at the Federal Protective Service where 
the administration plans to force the agency to focus itself 
exclusively in the one area where it has demonstrated failure, 
contract oversight.
    The plan is essentially to eliminate the position of the 
LPS officer and have the agency overseeing an enormous 
unaccountable army of private security guards.
    This concludes my statement. I will be happy to answer any 
questions the committee may have.
    [The statement of Mr. Cox follows:]

                    Prepared Statement J. David Cox

INTRODUCTION
    Chairman Carney and Subcommittee Members: My name is J. David Cox, 
and I am the Secretary Treasurer of the American Federation of 
Government Employees, AFL-CIO (AFGE). On behalf of the more than 
600,000 federal employees represented by AFGE, including 60,000 who 
work in the Department of Homeland Security (DHS), I thank you for the 
opportunity to testify here today on the current serious problems at 
DHS, and to highlight some recent, positive developments that make us 
hopeful for the future of DHS workers. AFGE applauds the leadership of 
Committee Member Sheila Jackson Lee and members of the Committee on 
Homeland Security for reporting H.R. 1684 to the full House with 
provisions that repeal the remaining elements of the so-called MAXHR 
program that relate to employee appeal rights and performance 
management goals. This is particularly significant as DHS has recently 
stated its intention to implement both sections of its regulations 
despite the likelihood that they will be overturned in federal court. 
The legislation also restores statutory authority for collective 
bargaining rights because the DHS regulations establishing a new 
collective bargaining system have been overturned by the courts. AFGE 
believes that H.R. 1684 will greatly strengthen our nation's overall 
homeland security by recognizing the contribution of the men and women 
on the front lines and providing the resources necessary to ensure that 
they are the best trained, best-equipped border protection force in the 
world today.

HUMAN CAPITAL SURVEY OF FEDERAL AGENCIES
    For the last two years the Human Capital Survey of Federal Agencies 
conducted by the Office of Personnel Management (OPM) has revealed 
profound problems with employee morale at DHS. In both years the agency 
came in last or close to last of all federal agencies for employee 
satisfaction, adequate resources, leadership, working conditions and 
many other categories. DHS employees arguably have the lowest morale of 
any group of federal employees.
    This does not come as a surprise to AFGE. Bringing together 22 
different federal agencies and 170,000 employees to form one new 
homeland security organization was a daunting task. Under the best of 
circumstances, forging a unified department would require good 
communications, a major investment in training, a respect for 
employees, and the time and patience to do the job right.
    Instead, DHS chose to develop a new personnel system, radically 
different from the one employees had known for years. While the various 
agencies and their employees were going through the hard work and 
anxiety of merging their distinct cultures and identities into a new 
Department of Homeland Security, DHS embarked on a massive upheaval of 
the pay, performance, classification, labor relations, adverse actions, 
and appeals systems. This was a prescription guaranteed to increase the 
fear, suspicion, and anxiety of employees and their managers at a time 
when the focus should have been on increasing the dialogue and 
understanding among the various groups being brought together.
    During involvement in the DHS Design Team and the Senior Review 
Committee, our participation in the Meet and Confer process, and our 
subsequent interactions with the Department, we urged the Department to 
clearly articulate the problems it was trying to fix and how the new 
personnel system (called would correct those problems. Instead, we have 
heard only platitudes about ``flexibilities,``lies about unions and 
collective bargaining, and a ``trust us'' approach to pay-for-
performance.
    In his recent testimony before the House Oversight and Government 
Reform Subcommittee on Federal Workforce, Postal Service, and the 
District of Columbia, Professor Jeffrey Pfeffer of Stanford University 
Graduate School of Business spoke about the woeful lack of reliance on 
evidence in management practices. Professor Pfeffer said:
    . . .I want to make five points as succinctly as possible. . . 
First, organizations in both the public and private sector ought to 
base policies not on casual benchmarking, on ideology or belief, on 
what they have done in the past or what they are comfortable with 
doing, but instead should implement evidence-based management. Second, 
the mere prevalence or persistence of some management practice is not 
evidence that it works -there are numerous examples of widely diffused 
and quite persistent management practices, strongly advocated by 
practicing executives and consultants, where the systematic empirical 
evidence for their ineffectiveness is just overwhelming. Third, the 
idea that individual pay for performance will enhance organizational 
operations rests on a set of assumptions. Once those assumptions are 
spelled out and confronted with the evidence, it is clear that many -
maybe all -do not hold in most organizations. Fourth, the evidence for 
the effectiveness of individual pay for performance is mixed, at best -
not because pay systems don't motivate behavior, but more frequently, 
because such systems effectively motivate the wrong behavior. And 
finally, the best way to encourage performance is to build a high 
performance culture. We know the components of such a system, and we 
ought to pay attention to this research and implement its findings.
    During our involvement with the Design Team phase of developing the 
regulations, we saw first-hand the lack of real research or attention 
to the evidence. We and other members of the Design Team read articles, 
interviewed experts, and went on site visits. There was no attempt, 
however, to analyze the results or prepare options for the new system 
based on the evidence we found. AFGE was deeply disappointed when the 
final DHS regulations were published because they ignored most of the 
work of the Design Team, most of the results of the focus groups with 
employees, and most of the comments the unions and over 3,500 others 
submitted. Instead, they reflected an ideological mindset that had 
predetermined the outcome.
    We were gratified earlier this year when DHS informed us that it 
was backing away from much of its earlier plans regarding 
MAXHR--in fact, it was no longer going to use that name--
because MAXHR had become associated with fear, delays, poor 
planning, and chastisement by the courts. The new system was to be 
called the Human Capital Operational Plan (HCOP). Chief Human Capital 
Officer Marta Brito Perez told us that the Department was not 
interested in pursuing the pay initiatives at this time for most 
employees. Instead, DHS was going to test this with a pilot program. At 
the very beginning of this whole process we urged DHS not to try to 
implement a radical and untested system, but instead to try a pilot 
program first so we could all learn from what worked and what didn't 
and thus create a better system. We are glad they are finally coming 
around.
    Ms. Perez told us that DHS was going to move ahead with a new 
performance management system and HCOP, which has five main goals:
        1. Hire and Retain a Talented and Diverse Workforce
        2. Create a DHS-Wide Culture of Performance
        3. Create High-Quality Learning and Development Programs for 
        DHS Employees
        4. Implement DHS-Wide Integrated Leadership System
        5. Be a Model of Human Capital Service Excellence
    AFGE would like to believe that DHS is moving toward what sounds 
like a more positive agenda. We think that increasing staffing at DHS 
and working to keep current dedicated employees and offer them training 
and career development opportunities are objectives the department 
should have focused on from the start. We would like to help make this 
happen and hope that DHS is as committed as we are to developing the 
workforce that is so vital to carrying out the Department's mission. 
But we have deep concerns.
    Shortly after our recent meeting with DHS, and without any advance 
warning, much less opportunity for discussion, we received notice of 
the department's intention to implement the provisions of MAXHR 
regarding adverse actions and appeals. While DHS is saying it wants to 
recruit and retain, train and develop its employees, it appears to be 
in a rush to implement an extraordinary reduction in the basic employee 
protections that have been in place for decades.
    The Homeland Security Act gave the Secretary and OPM Director 
authority to modify the appeals procedures of Title 5, but only in 
order ``to further the fair, efficient and expeditious resolution of 
matters involving the employees of the Department.''Instead, the final 
regulations virtually eliminated due process by limiting the current 
authority of the Merit Systems Protections Board (MSPB), arbitrators 
and adjudicating officials to modify agency-imposed penalties in DHS 
cases to situations where the penalty is ``wholly without a new 
standard for DHS employees that will rarely, if ever, be met.
    DHS has claimed that it created a new personnel system that ensured 
collective bargaining, as required by Congress. But the Court has ruled 
that it has not ensured collective bargaining, but eviscerated it. DHS 
has claimed that its regulations are fair, as required by Congress. But 
the Court has ruled that they are not fair, because they would 
improperly prevent the MSPB mitigating a penalty it considered to be 
too harsh or out of proportion to the offense.
    As you know, AFGE has previously challenged these very provisions 
in court, and the Court agreed in no uncertain terms that the 
provisions were patently unfair: as Judge Collyer explained, ``the 
Regulations put the thumbs of the Agencies down hard on the scales of 
justice in [the agency's] favor.'' The Court of Appeals did not 
disagree, but merely found that the issue was not yet ripe for 
adjudication. The Department should not take encouragement in the fact 
that an employee must be victimized by these unfair proposals before 
the Court can award a remedy, which will surely include back pay and 
attorney fees.
    DHS has the lowest morale in the federal government, when it needs 
to be the highest. Deputy Secretary Jackson said the top leaders took 
notice and would do something about it. Chief Human Capital Officer 
Marta Perez was quoted by the press as saying the new human resources 
plan would be reassuring to employees. What part of imposing an illegal 
and unfair adverse action system is reassuring?
    The insistence by DHS to implement a patently unfair system despite 
the court's warnings about its serious shortfalls makes us wary about 
its intentions in the other areas of its human capital plan.
    DHS plans to implement a new performance management system. AFGE 
commented on earlier versions of the Performance Management Directive, 
but has not seen the final version. We found the supposedly new and 
improved system to be surprisingly similar to those systems currently 
in place in the federal and private sectors. It is not particularly 
modern or innovative and does not convince us that it will be more 
credible to employees or more able to accurately evaluate performance 
than the current systems.
    The new system is be automated. We expressed our concerns about 
potential disparities between employees who have easy access to 
computers and can check their records and add their accomplishments 
whenever they wish and employees who patrol the borders or our ports 
and rarely have a chance to sit at a computer and deal with these 
issues. The same holds true for their managers, some of whom can take 
full advantage of a computerized system, while others are out in the 
field, and rarely at a desk.
    In the new system, failure to meet a single expectation requires a 
rating of ``Unacceptable,``which, in turn, requires an employee to be 
fired, demoted or reassigned.
    But ``expectation``in the new system is so vaguely defined that it 
could mean anything at all, including things that were never given to 
the employee in writing. For example, the Directive says that, ``. . 
.all of the diverse expectations that may apply need not be 
communicated in writing.''Creating an environment in which anything can 
be used to denigrate an employee's performance and in which managers 
are not held accountable for clearly spelling out what is expected, is 
hardly the answer to low morale and problems with recruiting and 
retaining good employees.
    DHS employees, in common with other federal employees, say that 
favoritism and poor management are big problems in their workplaces and 
they don't have confidence in their agency's performance management 
system. The new DHS system is unlikely to change that and can only make 
things worse if the department attempts make major changes in 
employees' pay based on it.

``ONE FACE AT THE BORDER''
    Customs and Border Protection (CBP) has attempted to establish what 
it calls ``One Face at the Border.'' The idea was to take the 
experience and skills of former Immigration and Naturalization Service, 
Customs and Agriculture employees and combine them into one position. 
In reality, this has been difficult to do--each discipline is very 
complex--and combining them threatens to weaken expertise in all three. 
In fact, we are starting to see CPB Officer positions offered with 
specialties in, for immigration law--a tacit recognition of the need 
for the experience and education of these legacy organizations' 
position descriptions.
    Although on paper DHS advocates for ``one face'' at the border, 
many of its actual personnel practices continue to emphasize the 
differentiation between ``legacy INS``and ``legacy Customs``officers. 
Instead of raising CBP employees to the best of the various benefits 
they enjoyed before, DHS has created a confusing morass of procedures 
and policies that take away income and rights without replacing them 
with anything of comparable value. Although legacy agriculture, 
immigration and customs inspectors were promised ``cross-training'' 
when they were converted to the new CBP officer position, such training 
never fully materialized for most CBP officers. From the beginning, DHS 
training has emphasized the immigration inspection function over 
agriculture and customs inspection functions. A 2006 Government 
Accountability Office (GAO) report found that agricultural inspection 
has suffered greatly under ``One Face at the Border``due to a decrease 
in agricultural inspections at points of entry leading to an increased 
risk of U.S. agriculture to foreign pests and disease. According to the 
GAO report there has been a significant decrease of as much as 20 
percent at some points of entry, and a majority of agriculture 
inspection specialists interviewed stated that they were doing fewer 
inspections and that there are insufficient numbers of agriculture 
specialists to carry out inspections.
    GAO'S findings are supported by research conducted by the National 
Border Patrol and National Homeland Security Councils of AFGE. A clear 
majority (64%) of border protection personnel say they are just 
``somewhat``or ``not really'' satisfied with the tools, training, and 
support they need to be effective at stopping potential terrorists from 
entering the country and at protecting the country terrorist threats. A 
majority of CBP inspectors said ``One Face At the Border'' has had a 
negative impact on their ability to do their jobs. AFGE restates its 
opposition to the flawed ``One Face at the Border'' program, which has 
resulted in decreased immigration inspections and agricultural 
inspections at points of entry, and calls for the program to be 
repealed.
    CBP Officers have just ``One Face'' at the border, but they are 
acutely aware that they are not treated equally, nor do they share the 
same benefits. For example:

        1. Foreign Language Award Program (FLAP)--AFGE recently filed 
        two grievances on behalf of employees who are not receiving 
        additional pay for having foreign language skills. The Foreign 
        Language Award Program guarantees foreign language proficiency 
        pay for employees who use language skills on the job in 
        languages other than English. While many officers from legacy 
        Customs have been awarded foreign language pay, the majority of 
        legacy INS officers have not.
        2. Administratively Uncontrollable Overtime (AUO)--When DHS 
        consolidated different groups of employees it re-classified 
        former INS Senior Inspectors as CBP Officers and eliminated 
        their right to a lump sum payment for working overtime. 
        Although the Senior Inspectors' duties have remained the same, 
        their pay has been drastically reduced.
    These are just a couple of examples of the differences CBP 
employees continue to see in their workplaces, despite their being told 
they are ``One Face on the Border.'' Senator Dianne Feinstein (D-CA) 
recently introduced S. 887, a bill to transfer the function of 
agricultural inspection at all U.S. entry points from the Department of 
Homeland Security to the U.S. Department of Agriculture (USDA). The 
bill recognizes the expertise of the 1,800 agriculture inspection 
specialists who inspect plants and animals entering at U.S. entry 
points for disease and insect infestation that if undetected, could 
place U.S. agriculture and the public at great risk. AFGE strongly 
supports S. 887, and calls upon Congress to pass legislation that will 
repeal ``One Face at the Border'' and transfer the remaining 
immigration and customs inspection functions back to their respective 
directorates in DHS.

TRANSPORTATION SECURITY ADMINISTRATION (TSA)
    Thanks to the leadership of the House Homeland Security Committee, 
45,000 Transportation Security Officers (TSOs) are quite close to 
achieving the rights wrongfully denied them five years ago. Following 
September 11,2001, Congress passed and President Bush signed the 
Aviation and Transportation Security Act (ATSA) creating the TSA and 
federalizing the duties of screening passengers and baggage at 
airports. Although this was a prime opportunity to establish a highly-
trained, well-paid and fully-empowered professional public workforce, 
TSA management instead took ATSA as a blank check to create its own 
management system irrespective of the widely accepted protections 
afforded to most workers by the rest of the federal government. Without 
enforcement of labor protection laws that ensure: 1) that workers are 
treated fairly, 2) that adequate workplace health and safety measures 
are in place to minimize injuries; and 3) that workers are protected 
from retaliation when they blow the whistle on security breaches, 
national security is jeopardized, not enhanced.
    Through broad judicial and MSPB interpretation of ATSA, TSA was 
given the ability to prevent independent oversight of decisions 
affecting employees, leaving workers with no alternative but to seek 
remedies from the very management that created the problem in the first 
place. The power of TSA management regarding TSOs is almost totally 
unchecked.
    A few examples of the pervasiveness and extent of these negative 
decisions include:
        1. Refusal to honor the First Amendment right of freedom of 
        association, resulting in screeners being fired for simply 
        talking about the union and posting and distributing AFGE union 
        literature during break times. Although TSA officially 
        ``permits'' TSOs to join the union, the reality has been that 
        TSOs have suffered retaliation for doing so, including 
        termination.
        2. TSA has refused to hold itself accountable to the 
        Rehabilitation Act and has therefore not made reasonable 
        accommodations for workers with disabilities, including 
        diabetes and epilepsy. This results in discrimination against 
        workers on the basis of their disability.
        3. Although Congress clearly indicated that the veterans' 
        preference honored by the rest of the federal government also 
        applied to TSOs, the TSA has refused to apply veterans' 
        preference in promotion and reduction-in-force decisions. 
        Moreover, even though other federal agencies apply veterans' 
        preference to both those who retired from the military and 
        those who leave active duty, TSA has redefined what it means to 
        be a veteran--only retired military personnel are awarded 
        whatever veterans' preference TSA management chooses to give.
        4. TSOs have been disciplined for using accrued sick leave 
        benefits for documented illnesses.
        5. TSOs have been paid thousands of dollars less than promised 
        at the time of hire, because screeners do not have an 
        employment ``contract``with the government, and therefore, no 
        contract protections.
    Denials of the meaningful ability to enforce the most basic worker 
rights and persistent inadequate staffing have taken their toll on the 
TSO workforce. TSOs are subject to extensive mandatory overtime, 
penalties for using accrued leave and constant scheduling changes 
because of understaffing. Another result is that TSA has among the 
highest injury, illness, and lost time rates in the federal government. 
In fiscal year 2006, TSA employees' injury and illness rates were close 
to far higher than the 5% average injury and illness rate for all 
federal employees. The overall TSA attrition rate is more than 10 times 
higher than the 2.2% attrition rate for federal civilian employees and 
upwards of 40% at some major airports. TSO base pay did not change 
between 2002 and 2007, and when TSA did implement a base salary 
increase, close to two-thirds of TSOs did not qualify for the pay raise 
under ``PASS``system. This continuing mistreatment of the TSO workforce 
hampers the ability of TSOs to do their jobs and public safety is 
jeopardized. After more than five years of second-class treatment 
despite the first-class job they perform every day protecting the 
flying public, it is time for the President to sign legislation passed 
by the Congress to grant TSOs working at our nation's airports the same 
collective bargaining and other labor rights enjoyed by other TSA and 
DHS employees.
    Despite the pressing need to fully staff our nation's airports with 
sufficient numbers of TSOs to provide security and expedite travel, the 
Bush administration has set an artificial cap of the number of full-
time TSOs nationwide. The current 45,000 cap has not only led to longer 
lines, it has also had a great adverse impact on TSOs, who face 
constant mandatory overtime and increased risk of injury while they try 
to do their jobs with too few people. With very strong bipartisan 
votes, during the Congress the Senate twice supported legislation 
introduced by Senator Frank Lautenberg (D-NJ) to remove the TSO cap and 
allow TSA to hire the number of full-time TSOs necessary to provide air 
safety. The idea of hiring enough people to get the job done should not 
be political or ideological. It is our hope that the House of 
Representatives will follow the lead of the Senate and send a bill to 
President Bush ensuring that TSA can hire the number of TSOs necessary 
to keep air travel safe.

FEDERAL EMERGENCY MANAGEMENT AGENCY (FEMA)
    Ten years ago, if you saw the word ``FEMA'' in the news, it was 
usually something complimentary involving rapid response to the 
Oklahoma City bombing or prompt efforts to reduce the impact of 
hurricanes and other natural disasters. Back then, FEMA was an example 
of a federal government agency that worked. Now it is a different 
story. Since Hurricane Katrina, FEMA has become associated with 
mismanagement and the abuse of power and resources given it by 
Congress. The exemplary government agency of the 1990s has become an 
example of government incompetence in 2007.
    One primary cause of deterioration was its placement inside the 
Department of Homeland Security (DHS). In the spring of 2003, the DHS 
leadership began a systematic purge of FEMA, ridding the agency of some 
of its most highly qualified emergency management personnel and tools:
        1. Long-time FEMA managers with years of experience in disaster 
        mitigation, preparedness, response and recovery were pushed 
        aside, and their work was reassigned to inexperienced DHS staff 
        and to contractors.
        2. Young and inexperienced political appointees were brought in 
        and placed over highly skilled career executives throughout the 
        agency, including at the most senior levels.
        3. The Preparedness function was taken out of FEMA, breaking up 
        the traditional partnership within FEMA of emergency 
        preparedness, prevention, response and recovery.
        4. FEMA's budget was cannibalized by DHS with much of the 
        agency's funding provided to other DHS departments. As 
        experienced FEMA staff retired or quit in disgust, their jobs 
        were left unfilled as the funding for those positions were 
        taken out of FEMA and given to DHS. By 2005, nearly one-third 
        of full-time jobs were vacant.
    After the Katrina debacle, many experienced FEMA professionals 
believed that such management problems would be rectified and influence 
over FEMA would be decreased. Unfortunately, the exact opposite has 
happened: in the past year and a half, experienced FEMA personnel who 
did their best to salvage the situation during Katrina are being 
systematically replaced by the same types of minimally-experienced DHS 
managers who caused the Katrina management problems in the first place. 
In many cases, it appears that DHS is bypassing federal civil service 
rules to place their selected managers in key positions throughout 
FEMA. More and more senior positions at FEMA are being filled by 
outside hires and appointments, while experienced FEMA staffers are 
regularly passed over for promotion into those jobs. Many of the new 
hires seem to be private contractors with prior military or Coast Guard 
backgrounds. While some of them have experience within their respective 
fields, they do not appear to have the broad national emergency 
management experience necessary for the positions they have been given.
    This is not the way to rebuild FEMA's emergency management 
capability. This not the way to restore the morale of FEMA's 
experienced emergency management staff. AFGE is hopeful that the 
recently enacted Post-Katrina Emergency Management Reform Act of 2006 
will help to revitalize FEMA. This new law establishes FEMA as a 
distinct entity in DHS similar to the U.S. Coast Guard and U.S. Secret 
Service, thereby preventing transfers of FEMA assets, authorities, 
personnel and funding. The new law also transfers most Preparedness 
functions back to FEMA, strengthening FEMA's ability to effectively 
prepare and respond to future disasters.
    But we remain extremely concerned that, despite the new law, 
experienced FEMA employees will continue to be trumped by DHS political 
appointees and managers who clearly do not understand national-level 
emergency management.

LAW ENFORCEMENT RETIREMENT REFORM
    AFGE is extremely gratified to see that the 110th Congress is 
beginning to move on an issue that has long been overlooked: law 
enforcement retirement coverage for CBP officers at DHS. Legislation 
has been included in the House Homeland Security Authorization bill 
that would finally offer this option to thousands of deserving, hard-
working federal law enforcement officers.
    At the same time, we believe that as this bill makes its way 
through Congress, serious consideration should be given to the other 
law enforcement officers of the federal government who deserve these 
benefits. Law enforcement officers working for the Federal Protective 
Service, the Department of Veterans' Affairs and a small number of 
other federal agencies continue to receive discriminatory treatment 
under the current proposed legislation. Yet they have full arrest 
authority, wear a federal law enforcement badge and carry a gun.
    Never before has the job of federal law enforcement been more 
important than it is today. Maintaining a high-quality, professional 
workforce requires that the federal government compete with hundreds of 
state and local law enforcement agencies, almost all of whom provide 
early retirement and other benefits to police officers. It is time we 
recognize the contribution these men and women make on the line, every 
day and give them the equality of benefits they deserve.

IMMIGRATION AND CUSTOMS ENFORCEMENT (ICE)
    I want to bring to your attention the plight of 56 nutrition 
services employees at ICE detention centers in Texas, California, 
Arizona, and Florida. In May 2006, ICE announced an A-76 privatization 
review for these employees. Almost every step of these reviews violated 
the policies and procedures of the A-76 privatization process. The 
privatization review ran longer than the time allowed by OMB rules; the 
accuracy of the in-house bid (the only chance the employees had of 
keeping their jobs) is highly suspect--even according to ICE 
officials--and the review resulted in an award of a contract to an 
Alaska Native Corporation with no competitive bidding process. In other 
words, the privatization review process, which is billed by the 
Administration as a way to make efficient use of taxpayer dollars, 
could not possibly have met this goal at ICE.
    The most repugnant part of this story is that the employees have 
yet to be told when they will lose their jobs, what other jobs might be 
available for them at ICE, or any other details that may help them 
prepare for their futures.
    Another privatization review was announced in May 2006 for 19 
facilities support employees at the same detention centers. That review 
was cancelled months ago, but no one in ICE management remembered to 
tell the employees. Until last week, those 19 employees were still 
coming to work each day wondering if they still had a job.

CONCLUSION
    Chairman Carney, AFGE would like to thank you and the members of 
the Homeland Security Committee not just for your attention to matters 
of great concern to DHS workers, but also for the legislative action 
taken in the past four months to address those concerns. After years of 
debate, legislation granting collective bargaining and other employment 
rights, and repealing MAXHR and ``One Face at the Border``has been 
reported out of the Homeland Security Committee, and in the case of TSO 
rights, has been passed by both Houses of Congress. Our DHS members 
understand the importance of their jobs, and are committed to doing all 
they can to keep the U.S. safe. It is little to ask that they be 
treated with fairness, dignity and respect as they continue to do so.
    AFGE looks forward to working together with the Chair and the 
Committee to ensure the security of DHS workers and our country.

    Mr. Carney. Thank you, Mr. Cox.
    I now recognize Mr. Stier to summarize his testimony for 5 
minutes.

  STATEMENT OF MAX STIER, PRESIDENT AND CEO, PARTNERSHIP FOR 
                         PUBLIC SERVICE

    Mr. Stier. Thank you very much, Chairman Carney, 
Congressman Rogers, Chairman Thompson, Congresswoman Clarke and 
Congressman Perlmutter.
    I very much appreciate being invited to testify this 
morning. It is particularly well-timed given the fact that we 
are releasing our best places to work rankings at noon today, 
which I must apologize I will have to leave for.
    And obviously, anyone here who would like to come see the 
full rankings is most welcome, particularly any reporters. I 
have plenty of room in my cab.
    But it is a complete ranking that you will see just a piece 
of a piece of it in the brochure, the Best Places brochure. If 
you go to the Web site, it really is a most comprehensive look 
at our federal government and what employees are saying about 
their work environment.
    It is really important both for external audiences to 
understand better what is happening inside our government, but 
also equally important for the managers inside government to 
help explain what they need to focus on to create a more 
engaged workforce.
    The best places to work rankings obviously--I will give you 
a quick preview of a little bit of information that we will be 
sharing about the Department of Homeland Security.
    And as you have heard from a number of folks already, it is 
distressing. Our best places to work rankings are based upon 
the Federal Human Capital Survey but are a complete look at 
over 222 subcomponents of government, along with the 30 large 
agencies and 31 small agencies.
    So a quick snapshot. The Department of Homeland Security 
ranks 29 out of 30 of the large agencies, and I know what you 
are probably thinking, but you can't hear who is at the bottom 
unless you come to our press conference.
    We ranked 222 subcomponents. Six of the 13 DHS 
subcomponents are among the 15 lowest. It is not just that it 
is bad, but it is actually getting worse.
    In some places--for example, FEMA--the score dropped by 13 
percent since 2005, placing it 211 out of 222 subcomponents.
    The DHS headquarters, which ranks 215 out of 222, scored 
the largest drop of over 29 percent from 2005. And these are 
very sobering numbers.
    So how did we get here? And I want to focus on just three 
primary issues, although there are obviously--it is a complex 
brew of different questions.
    First, the mega factors that Mr. Rogers and others have 
referenced already. But mergers are incredibly hard.
    And this one has got to be the hardest of all mergers 
possible, because not only are we involved in a merger that 
requires combining the 22 entities and 180,000 employees, but 
it is really the equivalent of driving 90 miles an hour down 
the highway and trying to retool your engine at the same time, 
because the actual creation of the department was caused by 
external events that are obviously incredibly challenging--the 
war on terror, natural events like Hurricane Katrina--which 
makes it all the more difficult to be trying to create a new 
agency in that kind of context.
    Second, our best places to work ranking says that there are 
three major drivers that, if the department focused on these 
issues, would have the most impact on their employees.
    Number one, and perhaps not surprisingly, and this is 
government-wide, better leadership, strong leadership.
    Second, the match between the employee's skills and the 
mission of the organization, which, as Ms. Perez already 
stated, is high at the Department of Homeland Security relative 
to their other scores, but it still again is a major driver 
that needs increased attention.
    And third and finally, strategic management of the 
resources. And this is actually different from the other 
agencies across government, where the work-life balance factor 
is more important.
    Number three, the department was given a blank check in the 
legislation that we talked about earlier, and they overdrew 
their account. And more on this later.
    So where do we go from here right now? We want to make five 
points, summarizing from the testimony. First, we can't stay 
with the status quo of the general schedule.
    I am not aware of a single successful large organization 
that is doing business the same way that it did business 60 
years ago.
    Along those lines, the general schedule has to change. It 
was created in 1949 when times were very different, when the 
needs of government were very different, when the workforce was 
very different, and we need a different system.
    Second, Congress needs to help DHS establish a fair, 
credible and transparent performance management system that 
both give clear goals to employees and make meaningful 
distinctions in employee performance.
    And very importantly, it has to be designed in 
collaboration with the department's employees and their 
representatives.
    Number three, Congress should allow the department to 
continue its pursuit over time of more market and performance-
sensitive pay systems.
    But this should not happen until the system that is already 
in place is working and has been certified by an appropriate 
entity.
    We also need to make sure that appropriate investment is 
being made into selecting, training and managing highly 
competent managers, supervisors and H.R. professionals.
    Fourth, Congress has to closely monitor the department's 
investment in training and development. We need to make sure 
that the funds are there and that they are fenced off in 
creative ways in order to give the department officials and the 
employees the tools that they need.
    And finally, we need metrics. The annual report that this 
committee did is an important first step. The human capital 
survey is important.
    But we need to specialize a set of metrics so that you have 
the information and the department has the information over 
time about what is happening. You can't manage what you don't 
measure. This is really important stuff.
    Thank you very much.
    [The statement of Mr. Stier follows:]

                    Prepared Statement of Max Stier

    Chairman Carney, Representative Rogers, Members of the 
Subcommittee, thank you very much for the opportunity to appear before 
you today. I am Max Stier, President and CEO of the Partnership for 
Public Service, a nonpartisan, nonprofit organization dedicated to 
revitalizing the federal civil service by inspiring a new generation to 
serve and transforming the way the federal government works. We 
appreciate your invitation to discuss the human capital challenges 
facing the Department of Homeland Security and the morale of the 
Department's employees.
    The Partnership has two principal areas of focus. First, we work to 
inspire new talent to join federal service. Second, we work with 
government leaders to help transform government so that the best and 
brightest will enter, stay and succeed in meeting the challenges of our 
nation. That includes all aspects of how the federal government manages 
people, attracting them to government, leading them, supporting their 
development and managing performance; in short, all the essential 
ingredients for forming and keeping a world-class workforce.

An Urgent Need for Action
    Americans need effective government, and the key to good government 
is good people. The report of the 9/11 Commission said it best: ``[T]he 
quality of the people is more important than the quality of the wiring 
diagrams.''
    Today, our nation faces challenges of unprecedented complexity--
from combating terrorism and competing in a global marketplace to 
dealing with an aging population at home. These new challenges require 
new skills from our federal workforce. Yet, at this critical time, a 
large number of experienced federal workers will soon retire, resign or 
otherwise leave the government, and insufficient interest in and 
knowledge about federal service leaves us with an inadequate pipeline 
of talent to replace these losses. Aggressive and immediate action is 
needed to strengthen the federal civil service, match new skills to 
current challenges, and build a government that the public deserves and 
the times demand.
    The federal government's human capital crisis defies easy solutions 
and will require a comprehensive strategy. The federal government will 
live up to its potential in serving the American people only when our 
best and brightest answer the call to federal service and enjoy a work 
environment that empowers them to perform at their best. There are 
significant human capital challenges facing the Department of Homeland 
Security, and the federal government as a whole, regarding its ability 
(or inability) to attract and recruit the talent it needs and to manage 
the federal workforce so that talented employees stay and succeed in 
achieving desired results.
    It is widely accepted that while the current General Schedule pay 
and classification system established in 1949 may have served the 
government well for many years, it is no longer good enough to attract 
and retain the best and brightest -and we know this from listening to 
federal employees themselves. In the Office of Personnel Management's 
(OPM) 2006 Federal Human Capital Survey of 221,000 civil servants, only 
30 percent agreed that ``In my work unit, differences in performance 
are recognized in a meaningful way.'' Talented people at all levels--
from new college graduates to seasoned professionals--look to work in 
environments that reward and recognize effort and results. Our Best 
Places to Work in the Federal Government project, which I will discuss 
later in my testimony, confirms that, compared to workers in the 
private sector, federal employees are more likely to say that they like 
the work that they do, that their coworkers cooperate to accomplish a 
job and that they are given opportunities to improve their skills. Yet, 
this same comparison reveals that the federal government lags behind 
the private sector in recognizing employees for a job well done.
    Generally speaking, federal employees are not motivated primarily 
by pay. As everyone here can attest, many public servants can make more 
money in the private sector--but they have chosen government service. 
Again referring to our Best Places to Work rankings, pay and 
compensation rank well below leadership, teamwork, how well an 
employee's skills are matched to agency mission and work-life balance 
as the key drivers of job satisfaction for federal workers. And 
satisfied employees are more engaged and better able to contribute to 
agency missions. In fact, the preponderance of research on effective 
organizations in both the private and public sectors indicates that 
employee engagement is a key driver of mission success. Yet many 
federal agencies lack the kind of performance management systems that 
create an environment in which excellence is both recognized and 
rewarded.
    We also note that the current federal pay system is not market 
sensitive, despite the existing statutory merit system principle that 
calls for federal pay to be set ``with appropriate consideration of 
both national and local rates paid by employers in the private 
sector.''

Department of Homeland Security Personnel Reform: A Brief Overview
    The Department of Homeland Security (DHS) was granted major 
exemptions from Title 5 requirements, including in the areas of pay and 
performance, when it was created under the Homeland Security Act of 
2002. DHS designed a new human resources (HR) system, dubbed ``MaxHR'' 
that included a pay-banded approach to pay and was intended to be more 
sensitive to performance than the existing General Schedule system. 
DHS, however, also designed new approaches to labor-management 
relations and employee appeals which were challenged in court by 
employee unions. The U.S. Court of Appeals for the District of Columbia 
ruled that the planned labor-relations provisions were inconsistent 
with the law. [See Appendix A]
    Most recently, DHS has announced their intent to ``move beyond and 
to focus on broader HR issues and initiatives under a ``Human Capital 
Operational Plan'' (HCOP). This broader HCOP appears to us to be a move 
in the right direction by DHS. The plan will focus on improved hiring 
and retention, creating a ``culture of performance'' based on 
performance management plans, and enhanced training and development. 
While there are still plans to move toward a more market-and 
performance-sensitive pay system, DHS is moving at a slower pace than 
originally planned in an attempt to better establish its underlying 
performance management system. We also note that the House Committee on 
Homeland Security has voted to repeal the authorization for DHS to 
pursue an alternative personnel system and that the final direction of 
the Department's reform efforts depends on the outcome of Congress's 
deliberations.

Best Places to Work in the Federal Government
    The old adage that ``what gets measured, gets changed'' still holds 
true. And when it comes to the federal workforce, not enough is getting 
fully measured. Data available on the state of the federal workforce is 
not systematically organized, evaluated or disseminated in a way that 
is meaningful to all of the key audiences.
    The value of indicator systems as an effective tool for driving 
reform has been widely documented. The Partnership has taken a step 
toward creating national indicators through our Best Places to Work in 
the Federal Government rankings, prepared in collaboration with 
American University's Institute for the Study of Public Policy 
Implementation. The Best Places build upon data Federal Human Capital 
Survey to provide a comprehensive assessment of employee satisfaction 
across the federal government's agencies and their subcomponents.
    Employee satisfaction and commitment are two of the necessary 
ingredients in developing high-performing organizations and attracting 
key talent to meet our nation's challenges. The Best Places to Work are 
a key step in recognizing the importance of employee satisfaction and 
ensuring that it is a top priority of government managers and leaders.
    Since the first rankings were released in 2003, they have helped 
create much-needed incentives to focus on key workforce issues and 
provided managers and leaders with a roadmap for boosting employee 
engagement.
    The rankings also provide Members of Congress and the general 
public with unprecedented insight into federal agencies and what the 
people who work in those agencies say about leadership, mission and 
effectiveness. Ideally, the Best Places can aid Congress in fulfilling 
its oversight responsibilities by highlighting the federal government's 
high-performing agencies and raising a red flag when agencies suffer 
from conditions that lead to low employee engagement and poor 
performance.

DHS: A Best Place to Work?
    Mr. Chairman, later today the Partnership will release the 2007 of 
the Best Places to Work in the Federak Government. This year's rankings 
include 61 federal agencies and 222 agencies subcomponents. We rank 
each agency on an overall satisfaction index score, as well as in ten 
individual workplace categories: employee skills/mission match, 
leadership, work/life balance, teamwork, pay and benefits, training and 
development, support for diversity, strategic management, performance-
based rewards and advancement, and family-friendly culture and 
benefits. Our index scores are computed based on data that comes from 
federal employees themselves through their responses to Federal Capital 
Survey.
    The Subcommittee is right to raise questions about employee morale 
at the Department of Homeland Security. As the Department's performance 
in the Best Places rankings shows, there is reason for concern.
    In 2005 and again this year, the Department as a whole ranks 
second-to-last--i.e., in 29th place--among large agencies. The 
Department is the lowest ranked agency in eight out of ten workplace 
categories.
    Of the eight DHS subcomponents that were ranked in 2005, only the 
Transportation Security Administration (TSA) and the Bureau of 
Citizenship and Immigration Services (BCIS) increased their overall 
scores; the other six (Headquarters, Federal Emergency Management 
Agency, Coast Guard, Immigration and Customs Enforcement, Customs and 
Border Protection and the Secret Service) declined.
    Our analysis of the Best Places data shows that, within DHS, three 
workplace categories are most closely related to overall satisfaction. 
They are, in order, leadership, employee match, and strategic 
management.\1\ For 2007, the Department as a whole showed improvement 
in two of these three key drivers--strategic management (up 3.3 
percent) and effective leadership (up 2.3 percent). DHS also improved 
in the performance-based rewards and advancement dimension, by 5.8 
percent. DHS scores were down in the other seven workplace categories.
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    \1\This differs from the government-wide results, where work/life 
balance--not strategic management--us the third most influential driver 
of employee satisfaction.
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    For the 2007 Best Places rankings, DHS is divided into 13 
subcomponents. The subcomponent data provides a fascinating look at 
where things are going well, or not going well, in the Department. Some 
of the more troubling data points for the DHS subcomponents include the 
following:
         Six DHS subcomponents (the Defense Nuclear Detection 
        Agency, FEMA, the Bureau of Immigration and Customs 
        Enforcement, Headquarters, TSA and the Office of the 
        Undersecretary for Science and Technology) are among the 15 
        lowest ranked federal subcomponents.
         TSA is the lowest ranked DHS subcomponent for two of 
        the three wide key-drivers: leadership and balance.
         FEMA's score dropped by about 13 percent from 2005, 
        placing it 211 th out of 222 federal subcomponent 
        organizations.
         DHS headquarters ranks 215th among all subcomponents. 
        Its score dropped 29 percent from 2005, the largest decline of 
        any federal subcomponent.
    The messages coming from DHS are not all disappointing, however. 
There is some encouraging news in the performance of several DHS 
subcomponents:
         Three DHS subcomponents--U.S. Visit, the Coast Guard 
        and the Federal Law Enforcement Training Center (FLETC)--are 
        ranked among the top 50 subcomponents. Two of the three (U.S. 
        Visit and the FLETC) are new to the in 2007.
         U.S. Visit, the Coast Guard, the Secret Service and 
        the FLETC scored above the government-wide mean in both 
        leadership and how well employee skills are matched to agency 
        mission. U.S. Visit in particular had a very distinguished 
        score in the leadership category; it ranked seventh out of 222 
        subcomponents.
         Five DHS subcomponents (FLETC, Office of Inspector 
        General, Coast Guard, Secret Service, and BCIS) scored above 
        the government-wide mean in the area of balance.
         TSA, one of the largest DHS subcomponents and the 
        lowest ranked federal subcomponent in 2005, enjoyed a six-
        percent increase and no longer ranks last. TSA improved in 2007 
        in two of the three workplace categories linked most closely to 
        DHS employee satisfaction and engagement -leadership (up 5.6 
        percent) and strategic management (up 6.2 percent). In employee 
        match, TSA stayed about even with its 2005 score.
    Mr. Chairman, these data points combine to tell a compelling story 
about the Department of Homeland Security. The Department is fortunate 
to have a workforce that is committed to the Department and to its 
mission; yet, varying degrees of weakness in all ten workplace 
categories keep the Department and its employees from performing at 
their best.
    Working in the Department's favor is the addition of Marta Brito 
Perez as the Department's new Chief Human Capital Officer. We believe 
that Ms. Perez understands the challenges facing the Department and is 
working to address them in a strategic and comprehensive way. Under Ms. 
Perez's guidance, and with the support of the Department's senior 
leaders and this Subcommittee, we think there is reason to believe that 
DHS can improve its overall Best Places ranking.

The Way Forward
    Making major changes in federal human resources systems, especially 
in pay and performance management, involves culture change as well as 
system change. Such change is inevitably slow and iterative. The 
changes that have been attempted at the Department of Homeland Security 
have had dubious success, especially in terms of employee acceptance. 
We note, however, that a number of the federal agencies that have been 
allowed to operate under alternative personnel systems such as SEC, 
NASA and GAO have consistently been rated by their employees as among 
the top ranked ``Best Places to Work.''
    We believe that moving DHS back to the 1949-era General Schedule 
would likely have greater costs than benefits. None of the alternative 
personnel systems have been ``magic bullets,``but over time most have 
been improvements over what existed previously and the affected 
organizations would not welcome a return to the previous state. The 
challenge, therefore, is to effectively move forward here with 
personnel management practices that are designed in partnership with 
Department employees and their representatives and that will benefit 
the Department and its employees alike.

Recommendations
    The Partnership offers the following recommendations regarding the 
Department of Homeland Security's personnel management:

        1. Congress should encourage and support Department efforts to 
        hire and retain top talent, create a performance-based culture, 
        create learning and development opportunities for DHS employees 
        and improve leadership.

        2. Congress should also support Department efforts to establish 
        a fair, credible and transparent performance management system 
        that makes meaningful distinctions in employee performance and 
        is designed in collaboration with the Department's employees 
        and employee representatives. A well-established performance 
        management system that is accepted by DHS employees is a 
        critical first step toward more performance-oriented 
        compensation systems. The Department's stated intent to address 
        weaknesses in their performance management system, and to 
        address the low percentage of positive responses from their 
        employees to the 2006 Federal Human Capital Survey before 
        implementing a performance-based pay prototype, are noteworthy 
        goals.

        3. Congress should allow the Department to continue its pursuit 
        over time of more market-sensitive pay systems that also allow 
        more flexibility in recognizing employee performance, 
        classifying jobs and setting initial pay--subject to the caveat 
        in recommendation 4. The flexibilities that have been tested 
        successfully in federal demonstration projects or in federal 
        agencies with special pay flexibilities provided by Congress 
        should serve as a guide in this regard.

        4. Congress should require that any DHS alternative pay system 
        must meet certain requirements, and be certified by OPM, GAO, 
        or another entity specified by Congress, before it is 
        implemented. The requirements for certification should include 
        (a) a fair, credible and transparent performance appraisal 
        system, (b) a means of ensuring employee involvement, 
        acceptance and ongoing feedback, and (c) a mechanism for 
        ensuring the system is adequately resourced.

        5. A key criterion for the success of any human capital 
        management system is the presence of highly competent managers, 
        supervisors, and HR professionals Congress should ensure that 
        DHS is making the necessary investment to select, train, and 
        effectively manage the individuals in these key occupations.

        6. Congress should ensure that a DHS personnel system operate 
        under government-wide ground rules. These ground rules 
        currently include and should continue to include:
         Adherence to the Merit System Principles in 5 U.S.C. 
        Sec. 2301(b) and the Prohibited Personnel Practices in 5 U.S.C. 
        Sec. 2302(b);
         Collaboration with and involvement of employees and 
        managers;
         Collective bargaining with employee representatives 
        via negotiated agreements;
         Due process rights for employees; and,
         Adherence to veterans' preference.

        7. Congress should closely monitor the Department's investments 
        in training and development. Too often, these accounts are 
        among the first to be cut, when the fact is we need to be 
        investing more in training and development, particularly when 
        we are demanding more of managers and implementing new 
        personnel flexibilities. A specific amount of funding 
        sufficient to this task should be allocated and fenced in.

        8. To assist Congress in the exercise of its oversight 
        responsibility and to respond to any concerns that current or 
        future HR reforms might actually detract the ability of DHS to 
        accomplish its missions, the Partnership recommends the 
        development and use of a set of metrics for the specific 
        purpose of evaluating personnel management and reforms over 
        time. Such metrics will only be of value if the Congress, the 
        Department and other key stakeholders agree on a common set of 
        measures to inform future decision-making. The following 
        principles should apply in this regard:
                a. The key to effective oversight will be looking at 
                the right measures, not the most measures.
                b. Metrics should include qualitative as well as 
                quantitative measures.
                c. Metrics should not impose an undue collection and 
                analysis burden.
                d. Metrics should be used to inform decision-making and 
                not simply to monitor compliance/non-compliance.
    The Partnership has recently completed a thorough review of human 
capital metrics in federal, state and local governments, as well as the 
leading practices of top companies in the Partnership's Private Sector 
Council (PSC), that serve as a useful guide to the Subcommittee in its 
oversight capacity.
    Based on this research and of the principles mentioned above, we 
recommend that the Subcommittee work with DHS to collect and analyze 
metrics in seven areas: recruitment, retention, skills gaps, 
performance distinctions, performance culture, leadership and 
implementation. The Subcommittee could gain additional insight from the 
data by looking at these metrics by specific demographic group--e.g. 
minority employees or a particular age group--as compared to the 
workforce as a whole.

Recruiting
    To assess whether they are winning the war for talent, leading 
organizations are collecting information about new hire rates--e.g., 
the ratio of new employees hired to the number of planned hires for 
critical skills--and new hire quality--e.g., ti the number of planned 
hires for critical skills--and new hire quality--e.g., monitoring 
Federal Human Capital Survey results about the skills of new hires.

Retention
    To measure whether DHS is retaining high-performing employees with 
critical skills, we recommend that the Subcommittee look at the 
attrition rates of high performers compared to overall attrition and 
the attrition rates of critical skill employees compared to overall 
attrition.

Skills Gaps
    DHS should be working to close the gap between the actual numbers 
of employees with a critical skill compared to the number needed. 
Ideally, the Subcommittee will monitor the results over time to assess 
whether the gap is decreasing.
Performance & Rewards
    A modern compensation system should make meaningful distinctions 
between employees based on their performance. The Subcommittee should 
monitor employee evaluations--e.g. the numbers of employees reaching 
the various levels of performance--and employee bonuses and rewards--
e.g. the number of employees receiving various levels of pay and 
bonuses.

Performance Culture
    Congress enacted a provision in 2003 requiring an annual survey of 
employees across the federal government. The survey should prove to be 
an invaluable window into employees' views of their agencies' 
management practices.
    The survey questions specified in recent regulations issued by OPM 
include several questions about supervision and pay that constitute a 
Performance Culture Index with items such as:
         Promotions in my work unit are based on merit.
         In my work unit, steps are taken to deal with a poor 
        performer who cannot or will not improve.
         In my work unit, differences in performance are 
        recognized in a meaningful way.
    The Subcommittee can compare the results of components 
participating in alternative personnel systems with the results of 
components operating under the General Schedule system. The 
Subcommittee and the Department will want to monitor the results over 
time to track whether the ``performance culture'' is increasing.

Leadership
    In any organization, it is vital that supervisors and senior 
leaders treat employees fairly, resolve disputes in a reasonable 
manner, and have the respect of their employees. Members of the 
Subcommittee can evaluate leadership effectiveness by using another set 
of questions the Federal Human Capital Survey. The Partnership has 
created an Index for Effective Leadership, which we use in our Best 
Places to Work rankings. This index includes items such as:
         I have a high level of respect for my organization's 
        senior leaders.
         Complaints, disputes or grievances are resolved fairly 
        in my work unit.
         In my organization, leaders generate high levels of 
        motivation and commitment in the workforce.
    The Subcommittee can compare the Department's scores on these 
questions to scores across government and the private sector.

Implementation-Pulse Surveys
    Finally, it is important to examine real-time data on the success 
of alternative personnel systems and their implementation. Pulse 
surveys are short surveys going to a small, representative sample of 
employees used to provide leaders with real-time information on 
critical issues. DHS could administer pulse surveys semi-annually to 
examine employee opinions on system understanding of the new system, 
satisfaction with the new system, et cetera. This data will allow DHS 
to improve the rollout of its personnel system based on employee 
feedback.

Conclusion
    Mr. Chairman, Representative Rogers, Members of the Subcommittee, 
we thank you again for the opportunity to share our views on the 
personnel challenges facing the Department of Homeland Security and our 
recommendations for the best way forward. We look forward to being of 
assistance to this Subcommittee and to the Congress as you consider the 
future of the Department and the men and women who work to ensure the 
safety of the American people.

    Mr. Carney. Thank you, Mr. Stier, for your testimony.
    And I want to thank all the witnesses for their testimony. 
I am sure it will help move the ball forward on this issue.
    I remind each member now that he or she will have 5 minutes 
to question the panel.
    And I will now recognize myself for questions.
    Ms. Perez, you said MaxHR was limited and that HCOP is 
broader. I don't think the employees disliked MaxHR because it 
was too narrow.
    What objectionable parts of MaxHR have been discontinued?
    Ms. Perez. Okay. This is actually extremely important, and 
I make sure that it is well-understood.
    Human resources management across any organization, public 
or private, requires that the company, the organization, pay 
attention to certain elements, like make sure that it has the 
right talent, make sure it is developing the talent, that it is 
doing what it can to retain the talent.
    So all of those things are things that are extremely 
important, and things that were not necessarily addressed 
specifically in the MaxHR initiative.
    What MaxHR did, and what I think--and it is important--is 
that it said the department needs to pay attention to the way 
that it evaluates its employees and the way that it compensates 
its employees. And that is a good thing. And we just heard Max 
Stier allude to that.
    We are keeping the area of evaluating our employees. The 
areas where Max did not address--it didn't say we are bad, it 
didn't say anything; it just didn't address--were in the area 
of hiring, retention, training and development, building 
leadership capacity, building rotational programs, rotational 
assignments for executives that we think will make them 
stronger.
    All of those things were not addressed in the MaxHR 
regulations. What we have done in the operational plan is 
identify a set of priorities that say specifically we need to 
make sure we have the right talent in place, and we are going 
to address that through our recruitment practices.
    We need to make sure that we have diversity in the 
organization, and we are going to do that through our 
recruitment practices.
    We need to make sure our employees have the talent, the 
skills that they need, and we want to increase our training.
    Those are areas that were not addressed in MaxHR that we 
think are fundamental to a well-run organization.
    Mr. Carney. Thank you.
    Ms. Kelley, would you care to comment on this?
    Ms. Kelley. I would. In NTEU's view, MaxHR just had a name 
change. The department has not indicated that they intend to 
change any of the things that have been tagged and earmarked as 
inappropriate in MaxHR.
    The operational plan that they describe may be broader, but 
in my view it is also at about a 10,000-mile view and is not 
doing anything to address the issues that we are discussing 
here today and that we have all identified as morale issues.
    So I have told the members who I represent to not believe 
for a minute that MaxHR is dead, that it just has a new name.
    Mr. Carney. Mr. Cox?
    Mr. Cox. Colleen and I will certainly agree upon that. You 
know, call it a different name. It is the same thing.
    And you know, I look at the TSA, the Transportation 
Security officers at the airport. Their pay system, I think, is 
a classic example of where MaxHR may be trying to go.
    They do not get the general cost of living adjustments. 
They only get the locality pay. And then everything is based 
upon bonuses, which rarely happen.
    You know, I would encourage the committee to request the 
data, to look exactly at how these employees are paid, how they 
get bonuses, how they are actually compensated.
    But many of them are now working for almost the same amount 
of money they were working for 4 years and 5 years ago, and we 
all know the cost of living, the general operation of life, is 
certainly costing more than it was 5 years ago.
    Most people want some type of cost of living adjustment, 
and to not have their salary increased--some type of bonus that 
is solely subjective to just whether a supervisor likes you or 
dislikes you.
    Mr. Carney. Thank you.
    Mr. Stier, do you agree with President Kelley that 
performance-based awards should be open, transparent and 
understood by rank-and-file employees?
    Mr. Stier. Oh, absolutely. No question about that. And I 
think obviously the starting point, before you tie money to 
anything, is making sure you have a system of appraisal that 
has all those attributes, and that employees believe it, 
because without that, it doesn't work.
    Mr. Carney. Okay, thank you.
    Ms. Perez, I have one question, on this round at least, one 
final for this round.
    In your testimony, you pointed to the fact that DHS is only 
4 years old and that studies have shown reorganizations of this 
nature take 5 years to 7 years.
    My question is where is DHS on this 5-year to 7-year scale. 
Are we really 4 years into progress?
    Ms. Perez. I don't know whether we are 4 years into the 
progress. I will tell you that a significant progress has been 
made.
    And specifically, when the survey was done in 2006, our new 
performance management system that has all the attributes that 
we have talked about--transparency, communication with 
employees, better trained managers--all of those things that 
are so important and fundamental to an organization's success 
was not in place.
    It began the training in the middle of 2006. We now have 
14,000 managers trained, again, expanding the training to our 
employees as well. So that area we are doing very well on.
    And the two things that we are doing relative to the 
Federal Human Capital Survey--doing focus groups, doing more 
meetings, enhancing our Web sites, better communication, better 
training for our leaders--all of those things, I think, are 
well on their way to achieving the kind of integration the 
department and the administration envisioned when it created 
homeland security.
    Are we three or 4 years into it? I am not quite sure, 
except to tell you that the initiative, the commitment from the 
secretary, from everyone, all the leadership at the department, 
the accountability--we have actually put it in the performance 
evaluation of our managers and our executives--accountability 
relative to their ability to lead employees, to communicate 
with employees, to provide training opportunities, for 
diversity, for integrity.
    All of those things are now part of the evaluation of each 
executive, and that was not something that was done--that was 
there before. It is something that we have done now.
    So accountability is an important element of all of this, 
and I believe that we are now in the right place relative to 
accountability.
    Mr. Carney. That is heartening. I am sorry it took 4 years 
to figure out accountability was important.
    Anyway, I now recognize the ranking member of the 
subcommittee, the gentleman from Alabama, Mr. Rogers, for 
questions.
    Mr. Rogers. Thank you, Mr. Chairman.
    Ms. Perez, it just occurred to me a few minutes when I was 
sitting here preparing my questions--that the last permanent 
chief came before this committee to talk about this very 
subject--and not only morale, but high turnover and the problem 
that it has created in DHS. He told us that day things were 
getting a lot better.
    And then later that day, he told us he had just turned in 
his resignation that morning. So I hope you are not going 
anywhere soon.
    Ms. Perez. I don't have any--no, I am not going anywhere, 
sir.
    Mr. Rogers. He said he didn't have the heart to tell me--
    Ms. Perez. Unless I do poorly, then they might tell me to 
go somewhere.
    Mr. Rogers. In thinking about this survey--you know, we 
have done this annually--and what it has told you, and in 
thinking about Mr. Stier's suggestion of metrics, I wonder, are 
you planning to--or do you think it would be beneficial to do a 
monthly survey within your department to get those metrics that 
he is talking about?
    I am not talking about surveying all 180,000; but do a 
random scientific sample of 300-500 of them so that every month 
you can see if you are making improvements in certain areas or 
not improving, so that when the next big survey comes a year 
from now, you will pretty much have an idea of how you are 
going to look in it.
    Ms. Perez. Yes.
    Mr. Rogers. Is that something you all have talked about or 
would find beneficial?
    Ms. Perez. Actually, I am a firm believer of metrics. And 
in fact, while at OPM I was, in fact--I led the human capital 
assessment and accountability framework for the entire federal 
government. That includes metric as a requirement for the 
entire government.
    We are in the process of--metrics and surveys are extremely 
important, and they need to be measured on a regular basis. The 
most actionable information for--component for an agency within 
homeland security comes from surveys that are done at a very 
localized level. And that is going on right now.
    TSA does it on a regular basis. CBP does it on a regular 
basis, to try to address--so that we don't wait an entire year. 
So those things are going on right now.
    We are now looking to identify what are the metrics that we 
want to monitor on a regular basis, like, for instance, the 
turnover, attrition in the department, the quality of the 
employees that are coming on board, the time that--the 
investments that we are making in training--all of these things 
that are being looked at and that we are--I am in the process 
of developing a bit of a scorecard that will do that.
    We now have as a requirement in the law an annual survey, 
and homeland security will be administering its survey in 
September time frame.
    But you should know that surveys, localized surveys, are 
going on at CBP, you know, TSA, Coast Guard, just to make sure 
that we keep our pulse, if you will, our hands on our pulse in 
making sure that we know what employees are doing.
    But at the same time, you can survey the organization to 
death, but if you do not take action, and if employees feel 
that the comments and the recommendations that they are making 
are not being acted on, it is of no use.
    So part of the accountability is to make sure that, yes, we 
have surveyed, but most importantly that we take the actions 
that need to take place to makes sure that we improve the 
leadership of the department, get our managers to train, and 
that employees are, in fact, seeing a change.
    Surveying is not enough unless there is action behind it to 
say, where is the beef here.
    Mr. Rogers. The biggest problem that this committee has 
noticed in the last couple of years, 3 years, has been a high 
turnover in upper management positions.
    What, if anything, are you planning to do or are doing to 
try to remedy that?
    Ms. Perez. I am happy report that the turnover in the 
department is, in fact, going in the right direction, going 
down. And in fact, we now--our turnover is about 9 percent 
relative to the government-wide, which is a little over 8 
percent, so we are going in the right direction.
    We continue to monitor--it is not just the turnover. It is 
the turnover in what positions and so on, so you have got to be 
careful about monitoring turnover.
    The other challenge for homeland security, but also for the 
entire government, is the fact that our workforce is aging. So 
many of those turnovers are natural turnover. People are 
retiring.
    Standing up homeland security took a lot of energy from a 
lot of our employees, who are very dedicated but were working 
long, long days to stand up the department.
    Situations like Katrina, events like Katrina--I mean, these 
are things that taxed individuals who were very committed to 
the mission. And you know, often what happens is if they are 
eligible to retire, they may retire.
    So the things that we need to work on, and the things that 
we are paying attention to is how do we create incentives for 
retention strategies. How do we make sure that we are not, you 
know, working people to, you know, extreme hours?
    All of those things we are monitoring and monitoring 
closely. By bringing more individuals into the organization, 
our leadership ranks are pretty much--out of 428 SES slots that 
we have for--now they recently increased it. We were pretty 
much--less than 10 percent vacancy rate. That is actually very 
good for a department our size.
    So making sure we have the right people in place, making 
sure we are not overworking our folks--those are all important 
things, and we are paying attention to that.
    Mr. Carney. The chair now recognizes the chair of the full 
committee, Mr. Thompson from Mississippi, for 5 minutes.
    Mr. Thompson. Thank you very much.
    Nice seeing all the witnesses again.
    Ms. Perez, one of the things we grapple with on this 
committee is the fact that the department will not fill 
vacancies in a reasonable period of time.
    Let me give you an example. One of the largest procurements 
we have right now is called SBInet. We have had testimony 
before the committee that we know what our staffing 
requirements will be for the next 2 years or 3 years.
    But we receive testimony that for the next mission for 
SBInet, which starts in June, we will only be able to hire 46 
percent of the procurement people, and we are going to have to 
contract the rest of the procurement.
    What do you think is the reason the department can't hire 
people when they know they need to hire them?
    Ms. Perez. Sir, I think that it is the most critical, 
important key. What keeps me up at night is the question of our 
ability to hire, which is why when I came on board(and one of 
my priorities is the whole hiring initiative, which is why I 
keep telling you that the human capital operational plan is not 
MaxHR.
    It addresses areas that were not paid attention to in the 
past, and particularly areas like procurement, areas like 
financial management, areas like I.T.
    Those are corporate assets that the department needs to be 
looking at. And we have never looked at it in that fashion. We 
began in March precisely that, an initiative.
    We put ads in the Washington Post that basically identified 
the competencies that we need, the skills that we need, saying 
we need program managers, we need procurement individuals, all 
of these things(put out an ad, and we had over 300 applicants.
    We are now processing those applications to make sure that 
precisely, Chairman Thompson, we have the talent that we need.
    There is absolutely no reason why the department should not 
have the talent, except that hiring may not have been a 
priority in the past. It is a priority.
    Mr. Thompson. So knowing that somebody is failing(do you 
know anybody who has been fired because they didn't perform 
that responsibility?
    Ms. Perez. The problem is not so much the failing to--
responsibilities, sir. It is that we managed hiring in the 
department as a very administrative function rather than with 
the eye to recruiting talent, to bringing the very best to the 
organization.
    And I apologize for giving you--
    Mr. Thompson. I appreciate you, but let me move it forward.
    Ms. Perez. Okay.
    Mr. Thompson. What happens is we end up paying three times 
the cost because we go and contract for that service. Why can't 
we just hire the person, keep them, because you know you need 
them?
    But then you come up and say we are only hiring 40 percent 
of the people, so we outsource, so if my colleague, Mr. 
DeFazio, is a contract employee, he is making twice the money 
that a government employee would be making.
    So therefore, as a taxpayer, we are paying more money for 
the service. And I am saying to you that that is a problem that 
the department continues to have across the board.
    And you just said that MaxHR is dead. But now everything 
you described in your testimony tell me MaxHR lives in another 
form.
    And I would hope that the department is not playing a shell 
game with Congress and the courts by determining that they are 
not going to follow the directions of Congress in this whole 
personnel system. If it is bad, it is bad. Don't try to dress 
it up.
    Let me move forward. Mr. Cox talked about some information 
he needed. And I think it is reasonable. If, in fact, we have 
employees who don't receive cost of living raises, when 
Congress, in fact, passes legislation that authorized cost of 
living raises, I want to know it.
    So can you tell me whether or not TSA employees receive 
cost of living raises?
    Ms. Perez. The compensation system of TSA employees is 
different, and I will have to get back to you with the 
specifics. I don't have it.
    Mr. Thompson. So they don't get it--
    Ms. Perez. No--
    Mr. Thompson. --even though Congress passed it.
    Ms. Perez. --I didn't say they don't get it, sir. I don't 
know the answer to that. I will have to come back to you with 
that answer.
    Mr. Thompson. Well, when you come back to me, I need that 
answer. If they don't get it, then I need to see what they get, 
how they get it, what is the objectivity in the giving of it.
    You spoke of diversity in the department. Are you satisfied 
with diversity in DHS?
    Ms. Perez. No, sir, I am not satisfied, and neither is the 
leadership of the department satisfied with the diversity in 
the upper ranks of the organization.
    And as I mentioned earlier, I was in the south of the 
border last week and had the opportunity to see there is a lot 
of diversity in the front lines.
    Our employees that are working, you know, directly with 
our--well, not so much clients, but the people that we service. 
There is a lot of diversity there.
    We don't have the appropriate diversity in the leadership 
ranks. We do not, sir.
    Mr. Thompson. Well, that is south of the border. You know, 
that is kind of stereotyping. And I want you to understand, a 
lot of us look at DHS in the broader sense. And we think that 
that is and continues to be a major problem.
    Have you ever met with the civil rights director for DHS?
    Ms. Perez. He and I are partnering on a number of 
initiatives. My reference to the--I just want to make sure--my 
reference to the southern border is that that is where I 
happened to be visiting, so it was not a stereotype.
    Mr. Thompson. Oh, okay.
    Ms. Perez. That just happened to be where I was.
    I am working very closely with Dan Sutherland, the civil 
rights-civil liberty officer for the department, and in fact 
have started a number of initiatives, including Dan and I are 
meeting with component heads and talking about our diversity 
objectives--not only important in the sense of recruitment, 
retention but also opportunities for training and development.
    Mr. Thompson. Well, if you have something in writing about 
this partnership, will you provide it to this committee?
    Ms. Perez. Absolutely. We would be happy to, sir.
    Mr. Thompson. Thank you.
    I yield back.
    Mr. Carney. Thank you, Mr. Chairman.
    The chair now recognizes other members for questions that 
they may want to ask the witnesses.
    In accordance with our committee rules and practice, I will 
recognize members who were present at the start of the hearing 
based on seniority on the subcommittee, alternating between 
majority and minority.
    Those members coming in later will be recognized in the 
order of their arrival.
    The chair now recognizes my good friend from Colorado, Mr. 
Perlmutter, for 5 minutes.
    Mr. Perlmutter. Thank you, Mr. Chairman.
    I have a number of questions, and I will start off by 
saying I sympathize with the department really in two areas. 
One, forming the department out of 22 agencies, the merger 
piece of this, 170,000, 180,000 people, is one heck of a task 
and takes time. There is no ifs, ands or buts about it.
    And constant reorganizations, though, in the department 
prolong, you know, getting to some, you know, lasting stability 
and, I think, ultimately good morale in the department.
    So I just would caution all of you that constant 
reorganizations don't help the process, and some stability is 
needed as we go forward.
    I would also say, you know, I am not a guy that is(you 
know, you have employees, and you want those employees to do 
their job, and I am not looking for, you know, a happiness 
quotient in all this.
    But there is clearly--in business, in government, in life, 
if somebody has got a bad attitude, they will often do a bad 
job. And that is where Chairman Thompson is so correct.
    I mean, the job we are asking of all of these folks is to, 
you know, prevent attacks, respond to disasters and monitor who 
is coming and going from our country, and we need people 
generally with good attitudes to make sure they do a good job.
    So I have a couple questions. First is I have had a chance 
now to meet with TSA employees, particularly out in Denver, but 
elsewhere. I kind of check in with them as I am going through 
all these different airports.
    And, to Ms. Kelley and Mr. Cox, you both mentioned the 
importance of TSA collective bargaining rights, and you know, 
in my conversations, all off the record, I have seen, 
particularly in Denver, where we have reduced the number of 
transportation officers by--I think from 1,100 down to about 
700--and we have almost doubled the number of passengers going 
through those screening checkpoints.
    And you know, what I am concerned about there is seemed to 
be poor pay and poor benefits, and much greater workload on 
folks.
    They just had an experience--it was on T.V.; I was 
questioned about it--where they did very poorly on what they 
call a red team examination, where they went in and checked the 
security and whether bombs could be passed through various 
checkpoints.
    And so you know, I am concerned. Again, the end product 
being if bad attitudes, you know--too much stress on the system 
ends up in less security. And I would like first Ms. Kelley to 
comment on it, Mr. Cox, and then Ms. Perez, if you get a 
chance.
    Ms. Kelley. Well, I think what you here described--and just 
from the sheer numbers that you report, obviously there is 
increased stress and pressure on employees who are trying to do 
the best job possible as employees and for our country.
    And in addition to the pay issues, I mean, there are a lot 
of health and safety issues that the TSOs face in their jobs 
that are not being appropriately addressed by management.
    The issue of collective bargaining would provide an 
opportunity for those employees and their representatives to 
address those issues in a formal setting rather than just have 
management decide whether or not they want to act on things 
that they hear.
    I would be shocked if the things that you hear and you see 
are not known by TSA management in Denver. And yet nothing is 
obviously being done to appropriately address them, to enable 
these employees to do the job that they are trying to do.
    So collective bargaining provides the framework for that, 
and it takes nothing away from the agency from a standpoint of 
needing to be responsive, to make sure they have the staff 
there.
    If they become aware of some information, there is language 
in the statute today that provides in emergencies for 
management to make these decisions without any reference to 
collective bargaining.
    We saw it happen on September 11th and in the aftermath of 
September 11th. There was no one waving their union contract 
saying, ``I won't go to that bridge, or to that land border or 
to that port. I won't work 16-hour shifts six or 8 days in a 
row.'' That just did not happen.
    There is no frame of reference to point to to show that 
collective bargaining would get in the way of TSA being 
successful and of giving these employees what they need to be 
able to be successful.
    Mr. Perlmutter. Mr. Cox, quickly, if you would.
    Mr. Cox. Yes. We have worked with TSA employees since they 
have started, since that was federalized as employees of the 
federal government.
    Some of the things that we have seen that we believe 
collective bargaining would help with, like sick leave, time 
and attendance, rotation of shifts--frequently, we get calls 
and we talk with these employees.
    They get a benefit of sick leave, as all federal employees 
do. However, if they have an ill child or they try to use 
family medical leave, they are told, ``No, you can't use that, 
you have to take leave without pay,'' or either, ``We will 
charge you AWOL,'' those type things.
    How can anyone be focused on doing a good job when each day 
they are being said, ``Choose between your sick child or, you 
know, coming to work?'' Those are the kind of things parents 
don't deal well with. I didn't deal well with it. You didn't 
deal well with it.
    There is things we could handle with collective 
bargaining--the rotation of shifts where they are coming in at 
5 a.m. one morning, then they send them back home and they work 
them midnight, and then they have got to be back at 5 a.m.--
those type things.
    People are not happy with that, nor can they function well 
with that.
    Mr. Perlmutter. Thank you.
    I have used up my time.
    Mr. Carney. You have, and thank you for pointing--
    Mr. Perlmutter. But it is nice that you let me go first--
    Mr. Carney. Well, of course.
    Mr. Perlmutter. --before my colleagues to my right.
    Mr. Carney. These are important.
    I now recognize Ms. Clarke from New York for 5 minutes.
    Ms. Clarke. Thank you very much, Mr. Chairman.
    Mr. Chairman, in the past I have stated that I am extremely 
concerned about the personnel problems within the Department of 
Homeland Security.
    DHS is the single most important department in our 
government when it comes to the safety and protection of the 
American people.
    Yet overwhelming evidence has demonstrated that DHS is the 
single worst cabinet-level department when it comes to the 
handling of its personnel, who are the least satisfied workers 
in our government.
    This situation must change if we are to ensure our key 
agencies are able to retain their most valuable employees.
    Let me just start by saying that there has to be a level of 
sensitivity, starting with you, Ms. Perez--and I wanted to ask 
you a couple of things.
    First of all, just trying to reinvent the culture there, 
and going from MaxHR to a system that essentially says HCOP, 
you know, I am just thinking about psychologically, you move to 
HCOP, right? Okay. Let me just continue there.
    And then I wanted to ask you just the whole human capital 
piece, which sort of makes employees--as a layperson, it is 
sort of a material commodity. You know, you carry the title of 
chief human capital officer.
    I wanted to just ask you, from a symbolic or emblematic 
standpoint, you know, how does it feel? I mean, did you kind of 
think about even your title and what that would represent in 
the context of developing a culture for the agency?
    Ms. Perez. First of all, let me tell you that I agree 
completely that the area of personnel management and making 
improvements in homeland security are key, and key to our 
success.
    With regards to the title of human capital, I have now 
been, for the last--well, in my professional life, now 30 years 
dedicated to development of employees and so forth, have 
carried many titles--human resources. I worked for OPM 
personnel management and now here--of human capital.
    The title human capital did not come from DHS but, in fact, 
the statute that created the human capital council with the OPM 
as the chair of that entity.
    At the end of the day, frankly, ma'am, I think what is 
important--less on the title, and my title, chief human capital 
officer--in fact, I am a Hispanic woman who--where chica means 
little--young lady, or what have you.
    Often, the title chico is one used to(as an abbreviation of 
what, you know, the heads of human resources management in the 
departments are called, not necessarily one that I think is 
particularly flattering, especially as a Hispanic woman.
    But quite frankly, to me, at the end of the day, ma'am, 
what is really important is that we do the right things to 
employees and less on what we call ourselves. So I was not 
about not to take the job because the title was chief human 
capital officer.
    With regards to the operational plan, the human capital 
operational plan, it is not--when I was at OPM, my 
responsibility was to audit human resources practices across 
the entire government.
    In that capacity, I had the opportunity to look at many 
well-written plans, with fancy names, you know, and branding 
names and so forth. But at the end of the day, you didn't know 
what the department was going to accomplish.
    What the components and my office did in coming together to 
create an operational plan. The acronym is just a federal 
government practice of giving an acronym to everything that we 
do.
    It is really the human capital operational plan. And what 
is in there is very--it is nothing fancy. There is no lofty 
pages of, you know, grandiose treatises about human resources 
management. We will, by May of such and such a date, do this, 
we will do this. That is all it is.
    The fact that we use an acronym to describe what is in it--
it is not something that was designed to be sexy or designed to 
be in any way diminishing the importance of our employees.
    It is just an operational plan, ma'am, with very specific 
objectives. My title--if we can come up with some fancier 
title, I would be pleased. At the end of my day, I just want to 
do my job.
    Ms. Clarke. With all due respect--and I certainly 
understand the administrative end. We are talking about an 
agency that has a history of demoralization, and so we have to 
be sensitive to these things, right?
    Ms. Perez. Right.
    Ms. Clarke. Whatever we can do to change that culture--we 
want to impact it in a positive way.
    My time is up, and I just wanted to bring that to your 
attention, because if you feel that it is somewhat 
dehumanizing, and that there are certain things within the 
culture--Mr. Chair, one moment.
    Mr. Carney. One more, yes.
    Ms. Clarke. Thank you.
    I think it becomes your obligation to speak out and to 
impact on that.
    Thank you very much, Mr. Chair.
    Mr. Carney. Thank you, Ms. Clarke.
    Mr. DeFazio, you are now recognized for 5 minutes.
    Mr. DeFazio. Thank you, Mr. Chairman. Congratulations on 
chairing this important subcommittee.
    Ms. Perez, you used to work at OPM, I believe you stated, 
is that correct?
    Ms. Perez. Yes, sir.
    Mr. DeFazio. Okay. Now, in your testimony on page three, 
you say here, mindful that the survey is only one source of 
data--you are referring to the OPM survey at that point, I 
believe--
    Ms. Perez. Yes, sir.
    Mr. DeFazio. --which reflects the attitudes of our 
workforce at a single point in time.
    Now, weren't there actually two OPM surveys, 2005 and 2006?
    Ms. Perez. Yes.
    Mr. DeFazio. Weren't they pretty consistent?
    Ms. Perez. Yes.
    Mr. DeFazio. Wasn't 2006 worse?
    Ms. Perez. Unfortunately, it wasn't necessarily worse. I 
mean, it was--in some areas we went down. In other areas, we 
went up.
    Mr. DeFazio. Let me say it was very disturbing. It was not 
good.
    Ms. Perez. It was very disturbing.
    Mr. DeFazio. Okay. So we didn't see any progress between 
2005 and 2006 with the OPM--and you would say that, since you 
worked at OPM, that OPM surveys are valid.
    I mean, they do have valid instruments. They do them in a 
proper way. They do give some real measure of employee 
satisfaction.
    Ms. Perez. Absolutely. Not only was I there, I was involved 
in the design of the questions, so I think they are extremely 
important.
    Mr. DeFazio. Okay.
    Ms. Perez. But all the metrics are really important.
    Mr. DeFazio. Okay. But I mean, that is what was confusing 
here, is that they--then you go on to say--so we have 
established we have two OPM surveys. They both, 2005 and 2006, 
are distressing in terms of the morale at the agency.
    But then you go on to say they should be considered with 
other data. Are there other data instruments, or surveys or 
something, that show that the findings are improper, or what do 
you mean by that, other data?
    Ms. Perez. Yes, thank you for asking. And Mr. Stier sort of 
alluded to the notion of metrics, and we talked about that 
before.
    There are a lot of different things that sort of provide--
that are indicators of how an--the health of an organization, 
things like the rate at which people are leaving the 
organization, the way that rewards are being administered in an 
organization, the way that compensation decisions are being 
made--all of those things are indicators of an organization 
that is either well-managed or not so much.
    So those are the--that is what I meant, sir, not to 
minimize its importance, but to say that there are a lot of 
different things the department needs to be paying attention 
to.
    Otherwise we are not going to make the progress that all of 
us want the department to make.
    Mr. DeFazio. Right, but the summary judgment is not so 
much. Now, you said the rate leaving--I mean, yes, there are 
certain parameters that go to that.
    I mean, there are external forces, I mean, you know, 
whether you are in a good job market or not, where you are 
located and those sort of things.
    You may be very unhappy in your job, but you feel what they 
call job lock. I am sure from your work you are familiar with 
that, you know, where people kind of feel stuck but they aren't 
happy there.
    The thing I found disturbing was that there were such high 
rates of--and it was pointed to as a positive thing, and I 
think it is positive about the people we have, but not about 
the way they are being utilized in the organization--is the 
degree of--you know, I think it was 89 percent thought that--
and I have lost the statistic here, but that the agency's work 
was important, their job was important--it was 80 percent, 89 
percent--
    Ms. Perez. Right.
    Mr. DeFazio. --so what we have here is that potentially--we 
have a dedicated workforce, potentially well-motivated people, 
but they are being mismanaged. And I mean, I was shocked, as 
was the chairman.
    On the COLA--and I would like to add something to your 
response. When you respond to the chairman on the COLA 
question, I mean, if the TSA employees didn't get it, where did 
the money go? Did it go to a few--I mean, was it distributed as 
lumps to a few supervisors?
    I mean, there was a substantial amount of money for COLA 
for all the workers, so when you respond to his question about 
did they or did they not get a COLA, do they or do they not get 
COLAs, if they didn't get a uniform COLA, where did the money 
go? I mean, we would want to see the distribution of those 
funds.
    I also hear from TSA--and again, I think, as a human 
resource professional, you would know that this is often a 
source of job dissatisfaction because it causes family strife 
and a whole bunch of other programs--there is a tremendous 
amount of forced overtime in TSA. Are you aware of that?
    Ms. Perez. Yes.
    Mr. DeFazio. And are we going to do something about that?
    Ms. Perez. Yes. And in fact, with regards to the 
compensation at TSA, again, I will come back with very specific 
as to how exactly they are compensated, at a later time.
    With regards to the number of employees in the department 
at TSA, and the overtime and all of that, those are things that 
are, again, indicators of where problem areas may be. The 
Federal Human Capital Survey doesn't address that.
    So those are areas the department needs to be paying 
attention to. And I know that TSA is paying attention to their 
hiring practices to make sure they have the right people on 
board, hiring the right kinds of people, providing career 
opportunities, career paths.
    Part of the challenge is--and I, too, travel extensively 
and spend time talking to TSA screeners, who often wonder, 
``Why is this woman asking me these questions?'' I even 
volunteer as a screener during the holiday shifts to get a feel 
for what--the work that they do.
    And the problem is that they--so many of them don't feel 
they have the opportunity for growth. We are addressing that. 
The department is addressing that.
    So there are a lot of factors that impact the employees' 
morale. Those are some of the factors that we need to pay 
attention to. Overtime, excessive overtime, overtiring people 
absolutely would go against--would hurt the employees' morale.
    Mr. DeFazio. Well, I was one of the authors of the 
legislation that created the Transportation Security 
Administration.
    And it was certainly our intent in having a federal 
workforce not only to professionalize it and deal with all the 
problems that preexisted 9/11, and I won't go into those, but 
also to give people a career path, because we had had 
statements under the prior privatized system that the screener 
jobs were the lowest entry-level job in many airports, and 
people aspired to McDonald's. That was pathetic. The pay was 
better, et cetera.
    So I would be disturbed to hear that we don't have the 
potential for a career path, because that was sort of the 
founding intent of the agency. And some of the other things you 
pointed to here--I mean, those are, you know, blinking red 
lights.
    But the problem is okay, we have identified them. But I 
mean, if you have identified these whole series of problems, I 
assume then you put together a document that points to how you 
are going to resolve these many issues. Is there such a 
document?
    Ms. Perez. Those career paths are already in place--
    Mr. DeFazio. Well, I am talking about more generally the 
whole list of problems--
    Ms. Perez. In fact, we have seen the attrition at TSA go 
from--in 2005, it is like 15 percent--from 15 something down to 
13 percent. We are seeing the positive trend.
    And in that market sector, airports and so forth, the 
attrition rate is usually 20 percent, 30 percent.
    So we are seeing, sir, whatever--your vision relative to 
creating TSA, and to make sure that employees have those 
opportunities and so forth, now with the department is 
executing on them, and we are seeing a reduction in the 
attrition.
    So the vision was correct, and we are seeing improvements 
in those areas.
    Mr. DeFazio. All right. Well, one last point.
    Thank you, Mr. Chairman, for the indulgence on the time.
    And I caution all professionals who come before us--and you 
have a long career in human resources--is we need to hear 
recommendations that may not fit well with political bosses.
    And for one, part of the problem at TSA is there is a cap. 
And the administration was complicit with the Republican 
Congress, who imposed an artificial cap on the agency, and that 
was, you know, particularly problematic post-9/11.
    And you know, that is part of the problem here. You know, 
we have got the liquids. That puts more burden on the 
screeners. It puts more burden on the baggage system. You have 
to have more people downstairs.
    We want to project TSA out in front of the work stations 
and have the person who checks the ticket and the I.D., the 
most critical interaction, be a TSA professional, not the 
lowest-paid entry-level job in the airport. That is the one 
residual position from pre-9/11.
    But the point is at some point the agency is going to have 
to come forward and say, ``We can't do it under this artificial 
cap.'' And you know, otherwise we are forcing people to do 
overtime and all these other problems.
    And all we want here is the truth, and we want things--we 
all want the department to succeed and to work better, and we 
want the employees to have more job satisfaction. So we hope to 
get some honest recommendations.
    Thank you, Mr. Chairman.
    Ms. Perez. Thank you. Thank you, sir.
    Mr. Carney. Thank you, Mr. DeFazio.
    We will now begin the second round of questions for those 
who have them.
    Mr. Stier, I understand that you had a time constraint, and 
I thank you for your time and your testimony today. And if you 
have to leave at some point, even in mid-answer, I guess we 
will let you do that.
    Mr. Stier. Thank you very much.
    Mr. Carney. Thank you very much.
    I will recognize myself for 5 minutes. And we are going to 
strictly adhere to the 5 minutes now.
    Ms. Perez, the adverse action and appeal provisions in the 
DHS personnel regulations were declared illegal and a stay was 
imposed on the rule in 2005 by U.S. District Judge Rosemary 
Collyer, who said, ``The regulations put the thumbs of the 
agencies down hard on the scales of justice in the agencies' 
favor.''
    The appellate court, however, said the plan changes in 
adverse action and appeals rights were not yet ``ripe'' for a 
decision since no one has been subject to discipline under 
them.
    Still, the appeals court agreed with Collyer's basic 
conclusion regarding the lack of fairness.
    Despite the court's rulings, DHS announced on March 7th of 
2007 that they intend to implement provisions of the 
regulations not specifically struck down by the courts, 
including these provisions limiting due process and appeals 
rights.
    Don't you think the department should tread carefully 
implementing regulations that will limit due process and 
appeals rights that the courts have said they may very well 
strike down in their previous rulings?
    Ms. Perez. Sir, absolutely. And in fact, again, I keep 
going back to my life at OPM, but it was my job to audit 
agencies' practices relative to that.
    We have not diminished the rights of our employees so 
that--in the new adverse actions and appeals. However, I will 
qualify my statement by saying that you know that I came to the 
organization, to the Department of Homeland Security, late in 
September.
    I have not had an opportunity to have conversations 
relative to those provisions with either my colleague, Colleen 
Kelley, or John Gage. We have talked about other things.
    And what I have asked my department is that we will--that I 
will wait until I have those conversations, which I hope will 
be scheduled--I think they are scheduled for next week or so--
to engage them and hear specifically from President Gage and 
President Kelley what are their concerns relative to that, 
because it is not our intention to do anything that in the 
minds of the employees diminishes their rights, absolutely 
none.
    It is our desire, however, to address areas like in the 
Federal Human Capital Survey, when only 22 percent of our 
employees are saying that we address poor performers.
    So it is not to diminish the rights. I will be engaging 
President Gage and Colleen Kelley in those conversations just 
so that I can hear firsthand from them, and then we will decide 
from there what we will do.
    Mr. Carney. Okay. Thank you very much.
    I just have a couple of minutes.
    Ms. Kelley and Mr. Cox, what advice given by NTEU or AFGE 
concerning the training of supervisors to conduct performance-
based evaluations has the department implemented?
    Ms. Kelley. What I know about the training that they have 
provided that started last summer--I have anecdotal reports 
from supervisors who attended the training.
    And the way it was described to me was a 2.5-day training 
of soft skills on basic management training. And that may be a 
very good place to start.
    I think many supervisors in the federal government probably 
are put into those positions because they are very good 
technically at their front line job, and they really are not 
given any training or skills on how to be a manager.
    And so as far as it goes, it sounds like it was probably 
training that they needed. How it has anything to do with 
launching a new performance management system or anything 
else--as far as I know, there was no training done on that.
    And I would say I hope there hasn't been any training done 
on that, since none of that information about a new system has 
been shared with NTEU.
    We were in discussions with the department in what were 
called collaborative meetings, where we were receiving 
information from DHS on what they were looking to do, next 
steps, the kind of market surveys they were looking at for a 
pay system, and that we were in collaborative discussions.
    They ended last April. April of 2006 is the last meeting 
that was held. We have not had any information sharing or one 
iota of information since then, so that is what I know about 
what has been reported to me about the management training.
    Mr. Carney. Mr. Cox?
    Mr. Cox. We have had very little information about the 
management training, and the reports we continue to get back 
from all the employees that we represent in the department is 
that there is very limited training.
    And again, with performance management, I know my colleague 
over here says the G.S. scale is not the system to do it, but 
what we keep seeing is pretty much a situation that will 
continue until morale improves.
    And we keep changing the system, and it keeps being worse, 
and so we change it and make it a little bit worse, and say, 
``Ah-ha, you had your chance. Take that one.''
    The whole reorganization, the personnel system, the 
training, we believe has just been a disaster in the whole 
department, sir.
    Mr. Carney. Okay.
    Ms. Kelley. Mr. Chairman, if I could just add, this 
training of the 14,000, I think, Ms. Perez said had been 
trained--while I think that might have been a good start and 
probably training they needed, I cannot tell you that I have 
had any reports from the field that they are now doing a better 
job of managing, communicating and supporting employees than 
they did before they had the training.
    Ms. Perez. With regards to the--we have implemented those 
areas like training and--like performance management and worked 
collaboratively with the unions and the employees in the design 
of that system, and that is all that has been implemented.
    Ms. Kelley is right, we have not trained in any other areas 
relative to pay because we are not implementing in those areas, 
and therefore we have not trained in any of those areas. It is 
just not ripe yet.
    We want to get performance management done well. We want to 
get it done right. It is absolutely fundamental for our 
success, and we are being very cautious relative to pay.
    Mr. Carney. All right. I thank you.
    I now yield 5 minutes or so to my colleague from Alabama.
    Mr. Rogers. Thank you, Mr. Chairman.
    Ms. Perez, what would happen if HCOP were not implemented?
    Ms. Perez. Frankly, I can't even imagine a message from 
Congress that we should not implement the elements of what is 
in the operational plan. Those are the most basic human 
resources management programs that one could imagine.
    We will need hiring targets. We will train our employees. 
We will familiarize federal managers with flexibilities in 
hiring that Senators Akaka and Voinovich championed.
    And we are not using them. Like, for instance, reimbursing 
employees for their expenses, college expenses. The federal 
government and the Congress passed legislation that allows 
departments to do that. We were not using that.
    Those are flexibilities that are--every department in the 
government has those flexibilities. We want to train our 
managers in those areas.
    If you tell me that I can't do training, I can't do hiring 
and I can't do basic performance management, you will be 
putting me out of a job, so to your question earlier--
    Mr. Rogers. Don't want that to happen. The last one didn't 
stay very long, so we want to try to get some continuity in 
this job.
    Mr. Stier, in talking about your five points that you would 
recommend for DHS to improve, of those five, which would you 
say you would ask these people, particularly Ms. Perez, to 
leave the table thinking, ``This is number one,'' you need to 
do this more than anything else to help with this morale 
problem and turnover problem?
    Mr. Stier. You have put me in a tough spot, because I think 
honestly that there is a whole set of problems and they all 
need to actually be addressed.
    I think a starting point is better communication, and that 
is not even one of the recommendations that I have there, but I 
think fundamentally--you know, I think even me listening on 
this side of the table to hearing what is going on here, I 
don't think that there is a, you know, shared sense--a sense of 
understanding about where the department is going.
    And that has to happen first. I mean, the bottom line is 
that people have to have a shared set of facts, an open line of 
communication before any of this can happen. And so I think 
that is absolutely vital.
    From your perspective, I think you need to keep your eye on 
an agreed-upon set of metrics that allow you to understand on a 
regular basis what is actually happening inside. And that is 
absolutely vital.
    If I might answer a question as well that you asked earlier 
about turnover at the political level, I think one other issue 
that you might think about is whether it is going to be 
important to create some kind of position where you have longer 
tenure at the more senior ranks that can look at long-term 
structural infrastructure questions going on in government 
agencies. It is a big challenge.
    One of the reasons why DHS is in the hole it is in right 
now is the point that you have raised, that you have had 
significant turnover in those leadership positions. It is also 
true in other agencies, but it is obviously more vital right 
now at DHS.
    And the comptroller general has recommended the process of 
creating a chief management officer, a chief operating officer 
that would have a term appointment. That would be one way of 
dealing with it. But it is vital.
    Unless you have leadership attention that is long term, you 
ain't going to get anything fixed.
    Mr. Rogers. And lastly, Mr. Cox, you made reference to some 
employees not getting a cost of living increase. Exactly who 
were you referencing?
    Mr. Cox. The transportation security officers, the airport 
screeners.
    Mr. Rogers. So that was the only universe of federal 
employees that you were making reference to?
    Mr. Cox. That is the reference that I am making in that 
statement, yes, sir. Those employees--we believe that they only 
get the locality pay, that they don't get the other cost of 
living raises, and that it is all based upon performance 
bonuses, which are very few and far between.
    Mr. Rogers. So you are saying that even the cost of living 
increase--if they get it--is performance-based?
    Mr. Cox. Yes, except for the locality portion of the pay, 
which is usually about 1 percent or less.
    Mr. Rogers. And how many years has this been going on?
    Mr. Cox. Since the department was created or when those 
employees were federalized back in 2002.
    Mr. Rogers. But you are not aware of any other employees in 
DHS who haven't been getting their annual cost of living 
increases?
    Mr. Cox. No, sir.
    Mr. Rogers. All right.
    And, Ms. Perez, you are going to get to this committee the 
specifics on what has been happening on that?
    Ms. Perez. Yes, I will get back. I think it is(in fairness 
to the committee, I think it is best that we provide a full 
presentation on the compensation plan at TSA rather than me 
trying to answer the question.
    Mr. Rogers. Good. Thank you very much.
    Thank you, all.
    Mr. Carney. Well, I think we have run out of questions.
    I want to thank all of you for your time and your valuable 
testimony. And the members of the subcommittee may have further 
questions. They will address them, and I would expect an 
expeditious reply to them.
    Hearing no further business, the subcommittee stands 
adjourned.
    [Whereupon, at 11:38 a.m., the subcommittee was adjourned.]


                               APPENDIX A

                              ----------                              


              An Overview of Civil Service Reform Efforts

    For much of its history, the federal civil service and the 
underlying human resources (HR) laws, policies, and practices intended 
to guide federal workforce management were remarkably uniform across 
agencies. However, as the demands upon government grew over the past 
several decades in response to a growing population and a more complex 
and technologically advanced world, it became clear that some civil 
service reforms were needed.
    Perhaps the largest civil service reform effort in recent memory 
was the Civil Service Reform Act of 1978. The 1978 Act made some 
significant changes to the civil service, such as the creation of the 
U.S. Office of Personnel Management and the Senior Executive Service. 
It provided, for the first time, statutory recognition of management 
relations. When the law was passed, Congress recognized that the 
specific government-wide reforms being authorized were unlikely to be 
sufficient, and it established a research and demonstration project 
authority (title 5 U.S.C. Sec. 4703) to help guide reform efforts. Over 
time, several of the demonstration projects undertaken were allowed to 
become permanent alternative personnel systems.
    Congress has also recognized for quite some time that ``one size 
doesn't necessarily fit all'' when it comes to HR systems. For example, 
the U.S. Post Office became the U.S. Postal Service in 1970 with 
significant changes in its HR policies and systems that had previously 
been guided by Title 5. Earlier, in creating the Tennessee Valley 
Authority, Congress gave it wide discretion in the development of its 
HR systems. Similarly, the Veterans Administration (now the Department 
of Veterans Affairs) was given authority to manage its medical 
personnel under a different legal framework, Title 38 of the U.S. Code. 
The National Nuclear Security Administration in the Department of 
Energy is the latest federal organization to announce plans to become a 
demonstration project.
    The Financial Institutions Reform, Recovery, and Enforcement Act of 
1989 (FIRREA) gave special pay-setting authority to agencies such as 
the National Credit Union Administration and the Federal Deposit 
Insurance Corporation (FDIC). The Securities and Exchange Commission 
(SEC) was recently given comparable authorities. The Internal Revenue 
Service (IRS), Federal Aviation Administration (FAA), NASA, the 
Transportation Security Administration (TSA), and Congress's own 
Government Accountability Office (GAO) have all been granted special HR 
authorities by Congress. The Departments of Defense and Homeland 
Security, which together employ over 42 percent of all civilian 
employees in the executive branch, are only the most recent federal 
departments granted relief from parts of Title 5 of the U.S. Code that 
were deemed too inflexible or counter-productive.


                               APPENDIX B

                              ----------                              


                        Questions and Responses

Questions from the Honorable Bennie G. Thompson, Chairman, Committee on 
                           Homeland Committee

                      Responses from J. David Cox

    Question 1.: President Kelley of NTEU testified that the President 
and TSA have the statutory flexibility to respond in times of crisis. 
In light of this, can you explain how granting TSA screeners collective 
bargaining rights could harm national security or prevent TSA from its 
mission?
    The simple answer is that in both law and fact, there is nothing 
about the granting of collective bargaining rights to Transportation 
Security Officers (TSOs), or the exercise of those rights that is 
adverse to national security of the U.S. or TSA's ability to fulfill 
its mission. The basic collective bargaining provisions under the 
Federal Sector Labor-Management Relations Statute found in Title 5 U.S. 
Code, Chapter 71 give great latitude to the government as employer in 
the event of an emergency situation, including superseding provisions 
of existing collective bargaining agreements and states that ``nothing 
in this chapter shall affect the authority of any management official 
of any agency. . .to take whatever actions may be necessary to carry 
out the agency mission during emergencies.'' 5 U.S.C. Sec. 7106 
(a)(2)(D). Once the emergency has passed, the provisions of the 
agreement that may have been applicable would be put back into effect. 
Management has the right to assign duties, both temporary and 
permanent, during non-emergency situations. 5 U.S.C. 
Sec. 7106(a)(2)(A). Unions have negotiated fair assignment procedures 
into collective bargaining agreements that spell out rules for 
``Temporary Assigned Duties that allow qualified volunteers to be 
utilized to the maximum extend before forcing qualified volunteers to 
take on those duties. AFGE's collective bargaining agreements with 
other security and law enforcement agencies include provisions that set 
forth an orderly process for workers to volunteer for temporary duty 
assignments. In fact, TSA has generally used volunteers for assignments 
during times of heightened security alerts, including both Hurricane 
Katrina and the United Kingdom air bombing.
    TSOs reported that TSA's response to these two security emergencies 
was hampered by the agency's of procedures for the very types of events 
for which it was created to respond--the same type of procedures 
included in every AFGE contract with the government.

Questions from the Honorable Mike Rogers, Ranking Member, Subcommittee 
              on Manangement, Investigations and Oversight

    Question 2.: In your testimony you both discussed the need for law 
enforcement officer (LEO) status for Customs and Border Protection 
Officers (CBPOs). The Committee on Homeland Security first included 
provisions to grant this status to CBPOs in the 109th Congress as part 
of the DHS authorization bill the Committee reported last year.
        a. How many CBPOs receive this status?
        b. What are the costs involved with providing LEO status to 
        CBPOs retroactive to March 2003? How much would it cost to 
        provide this status to individuals serving as customs officers 
        prior to March 2003?
    First, I do not recall such a provision being included in the FY 07 
Homeland Security Authorization legislation nor have I been able to 
find it in on the internet. However, there was such a provision 
included in the FY '08 legislation recently adopted by the House of 
Representatives. H.R. 1684 would allow certain Customs and Border 
Protection officers to elect law enforcement officer coverage under 
Title V of the United States Code within five years of the bill's 
enactment. The Congressional Budget Office estimates that 90 percent of 
CBP Officers under the age of 40 would opt for this coverage. Because 
one needs 20 years of LEO status to receive the benefits accorded LEOs 
and there is a mandatory retirement age of 57, few agents over age 40 
would switch status. Only the Department of Homeland Security would 
have the data to determine how many CBP Officers are under the age of 
40. CBO estimates that employee contributions would increase by $19 
million over the 2008--2012 period and by $46 million over the 2008--
2017 period.
    The CBO analysis also estimated the cost to workers of providing 
LEO status to CBPO's retroactive to January (not March) of 2003. The 
estimate is based on an average salary of $60,000 and a 20 percent 
participation rate With respect to costs associated with providing LEO 
status retroactive to January, 2003, the estimated increase in employee 
contributions is $2 million in FY '08.
    Finally, AFGE has no data on the cost of providing LEO status to 
Customs Officers prior to March, 2003, both because AFGE did not 
represent those workers and that data is generally only available to 
the agencies, not the union.

    Question 3.: How will reverting to the General Schedule (GS) 
personnel system, as you recommend, improve employee morale at the 
Department of Homeland Security? How would pay and benefits under the 
General Schedule address concerns raised by DHS employees in the 
Federal Human Capital Survey?
    Retaining the General Schedule (GS) pay system would eliminate the 
sense, on the part of DHS employees, that decisions about their 
salaries, job classifications, and salary adjustments will be based on 
subjective factors over which they have no control. AFGE members at DHS 
are both furious and anxious over the prospect that factors that are 
entirely unrelated to their own skills, efforts, and outcomes will be 
allowed to determine not only whether and by how much their salaries 
will be adjusted from year to year, but also how the agency will 
classify their jobs. This administration has shown again and again (the 
Department of Justice, the State Department, the Defense Department, 
Health and Human Services, etc.) a willingness to politicize hiring and 
pay decisions affecting federal employees, not to mention decisions 
about whether to contract out government work and which contractor to 
send it to. In the survey, DHS employees expressed a lack of confidence 
in their managers. They tell us that their lack of confidence includes 
a belief that career agency managers are neither able nor willing to 
stand up to pressure from political appointees.
    Although on paper the DHS pay system promises to at least try to 
minimize subjectivity, DHS employees know that its ``flexibility'' 
creates the opportunity for favoritism, bias, discrimination, and 
dishonesty. Ultimately, the DHS pay system has crushed morale because 
DHs employees know that it allows the agency either to cut pay or deny 
a pay raise for any reason. Even if an employee's ``performance'' is 
judged worthy of a pay raise, the agency can deny it by citing its own 
``market data,'' and the employee has almost no recourse against this 
judgment. Even if the ``market data'' suggest an employee is underpaid, 
and a direct supervisor recommends a raise based on the employee's 
``performance,'' a decision made at a higher level could deny the raise 
because resources were needed to fund a different agency priority. The 
DHS pay system allows an almost endless number of scenarios wherein an 
employee does everything that is asked of him only to lose out in the 
end. Even without discrimination, even without malicious intent, even 
without politicization, the DHS pay system means:
        1. uncertainty (one will never know whether performance, market 
        data, or agency priorities will be determinant),
        2. a lack of transparency (one will never know who made the 
        decisions and the basis on which decisions were made), and
        3. an absence of accountability (the employee will have almost 
        no ability to hold either individual managers or the agency 
        accountable for misfeasance because appeal rights have been 
        curtailed).
    Together, these facts mean that the system will always be despised. 
And a pay system despised by the employees is a guarantee of low 
morale.
    In contrast, the General Schedule pay system is based on objective 
data. The labor market data are not a matter of a manager picking up 
the newspaper and checking the want ads, or buying ``off the shelf'' 
data from a contractor that do not accurately reflect the work 
performed by DHS employees. The data are from the Department of Labor's 
Bureau of Labor Statistics (BLS) National Compensation Survey, they 
explicitly include federal job matches, and no one questions either 
their validity or their quality. The methods for calculating the 
comparability of GS pay with private sector pay are clear, reliable, 
fair, predictable, and available to federal employees and the general 
public. Discrimination is rare and difficult to get away with because 
salaries are set to reflect the duties of the job rather than the 
opinions about the personal characteristics of the jobholder or 
applicant. The pay system rewards good performance, experience, and 
dedication. Employees have the right to appeal both job 
classifications, pay cuts, and denials of raises to truly independent 
third parties. The GS system is widely viewed as fair because it is 
fair. As such, it improves morale by allowing employees to focus on 
doing their jobs instead of worrying about being the victim of an 
unjust, arbitrary, and politicized pay system.

    Question 4.: What improvements do you believe could be made to 
employee training programs at the Department?
    Effective training programs are absolutely vital to the future of 
the Department of Homeland Security. Training has a major impact on any 
organization's ability to attract and retain talented employees, 
anticipate and respond to changing mission needs, and keep workplace 
morale high. If DHS hopes to realize these benefits of training, its 
programs must undergo serious rehabilitation. The Department must 
improve the quality of the training, but even more important, it must 
improve its ability to ensure fair distribution and reliable access to 
this training.
    In its April 4, 2006 report, AVIATION SECURITY: Transportation 
Security Administration Has Made Progress in Managing a Federal 
Security Workforce and Ensuring Security at U.S. Airports, but 
Challenges Remain, the Government Accountability Office detailed 
serious problems with training Transportation Security Officers.
    According to GAO, ``. . .insufficient TSO staffing and a lack of 
high-speed Internet/intranet connectivity to access the Online Learning 
Center have made it difficult for all TSO screeners at many airports to 
receive required training and has limited TSO access to TSA training 
tools.'' GAO found that TSA managers had difficulty releasing employees 
for training, even required training, while maintaining adequate 
staffing levels. Once released for training, TSOs frequently 
encountered problems using the learning programs because of inadequate 
tools and resources available to them.
    Such problems result in the failure to properly train all employees 
and they also result in favoritism, discrimination, and lapses in the 
distribution of scarce training resources.
    These issues are not limited to TSA or TSOs. We find that 
throughout the Department employees tell us that training is missing, 
sporadic, or subject to favoritism. When staffing or budgets are short, 
training is one of the first things to go.
    Our members tell us that training frequently is not advertised or 
distributed based on need, seniority, volunteer lists or other 
appropriate means. They say that training opportunities may be 
communicated to field or regional directors, but often don't make it to 
the frontline employees. This can be because of favoritism, failures in 
the communications networks, decisions to make training a low priority 
because of staffing or budget shortages, or other reasons. Whatever the 
reasons, however, the result is patchy implementation, inequity, and 
frustrated employees.
    Increasingly, employees are informed only of intranet-based 
training programs, with few opportunities to participate in ``hands-
on'' and classroom training with fellow employees and expert 
instructors. A common reason given is, ``We don't have enough personnel 
to allow anyone to attend at this time.'' There should be more emphasis 
and efforts put into the kind of training that brings workers together 
where they can hear each other's questions, learn from each other's 
experiences, and gain the benefits of being taught by the experts.
    Electronic and online learning are valuable tools for training and 
should continue, although they should augment but not replace classroom 
and field instruction. Employees tell us that the online training, or 
the ``Virtual University,'' should be expanded to include such things 
as language training, lmmigration and other relevant laws that are 
constantly changing, and other job-related matters. In addition, 
employees would like access to training that can help them gain the 
skills and knowledge needed for career advancement within the 
Department.
    A major problem with online learning, however, is the fact that 
large numbers of DHS employees do not sit at a desk with a computer to 
do their jobs, but work at the border, the ports, and other locations 
out in the field. Not only do they not have easy access to computers, 
but their jobs do not readily lend themselves to taking time to go 
through an online course. They also frequently do not get training in 
new technology, but are told to read the manual and ``play around with 
it.'' There should be computers and printers that employees can use, 
along with instructions and designated time for them to take these 
courses.
    ICE employees tell us that the Agency withdrew funding for 
``aspiring leaders'' and ``new leaders,'' which allowed volunteers to 
shadow fellow DHS agencies to understand the bigger picture and learn 
how ICE, CIS, and CBP operations fit into the overall design and how 
their jobs fit into the mission. This was a valuable on-the-job 
opportunity that should be brought back and expanded. In the past, 
there were always more volunteers than slots, so a fair and neutral 
panel should be established to make selections to avoid the perception 
that you have to be in the ``inner circle'' to get this opportunity.
    Employees who go through academies or other learning centers, for 
law enforcement, Immigration Enforcement, etc., would like to see more 
opportunities for experienced workers to rotate in as instructors. This 
both enhances the work experience of the instructor and brings 
knowledge of up-to-the-minute current practices to the students.
    One of the most common concerns of employees was the inadequacy of 
refresher training once they were on the job after their initial 
training. Employees describe this as a hit or miss proposition. In far 
too many cases, required annual refresher training is minimized or not 
offered at all. For example, Federal Protective Service employees tell 
us that their Public Service Building Handbook requires annual training 
in:
         Use of Force
         OC (Oleoresin Capsicum, or ``Pepper'') Spray
         Expandable Baton
         Nuclear, Biological and Chemical Refresher
    They tell us, however, that this training is lacking or sporadic at 
best. They also tell us that required quarterly firearms qualifications 
are sometimes waived because there is no appropriate firing range 
available.
    DHS employees tell us that they are not receiving required training 
to do their jobs. They are not getting necessary refresher training to 
keep their skills sharp or keep up with changing laws and policies. 
Many of them do not have access to the tools necessary to take 
advantage of online training opportunities. Due to staffing shortages, 
budget shortfalls, and the persistence of a ``good old boy'' network, 
training opportunities, both required and career enhancing, often do 
not reach the people who need them and would make the best use of them.
    DHS must develop a meaningful plan for determining its training 
needs and ensuring that employees receive necessary training and have 
real opportunities for career-enhancing training. This cannot be left 
up to various organizational levels to decide whether or not they will 
comply--this must be a requirement and there must be accountability. 
Labor-management committees and panels are good ways to have oversight 
and accountability and make sure that resources are used effectively 
and equitably distributed in our bargaining units.
    This really isn't a ``wish list,'' i.e., things that would be nice 
to do if we only could fit them in. These are requirements for a high 
performance organization that prizes talent and accomplishment, and has 
the awesome responsibility of protecting the security of our homeland.

Questions from the Honorable Bennie G. Thompson, Chairman, Committee on 
                           Homeland Security

                    Responses from Colleen M. Kelley

    Question 1.: During the hearing, you testified that the President 
and TSA have statutory flexibility to respond in times of crisis. In 
light of this, can you explain how granting TSA collective bargaining 
rights could harm national security or prevent TSA from fulfilling its 
mission?
    Response: I see no reason how granting TSA collective bargaining 
rights would harm national security or prevent TSA from fulfilling its 
.mission. On the contrary, I believe that TSA's continuing workforce 
problems stem directly from the decision to deny employee input through 
the collective bargaining process. TSA has been plagued by personnel 
problems never seen in any federal agency. Maintaining a stable, 
qualified, trained workforce was the primary goal of federalizing the 
transportation screener position. And years of massive turnover has 
wasted millions of taxpayer dollars in recruitment and training costs. 
NTEU believes that employee rights are the foundation for building a 
highly trained, committed, experienced career TSO workforce.
    The Administration's concerns that collective bargaining rights 
would limit management flexibility or undermine national security at 
TSA has been totally discredited by the record of the organized 
workforces at other DHS bureaus. Indeed, it is insulting to the 
hundreds of thousands of dedicated public safety officers with 
collective bargaining rights--from CBP Officers and Border Patrol 
Agents at DHS to local police and firefighters and your own Capitol 
Hill Police Force--to suggest that they would put their union rights 
before the national security interests of the country.
    Collective bargaining rights have not hindered the federal 
government's emergency response capability. Every union contract with 
federal government agencies recognizes management's right to assign 
work and detail workers as necessary. In addition, management 
flexibility in times of crisis is set in statute. Title V, Section 
7106(a)(D) states clearly that nothing ``shall affect the authority of 
any management official of any agency to take whatever actions may be 
necessary to carry out the agency mission during emergencies.''
    Rather than inhibit management, collective bargaining agreements 
set procedures for work assignments and duties that lead to stability 
in the workplace. Union rights result in trained, experienced, 
committed and efficient workers, and that is what it takes to make this 
nation safe.
    Federal workers represented by a union have no right to strike, and 
any statement to the contrary is patently false. The statute creating 
TSA, P.L. 107-71, in Section 111, includes specific language: (i) 
Limitation on Right to Strike--an individual that screens passengers or 
property, or both, at an airport under this section may not participate 
in a strike, or assert the right to strike, against the person 
(including a governmental entity) employing such individual to perform 
such screening.
    Title V also includes a specific prohibition on the right to strike 
for all federal employees in Section 7311 that states: ``An individual 
may not accept or hold a position in the Government of the United 
States or the government of the District of Columbia if he--(3) 
participates in a strike, or asserts the right to strike, against the 
Government of the United States. . ." And Section 711(b)(7)(A) of Title 
V makes it an unfair labor practice for a federal union to call or 
participate in a strike.
    Therefore, there is no reason that TSOs should not have the same 
collective bargaining rights as other DHS employees.
    Like most other DHS employees, TSOs must have access to an adverse 
action and appeal process that treats employees fairly and ensures that 
their due process rights are protected. TSOs must be given reasonable 
notice and an opportunity to make a meaningful reply before 
disciplinary action is taken against them. TSOs must be able to appeal 
agency actions to an independent adjudicator whose decisions are 
judicial review and agencies should bear the burden of proving just 
cause for actions taken against employees. In a workplace without these 
bedrock protections, employee morale will suffer, which in turn will 
adversely affect efficiency.
    Basic fairness, including equity, security and stability of the TSA 
workforce compel Congress to provide collective bargaining rights for 
the only major workforce at DHS denied these rights. Ending years of 
TSA employee turnover and turmoil will result this important correction 
by Congress.
    NTEU strongly supports repeal of Section 111(d) of ATSA as approved 
by the House of Representatives in H.R. 1 and included in S. 4. 
Reversing this unequal treatment of TSOs will help restore morale and 
strengthen mission and personnel dedication at the Department of 
Homeland Security. NTEU wants for TSOs the same thing I believe 
Congress wants--a workplace where employees can be successful and do 
quality work in an environment where they will be treated with dignity 
and respect and supported in achieving the agency's critical mission.

Questions from the Honorable Mike Rogers, Ranking Member, Subcommittee 
              on Management, Investigations, and Oversight

    Question 2.: In your testimony you both discussed the need for law 
enforcement officer (LEO) status for Customs and Border Protection 
Officers (CBPOs). The Committee on Homeland Security first included 
provisions to grant this status to CBPOs in the Congress as part of the 
DHS authorization bill the Committee reported last year.
        a. How many CBPOs would receive this status?
        b. What are the costs involved with providing LEO status to to 
        CBPOs retroactive to March 2003? How much would it cost to 
        provide this status to individuals sewing as Customs Officers 
        prior to March 2003?
    Response: According to the May 2,2007 Congressional Budget Office 
(CBO) Cost Estimate for H.R. 1684, ``CBO estimates that, in 2008, 
roughly 9,000. . .would be subject to treatment as federal Law 
Enforcement Officers under the Federal Employees Retirement System 
(FERS).''
    Rather than cost any additional federal funding, CBO estimates that 
Section 501 of H.R. 1684 ``would increase revenues by $5 million in 
2008, $19 million over the 2008--2012 period, and $46 million over the 
2008--2017 period.'' I've attached the CBO Cost Estimate in its 
entirety.
    The Congressional Budget Office has done no recent cost estimate of 
a proposal to provide LEO status to individuals serving as Customs 
Officers prior to March 2003.

    Question 3.: How will reverting to the General Schedule (GS) 
personnel system, as you recommend, improve employee morale at the 
Department of Homeland Security? How would pay and benefits under the 
General Schedule address concerns raised by DHS in the Federal Human 
Capital Swey?
    Response: DHS has been pursuing a pay-for-performance experiment 
with the ultimate goal of replacing the current General Schedule for 
all DHS employees, the system by which most federal employees are 
currently paid. The idea of alternative pay and personnel systems using 
a new pay and performance management system has been one promoted by 
the Administration for several years. But there is no hard evidence 
that these alternative pay systems work.
    To quote Robert Behn, author and lecturer at Harvard University's 
John F. Kennedy School of Government, ``Systems don't improve 
performance; leaders do.'' In his book, The Human Equation: Building 
Profits by Putting People First, Jeffrey Pfeffer, of Business School 
says, "Although variable pay systems that attempt to differentially 
reward individuals are clearly currently on the increase, such systems 
are frequently fraught with problems. Incentives that reward groups of 
employees or even the entire organization. . .are customarily 
preferable.''(p.203)
    I believe that leadership that solicits, values, and acts on the 
ideas of frontline employees in efforts to achieve agency missions is 
missing in many agencies today. Providing that kind of leadership would 
do more to improve the quality of applicants and performance of 
employees than alternative personnel systems and pay for performance 
projects as proposed by this Administration.
    Despite being ranked at the bottom of the Partnership for Public 
Service's annual survey of ``Best Government Places to Work,'' DHS is 
insistent on moving forward on its alternative personnel and pay 
system. While the pay for performance system at DHS has not yet been 
implemented, we are very concerned that it will push employees who are 
already demoralized out of the agency when the importance of keeping 
experienced, skilled employees is greater than ever. Let me be clear, 
the employee opposition to the proposed DHS system is not about ``fear 
of change,'' as some have tried to portray it. I know firsthand that 
this group of employees, entrusted with protecting our country from 
terrorists and other criminals, is not a fearful group. What they most 
object to about the proposed DHS system is that it will make it harder, 
not easier, to accomplish the critical mission of the agency.
    There are several reasons for this: 1) The system is not set by 
statute or subject to collective bargaining, so there is nothing to 
provide its credibility among employees; 2) The system will have 
employees competing against each other over small amounts of money, 
discouraging teamwork, which is critically important in law 
enforcement; 3) The system is subjective, which will lead to at least 
the appearance of favoritism; 4) The system is enormously complex, the 
administration of which will require huge amounts of money that is so 
much more desperately needed in frontline functions, not to mention 
siphoning off money that could go for more pay in a less 
administratively burdensome system; 5) the draft competencies for the 
new DHS system do not recognize or reward the real work that these 
employees do to keep our country safe.
    It is also instructive to look at IRS and pay for performance, 
while bargaining unit employees represented by NTEU are not covered by 
a pay banding performance based system, managers are. The Hay Group did 
a Senior Manager Pay band Evaluation on this system for the IRS in 
2004. Here are some of the results: (1) 76 percent of covered employees 
felt the system had a negative or no impact on their motivation to 
perform their best; (2) 63 percent said it had a negative or no impact 
on the overall performance of senior managers; (3) ``Only one in four 
senior managers agree that the SMPB is a fair system for rewarding job 
performance or that ratings are handled fairly under the system;'' (4) 
``Increased organizational performance is not attributed to the SMPB.''
    The results of this system are dismal, yet it is pointed to as a 
model for moving the whole federal government to a similar system. In 
fact, there is a dearth of information to indicate that alternative pay 
systems have had any significant impact on recruitment, retention or 
performance. A GAO report on ``Human Capital, Implementing Pay for 
Performance at Selected Personnel Demonstration Projects'' January 2004 
included virtually no evidence that the systems improved any of those 
measures. In fact, the Civilian Acquisition Personnel Demonstration 
Project, reviewed in that report, had as one of its main purposes, to 
``attract, motivate, and retain a high-quality acquisition workforce.'' 
Yet, attrition rates increased across the board under the pilot.
    NTEU is not averse to change. We have welcomed, including at the 
FDIC where we have bargaining unit employees, and elsewhere, the 
opportunity to try new ways of doing things. Based on my experience, 
these are the things I believe will have the most impact on the quality 
of applicants and the motivation, performance, loyalty and success of 
federal workers.
        (1) Leadership. Rules and systems don't motivate people. 
        Leaders do.
        (2) Opportunities for employees to have input into decisions 
        that affect them and the functioning of their agencies. They 
        have good ideas that management is currently ignoring.
        (3) A fair compensation system that has credibility among 
        employees, promotes teamwork and is not administratively 
        burdensome.
        Unfortunately, I do not believe the DHS pay for performance 
        system follows these standards.
        4. What improvement do you believe could be made to employee 
        training programs at the Department?
    I would first improve the training of DHS supervisors. A bill has 
been introduced in the Senate that will do just that, S. 967, the 
Federal Supervisor Training Act mandates the establishment of a 
training program for supervisors by each agency, in consultation with 
the Office of Personnel Management (OPM).
    Supervisor training, accountability and development are pressing 
concerns for human capital management in the federal sector. 
Legislation should establish and authorize funding for new and 
necessary training programs for supervisors and managers of federal 
employees. These training programs would be mandatory and based on 
competency standards set by agencies under the guidance of the Office 
of Personnel Management (OPM).
    In January 2007, the Office of Personnel Management (OPM) released 
the 2006 Federal Capital Survey, which showed that the federal 
government's employees and senior managers and leaders still face 
communication problems. For example, according to the survey: only 49 
percent of federal employees have a high level of respect for senior 
leaders in their agencies, only 41 percent say they are satisfied with 
their leaders' policies and practices, and only 47 percent of federal 
employees said they were satisfied with the information they get from 
management.
    Upon the release of the survey, OPM Director Linda Springer wrote, 
``As senior leaders retire, the federal government also faces a 
challenge--and opportunity--to improve the effectiveness of the 
leadership corps across government. We must develop the kinds of 
leaders who ensure a talented and committed federal workforce now and 
in the future. Our leaders will need to adapt the workplaces and 
opportunities they offer to attract the best and the brightest from 
diverse talent pools.''
    Good leadership begins with strong management training. It is time 
to ensure that federal managers receive appropriate training to 
supervise federal employees. The Federal Supervisor Training Act, S. 
967, has three training components. First, the bill will require that 
new supervisors receive training in the initial 12 months on the job, 
with mandatory retraining every three years on how to work with 
employees to develop performance expectations and evaluate employees. 
Current managers will have three years to obtain their initial 
training. Second, the bill requires mentoring for new supervisors and 
training on how to mentor employees. Third, the measure requires 
training on the laws governing and the procedures for enforcing 
whistleblower and anti-discrimination rights.
    NTEU believes S. 967 adds several essential features to a 
supervisor training initiative. First, it mandates coverage of a wider 
range of managers. Second, it provides a more detailed description of 
the type of training to be required. It specifically requires that 
training be interactive and instructor based. For supervisor training 
to be meaningful, it must be more than simply the review of written 
material. Training delivered by training professionals in a situation--
either face to face or internet based--which allows dialogue, 
questioning and interaction between student and teacher is an 
indispensable feature of an effective program.
    Further, S. 967 has great value as it requires more than simply 
training in the supervision of employees but in working with employees, 
communicating with them, and discussing their progress. A good manager 
needs to do more than correctly evaluate an employee. A good manager 
needs to know how to develop an ability to help his or her subordinates 
become top performers and be able to communicate with and hear from 
employees. A well trained manager knows how to motivate employees, 
build teamwork, and be flexible rather than rigid in workplace 
situations.
    Absolutely essential is the requirement in the bill to include 
supervisor training on prohibited personnel practices, particularly 
violations of statutorily prohibited discriminatory actions and 
whistleblower activities. A key way to lessen discrimination in the 
federal workplace and ensure workplace fairness is for proper 
supervisor training so that they fully understand the duties and 
obligations they have. NTEU believes, however, that this section needs 
to be even further expanded and defined. It must be explicit that this 
training encompass the full range of prohibited personnel practices, 
unfair labor practices, and all violations of the merit system.
    In addition, S.967 will set standards that supervisors should meet 
in order to manage employees effectively, assess a manager's ability to 
meet these standards, and provide training to improve areas identified 
in personnel assessments. S. 967 includes the promulgation of 
management performance standards. Supervisor training will lose its 
full value if there are not standards to measure it by. NTEU believes 
that by including management competency standards, we have the ability 
to move toward accountability.
    S.967 received support from the Government Managers Coalition, 
which represents members of the Senior Executives Association, the 
Federal Managers Association, the Professional Managers Association, 
the Federal Aviation Administration Managers Association, and the 
National Council of Social Security Management Associations; the 
American Federation of Government Employees; the National Treasury 
Employees Union; the International Federation of Professional and 
Technical Engineers; the AFL-CIO, Metal Trades Department, as well as 
the Partnership for Public Service.

  Questions the Honorable Bennie G. Thompson, Chairman, Committee on 
                           Homeland Security

             Responses from the Honorable Marta Brito Perez

    Question 1: Ms. Perez, in your testimony you discussed employee 
resistance to mergers. Do you believe that one source of this 
``resistance'' is that employees believe that they are not getting 
similar treatment as other employees in the Department or throughout 
the government as a whole?
    Response: No, the Department does not believe that employee 
resistance to mergers is due to a perception of dissimilar treatment. 
The challenges DHS employees are experiencing relative to the creation 
of the department has, in my opinion, two sources. First, DHS was 
formed as a result of the most horrific act of terrorism that has ever 
taken place within our borders. That event changed the nature of the 
work for most of the agencies that now comprise the Department of 
Homeland Security. That has had a significant impact on all of our 
employees. As a result, the workload has increased exponentially as 
well as the impact of what they do. 9/11 changed the intensity of the 
mission for all affected organizations.
    Second, even if the formation of DHS had not been triggered by the 
September 11th attacks, it would still represent a huge and complex 
merger. Resistance to such a merger would be normal as employees of the 
legacy DHS organizations feel attachment to the rich cultures and 
histories of those organizations. Yet, to be effective in carrying out 
our mission, we must further integrate our components and solidify the 
unified ``Team DHS''environment.
    So we have both the intensification of mission associated with the 
challenges of protecting our nation in a post-9/11 world and the 
tremendous organizational change of a merger of 22 organizations. 
Either of these factors would cause stress among our employees who are 
dedicated to protecting our nation and want to do the right thing. 
Their self-imposed pressure is now extremely great because we have all 
seen the grave consequences of the terrorist threat on our own soil.

    Question 2.: Ms. Perez, what concrete steps is the Department 
taking to address the disparities in the Department's hiring of women 
and people of color, particularly in management positions?
    What results have you seen from the actions taken to address these 
disparities?
    Response: DHS has identified eight core leadership competencies 
that comprise a critical element in each executive's performance plan. 
These requirements are cascaded to managers and supervisors in our new 
performance management system. One of these competencies is ``Diversity 
Advocate''. The complete list and descriptions follow:
        1. Principled--adheres to the highest ethical standards of 
        public service and promotes a culture of integrity within DHS.
        2. People Centered--engages, values, motivates, mentors, 
        recruits, clearly directs and appropriately rewards DHS 
        employees. Fosters a safe working environment.
        3. Effective Communicator--defines the mission for 
        subordinates, colleagues and external partners with clarity; 
        listens effectively and shares information, as appropriate.
        4. Performance Centered--establishes and meets clear, 
        measurable and meaningful goals in a timely manner, and uses 
        good judgment in decision making.
        5. Diversity Advocate--promotes workforce diversity; provides 
        fair and equitable recognition and equal opportunity, promptly 
        and appropriately addresses allegations of harassment or 
        discrimination.
        6. Highly Collaborative--partners effectively within and across 
        DHS components and, as appropriate, with international, 
        federal, state, local, tribal and private sector partners.
        7. Nimble and Innovative--brings nimble, creative discipline to 
        encourage continuous innovation in support of the DHS mission.
        8. Steward of Public Resources--ensures financial and 
        managerial accountability in executing fiduciary 
        responsibilities and appropriately protects classified and 
        other security-sensitive information.
    The Office of the Chief Human Capital Officer and the Officer for 
Civil Rights and Civil Liberties are addressing challenges in the areas 
of diversity and specifically in our leadership ranks through these 
steps:
         Developing a corporate Diversity Strategy
         Reinforcing diversity objectives with each DHS 
        component leader
         Spearheading corporate participation in job fairs 
        (e.g., FOSE, LULAC, Black Engineers, etc.)
         Completing a year-long review of DHS employment 
        policies and practices to identify barriers to full employment 
        and retention
         Expanding scholarship and internship opportunities for 
        Minority Servicing Institutions
         Planning a Department-wide annual ``Diversity Day'' 
        event
         Initiating a formal mentoring program
         Establishing an Executive Leadership Development 
        Program
         Creating a Senior Management Rotation Program

    Question 3.: According to the most recent OPM Human Capital Survey, 
51 percent of DHS employees feel they do not have sufficient 
information to do their jobs. What steps are being taken to ensure 
supervisors are aware of employee needs?
    Response: The challenges of establishing a new Department whose 
mission has been impacted by 9/11 and is as important as the protection 
of our homeland greatly intensify the need for proactive 
communications. At times, the information to share with employees is 
evolving as policies are being developed. However, we continue to make 
significant progress towards communicating effectively with all 
employees. Below are some of the steps we are taking to improve 
communications:
     Communication is one of the eight competencies used in the 
performance ratings of executives. See ``Effective Communicator'' in 
Question 2.
     We are improving the DHS intranet so employees can have 
better access to information.
     Our new performance management system is built around 
ongoing conversations between the supervisor and employee about work 
requirements, knowledge sharing, and training needs.
     All new supervisors and managers are required to attend 
``Results Driven Communications for Supervisors.'' This 5 day course 
provides the tools they need to effectively guide performance.
     A new web based training course for supervisors focuses 
specifically on the type of communication expected of a supervisor or a 
manager to sustain a high performance culture in the Department.
     The Department included an array of communications 
initiatives in our Federal Human Capital Survey Action Plan to ensure 
that senior leaders communicate to the broadest range of employees by 
methods including Town Hall meetings and an updated DHS website.
     We have cascaded the requirement for communications 
initiatives to components to ensure they are actively engaged in 
improving communication at the component level.
     We are actively engaging with labor organizations and 
other employee representatives to garner additional views about the 
Department's policies and programs.
     We are holding focus groups across the Department to 
understand what types of communication employees feel is lacking and 
how we could share information better; we will make adjustments 
accordingly.
     Finally, we are implementing a new suggestion program 
Department-wide which will enhance our ability to use employees' 
insights and creativity to make the Department a better place to work 
and improve our service to the public.

    Question 4.: What internal processes are in place for DHS employees 
to anonymously inform supervisors of problems they face, such as those 
highlighted by the OPM Survey?
    Response: While the survey provided valuable information about 
areas needing attention, we are in the process of conducting 
Department-wide, cross-component focus groups in the May/June timeframe 
to obtain specific insights and recommendations from employees. These 
focus group sessions provide employees an interactive forum to discuss 
a variety of topics in an anonymous environment. Additional programs 
will be based on feedback from focus groups.
    To ask anonymous questions specifically related to the DHS 
Performance Management Program, employees have access to an employee 
email box which has been in place since before the new program was 
implemented.
    Where an employee's concerns remain unresolved, they may pursue 
those concerns through one of the many dispute resolution processes and 
parties available to them, including:
         DHS Administrative Grievance Procedure
         Management investigation and reviews
         DHS Inspector General (Waste, Fraud, or Abuse)
         Office of Special Counsel (Prohibited Personnel 
        Practices)
         DHS Office of Civil Rights and Civil Liberties 
        (Statutory Discrimination Claims)
         DHS Office of Ethics (Ethical Violations)
         Component Office of Professional Responsibility 
        (Internal Affairs)
         Component EEO Office (same as above)
         Component Ombudsman (Tour Of Duty hours, Denial of 
        Leave, Performance Review/Appraisal)
         Collectively bargained grievance procedures
         U.S. Department of Labor (ULP, USERRA, FMLA, Workman's 
        Compensation)

    Question 5.: During your testimony, you discussed the Department's 
diversity goals. Specifically, what are the Department's goals in terms 
of diversity?
    What is the current breakout by component?
    Please use the same breakdown used by OPM's Federal Human Capital 
Survey and sort based upon ethnicity, gender, grade level, supervisor/
non-supervisor.
    Additionally, within CBP, TSA and ICE, please break out by 
organization within component; i.e. Border Patrol, Office of Field 
Operations, Office of Information and Technology.
    Response: To date, each component has been addressing diversity 
issues on its own. We are now in the process of developing a 
department-wide Diversity Strategy that will incorporate the components 
initiatives. The new Department policy on Diversity will focus on 
improving our diversity in three primary areas:

        1. Acquisition of Talent
                 To recruit, hire, develop, and retain the most 
                qualified, diverse workforce at entry, mid-career, and 
                senior levels. This includes the Department's 
                commitment to recruit at Minority Serving Institutions 
                (MSIs), Historically Black Colleges and Universities 
                (HBCUs), Tribal Colleges and Universities, and Hispanic 
                Serving Institutions. Relative to hiring, we require 
                each component to conduct the broadest outreach based 
                on the demographics of its organization.

        2. Learning and Development
                 To provide a pipeline for advancement into 
                senior managerial and leadership positions by ensuring 
                that scholarship, internship and other learning and 
                development opportunities exist for all employees 
                within the Department.
        3. Capacity Building/Research
                 To ensure that Historically Black Colleges and 
                Universities (HBCU's) and other Minority Servicing 
                Institutions (MSI's) are given the appropriate 
                opportunity to participate in the grants process for 
                research efforts that originate within DHS.
    Attached, please find the requested diversity breakout by 
component.

Questions from the Honorable Christopher Carney, Chairman, Subcommittee 
              on Management, Investigations, and Oversight

    Question 6.: Our understanding is that contrary to past practice, 
employee work schedules at CBP have been determined to be exempt from 
union input, and that CBP management has unilaterally denied employee 
input into this type of routine workplace decision-making.
    Do you believe that CBP Officers, who are on call 24 hours a day, 7 
days a week, should not have a say in their work schedule?
    If so, please describe what input you believe they should have and 
what mechanisms are in place or are being put in place to address this.
    Are you training CBP managers to include employee input in their 
scheduling decisions?
    How are you ensuring that if managers are abusing their scheduling 
authority to favor or punish workers that there is some avenue of 
redress for the employees?
    Response: We believe that communicating with employees and their 
representatives is always a good idea and we do. However, at the risk 
of being repetitious, the nature and underlying premise of the work we 
do has changed. With that change comes the need to be more flexible and 
nimble.
    In 2001, U.S. Customs Service established a National Inspection 
Assignment Policy (NIAP) for its Customs Officers. U.S. Customs and 
Border Protection (CBP) later expanded the application of this Policy 
to all inspection personnel, including employees transferred to CBP 
from the former Immigration and Naturalization Service and U.S. 
Department of Agriculture Plant Protection and Quarantine. This Policy 
has been in place for all CBP Officers and Agriculture Specialists 
since June of 2004.
    Given CBP's critical national security mission, including the 
prevention of terrorist and terrorist implements from entering the 
United States, it is important that it adopt and maintain mission-
centered policies, particularly with respect to assignment and 
scheduling of inspection personnel. With this in mind, the NIAP was 
designed to ensure the delivery of outstanding service; to enable CBP 
managers and supervisors to respond to mission and workload demands 
quickly and efficiently; to maximize the effective use of overtime; and 
to provide uniformity, efficiency, and fairness in the assignment of 
employees.
    Although principally driven by workload requirements, available 
level of staffing to perform job tasks, budget constraints and other 
operational considerations, managers are encouraged to engage employees 
and their representatives so that their interests may be considered 
when making and implementing scheduling decisions. For example, to the 
extent possible, overtime assignments are assigned on a voluntary 
basis, providing the voluntary nature of the assignment process does 
not drastically increase cost. In addition, managers and supervisors 
have the authority to entertain and approve employee requests for shift 
swaps or excusals from overtime assignments.
    In the event an employee (or his/her union) believes that a manager 
or supervisor has not established schedules or assigned work in a 
manner consistent with the Policy, (s)he may seek redress through the 
applicable grievance procedure, all of which provide for higher level 
review of the responsible official's decisions.

    Question 7.: When he appeared before the Full Committee on February 
9, Secretary Chertoff stated that performance-based evaluations would 
go forward within the bounds of the Court decision on MAX HR. What 
steps have been taken to train supervisors on conducting performance-
based evaluations?
    Response: Over 14,000 of the department's managers and supervisors 
have now taken the DHS Performance Leadership Training. This is a 
noteworthy accomplishment and a significant milestone in the 
implementation of the new DHS Performance Management program. It also 
marks the first enterprise-wide leadership training the department has 
conducted since its creation. By the way, this is an area where the 
Department excels.
    The training program has played an integral role in ensuring that 
managers understand the new performance management program and receive 
the tools and support they need to effectively guide employee 
performance. The training focuses on developing the skills that will 
enable managers to have meaningful conversations with employees where 
goals are set and expectations are clearly articulated. It helps 
managers:
         Clarify priorities to use in setting a work group's 
        direction
         Develop performance plans that clarify how to achieve 
        mission critical objectives
         Manage individual and organizational work unit 
        performance
         Communicate performance expectations, monitor 
        performance, reward good performance, and deal with poor 
        performance
    DHS managers and supervisors now have a common framework and 
language to use as they implement performance management. This common 
framework will establish the foundation for sustaining a high-
performance culture within DHS and ensure a consistent approach to 
performance management throughout the department. We have engaged 
employee representatives as appropriate in the design and development 
of our performance management program.

    Question 8.: How has the Department solicited advice from NTEU or 
AFGE concerning the training of supervisors to conduct performance-
based evaluations? Please describe any meetings, focus groups, or other 
methods.
    How has this advice been incorporated into the Department's plans?
    Response: Beginning in February 2005, both NTEU and AFGE were 
actively involved in the development and implementation of the 
performance management policy via the continuing collaboration process. 
This process provided employee representatives an opportunity to submit 
written comments and/or to discuss their views with DHS officials on 
final draft implementing directives. Employee representatives were also 
involved in focus groups used to design the program, develop the DHS 
core competency model, validate performance standards for each type and 
level of work in the core competency model, and selection of an e-
performance tool to facilitate the performance management process. I 
have met with NTEU President Colleen Kelley and AFGE President John 
Gage and have promised to maintain an ongoing dialogue.

    Question 9.: President Kelley of NTEU testified that the President 
and TSA have statutory flexibility to respond in times of crisis. In 
light of this, can you explain how granting TSA screeners collective 
bargaining rights could harm national security or prevent TSA from 
fulfilling its mission?
    Response: In the Aviation and Transportation Security Act, which 
established TSA, Congress recognized that special flexibility for 
personnel performing key homeland security roles is critical. Passage 
of the Homeland Security Act of 2002, which established the Department 
of Homeland Security (DHS), was delayed over debate over this same 
fundamental question. Existing authorities permit TSA to flexibly 
manage and deploy its workforce, including its Transportation Security 
Officer (TSO) workforce, in carrying out important security work 
directly affecting national security. In exercising these authorities, 
TSA is committed to ensuring that employees are treated fairly, 
consistent with merit system principles. During Hurricane Katrina and 
after the United Kingdom (UK) air bombing plot was foiled, TSA changed 
the nature of employees' work--and even the location of their work--to 
quickly and effectively respond to these emergencies. For example, 
after the UK air bombing plot was discovered, TSOs employed new 
standard operating procedures within hours to deal with the new threat. 
This flexibility is key to how DHS, through TSA, protects Americans 
while they travel, both at home and abroad. Eliminating these 
authorities, would significantly diminish the Department's ability to 
respond quickly to security threats and would ultimately reduce 
transportation security.

    Question 10.: What are the primary distinctions between MaxHR and 
HCOP? Specifically, what aspects of MaxHR were not included in HCOP 
because of employee concerns?
    What aspects of MaxHR did employees find most objectionable, and 
what has the Department done to address those concerns in HCOP?

    Response: The term MAXHR '' was a brand that was used to 
identify the program developed in response to the Homeland Security Act 
of 2002 and focused on six specific elements--performance management, 
classification, pay, labor relations, adverse actions and appeals. 
Leadership training, hiring, and diversity themes were not part of 
MAXHR .
    ``HCOP'' is an acronym for the Human Capital Operational Plan which 
outlines the Department's human resources priorities for fiscal year 
2007--2008.
    The perception that the Human Capital Operational Plan is 
``replacing'' MAXHR is a misunderstanding. Establishing the 
Plan and identifying priorities signals a shift in emphasis from the 
limited areas initially covered under MAXHR, to a broader, 
more comprehensive approach. Although we continue to deploy programs 
initiated under MAXHR, such as the DHS Performance 
Management Program, we are discontinuing use of the term 
``MAXHR'' and will focus on a broader, more comprehensive 
set of priorities including key elements such as talent management, 
leadership development, training, and service excellence.
    The Human Capital Operational Plan was developed in collaboration 
with component representatives, based on their knowledge of their 
organization and workforce, and serves as a framework for component 
leaders and human capital advocates to work in partnership on 
initiatives related to hiring, retention, learning and development, 
leadership, service excellence, and building a culture of performance.
    With regard to aspects of MAXHR employees may have found 
objectionable and what the Department has done to address those 
concerns, I believe there has been a bit of a misrepresentation about 
the intent of the flexibilities. An example is the representation that 
the Department intended to reduce employee rights. We are working with 
the components and the unions to dispel that misconception. The one 
area that is new and that requires extensive communication and training 
is the implementation of a new pay system. While employees in other 
parts of the government where the pay system has changed grow to like 
it, there is an initial period of concern. However, we plan to move 
slowly with regard to changes to the pay system and first ensure 
performance management is well implemented.
    Employees were included throughout the design process of the 
programs under MAXHR and their concerns were addressed at 
those times. This included employee involvement in focus groups, 
through surveys, through employee email boxes, and as part of technical 
advisory groups. Employees conveyed extensive interest in the design 
work being conducted and some concern on a variety of issues, and the 
input received was used to modify the development of programs to the 
extent possible.
    As the Department moves forward with the priorities and activities 
identified in the Human Capital Operational Plan, we will continue to 
include employees in the process so their views are heard and 
incorporated.

    Question 11.: As you know, the adverse action and appeals 
provisions in the DHS personnel regulations were ruled illegal and a 
stay was imposed on the rule in 2005 by U.S. District Judge Rosemary 
Collyer, who said ``the regulations put the thumbs of the agencies down 
hard on the scales of justice in [the agencies'] favor.'' The appellate 
court, however, said the planned changes in adverse action and appeal 
rights were not yet ``ripe'' for a decision since no one has been 
subject to discipline under them. Still, the appeals court agreed with 
Collyer's basic conclusion regarding the lack of fairness. Despite the 
Court rulings, DHS announced on March 7, 2007 that they intend to 
implement provisions of the regulations not specifically struck down by 
the Courts including these provisions limiting due process and appeal 
rights. What has the Department done to address the courts' rulings?
    Response: The Department and the Office of Personnel Management, in 
collaboration with labor organizations, designed the adverse actions 
and appeals system as a fair, efficient and expeditious means of 
handling employee performance and disciplinary issues. The Court 
approved much of the system and reserved judgment as to the rules' 
standard for mitigation of penalties before the Merit Systems 
Protections Board and arbitrators until faced with an actual case in 
controversy. As such, that regulation is not enjoined and is available 
for implementation by the Department. It also in no way diminishes 
employees' due process rights. The Department has engaged and will 
continue to engage with labor organizations in a dialogue on this issue 
and other areas of the regulations.

    Question 12.: In implementing the PASS for Transportation Security 
Officers;
    (a) What process is provided to employees who disagree with their 
supervisor's rating or the final decision?
    TSA has a grievance policy that lays out the process that employees 
can use to have their rating reviewed by a higher level official.

    (b) How are employees treated who leave or are promoted after the 
rating period but before performance evaluation decisions are made?
    All employees on board on the final day of the performance period 
(September 30) will receive a Final Rating. All employees that receive 
a Final Rating and are still employed by TSA on the effective date of 
the pay-out (typically the first week in January) are entitled to and 
will receive their PASS related performance increase and/or bonus.
    (c) Will you continue to have a monetary awards program in addition 
to annual pay adjustments and bonuses based on performance?
    Yes.

    (d) What changes, if any, do you intent to make to the awards 
program?
    With regards to annual pay adjustments and bonuses based on 
performance, TSA is looking at changing the number of ratings levels 
from 4 to 5 to better reflect the differences in performance levels of 
our workforce. This change to a 5-level rating system may have a 
positive impact on the number of employees eligible for an annual pay 
adjustment.

    (e) Do you guarantee a minimum increase equivalent to the annual 
general increase provided for employees for satisfactory performance?
    All TSA employees receive an annual pay increase commensurate with 
the cost of living adjustment (COLA) received by all other Federal 
employees. All employees receive the same locality adjustments as other 
Federal employees. TSA's annual pay increase is called the 
Comparability Equivalent Increase (CEI). In addition, TSOs are covered 
by PASS and may be eligible for a PASS increase, and/or a PASS bonus 
based on PASS rating. The PASS increase and PASS bonus are in addition 
to the CEI. For example, in January 2007, a TSO with a PASS rating of 
Exceed Standards received the CEI (1.7% pay increase) plus a PASS pay 
increase of 3% plus a PASS bonus of $2,000 paid in a lump sum.

    (f) What is the formula you intend to use to establish the pool for 
pay adjustments and bonuses? Is the formula set by the department, by 
components, or by the manager of each pay pool?
    The pool for pay adjustments and bonuses is determined by 
estimating the number of Transportation Security Officers (TSO) and 
their expected Performance Accountability and Standards System (PASS) 
ratings. This is determined by the Transportation Security 
Administration (TSA).

    (g) Under what conditions is this formula subject to change?
    This is subject to change when modifications to the PASS rating 
system occur.

    (h) Do you intend to have separate pools for supervisors and non-
supervisors?
     Supervisors and Non-Supervisors in the TSO workforce are covered 
under PASS.

    (i) Will employees with the same ratings be treated the same for 
pay-out purposes?
    Yes, PASS is a system with national standards and national payouts.

    (j) If not, what factors will affect the differences in pay-out?
    N/A

    (k) How do you ensure transparency in the decision making process?
    Payout levels are determined at the national level and are driven 
by budget availability and the number of employees that have reached 
each performance level. The integrity of rating process is maintained 
by the fact that more than 65% of an employee's final rating is 
determined by objective measures. In addition, in 2006 the system 
employed a number of ``business rules'' that ensured that the 
subjective ratings did not overshadow the objective ratings.

    (l) How do you ensure that women and minorities are treated fairly?
    Payout levels are determined at the national level and are driven 
by budget availability and the number of employees that have reached 
each performance level. The integrity of the rating process is 
maintained by the fact that more than 65% of an employee's final rating 
is determined by objective measures. In addition, in 2006 the system 
employed a number of ``business rules'' that ensured that the 
subjective ratings did not overshadow the objective ratings.

    Question 13.: The Department of Homeland Security ranked nearly 
last in every category of the 2006 Federal Human Capital Survey. The 
Human Capital Operational Plan (pronounced: H-COP), which contains 
provisions of MaxHR not enjoined by the courts, seeks to address many 
of the concerns expressed by employees in the Survey. Unfortunately, 
last month this Committee adopted by a party-line vote an amendment to 
the DHS authorization bill that would repeal the Department's personnel 
management flexibility, which will halt the implementation of HCOP.
    Please discuss the impact of this amendment on the Department and 
the Secretary's ability to manage the DHS workforce.
    In the event this provision is enacted into law, what would the 
Department do?
    What are the major benefits of HCOP and what improvements would it 
make compared to the decades-old General Schedule (GS) personnel 
system?
    What provisions of MaxHR are included in the Human Capital 
Operational Plan(HCOP)?
    Response: We do not support the provisions in H.R. 1684 that would 
repeal the personnel flexibilities provided in the Homeland Security 
Act of 2002. DHS needs a human resources management system designed to 
meet the diverse personnel requirements faced by the Department. As 
conveyed during consideration of the Department's original 
authorization in 2002, the Administration believes that DHS personnel 
management must strike a careful balance between the flexibility needed 
to defend against a ruthless enemy and the fairness needed to ensure 
employee rights. This legislation threatens that balance.
    Flexibility is needed given the Department's role in preparing for 
and responding to ever-changing homeland security threats. Eliminating 
these authorities would significantly diminish the Department's ability 
to respond quickly to security threats and would negatively impact the 
security of the Nation.
    ``HCOP'' is an acronym for the Human Capital Operational Plan, 
which outlines the Department's human resources priorities for fiscal 
year 2007--2008. This Plan was developed in collaboration with 
component representatives and serves as a framework for component 
leaders and human capital advocates to work in partnership on 
initiatives related to hiring, retention, learning and development, 
leadership, service excellence, and building a culture of performance.
    The priorities outlined in the Human Capital Operational Plan 
address classification, performance management and my office's 
commitment to support components with labor and employee relations 
issues.

    Question 14.: You, Secretary Chertoff, Deputy Secretary Jackson, 
and Under Secretary for Management Schneider have made improving morale 
at the Department a top priority and you have been attempting to 
address employee concerns from the Federal Human Capital Survey.
    If the Department of Homeland Security is forced to roll back the 
clock and revert to the General Schedule (GS) personnel system, how 
will you address issues such as only 15% of DHS employees responding to 
the Federal Human Capital Survey agreeing that ``pay raises depend on 
how well employees perform their jobs'' and only 22% believing that 
``promotions in my work unit are based on merit''?
    Don't these statistics illustrate that DHS employees support a pay 
for performance structure like the one included in HCOP?
    Response: We believe the survey results indicate that DHS employees 
support a pay for performance system. A broad banded pay system that is 
reliant for base pay adjustments on the linkage between performance and 
pay is a powerful mechanism for motivating employees and demonstrating 
the relationship between the accomplishment of work and resulting pay. 
While the General Schedule provides opportunities to reward performance 
it is fundamentally a time-based system. Our employees have said loudly 
that the current pay is not up to par. The Partnership for Public 
Service in its testimony supported our position, and even the GAO has 
moved to a pay for performance environment.

    Question 15.: In your testimony the Department plans to offer a DHS 
101 module. Could you talk a little more about the module?
    When will it be rolled out?
    Are all DHS employees required to participate?
    How will this benefit the employees?
    Response: DHS 101 is a new multi-media, interactive, online 
awareness course. The Target Audience is primarily all current and new 
employees. The secondary audience is the general public and external 
audiences such as: interagency, intra agency employees, leadership and 
contract support staff as well as people within State, local and tribal 
government, academic, practitioner and other stakeholder arenas.
    The purpose of the module is to establish the baseline for 
standardized broad-based organizational knowledge; provide 
understanding of the DHS organization and its Components' roles, 
missions and program areas; and provide a foundation for DHS mission-
oriented culture. The online format ensures consistent delivery of 
required course content while increasing its retention and practical 
application. The course will establish organizational context to 
enhance effectiveness on the job for new and existing DHS employees, 
interagency partners and other stakeholders.
    DHS 101 is an essential element of an enterprise-wide effort to 
strengthen and unify DHS operations and management. It is a first step 
in a process of developing varied learning and development 
opportunities that enhance mission awareness and foster a ``Team DHS'' 
culture. DHS 101 is designed to serve as a core prerequisite for other 
courses and programs and will provide the basis for an expanded in-
residence experience.
    Delivered in a flexible, expandable, appealing format, DHS 101 
incorporates, updates, and significantly enhances the existing 
information available about the Department. Initial roll out of the 
module is expected in September of this year. A system of measurement 
will be established to ensure participants demonstrate an understanding 
of learning objectives upon completion.
    DHS 101 will be accessible through www.DHSonline.gov for internal 
employees and will be linked with the OCHCO Learning and Development 
Home page and DHS Learning Management Systems (LMS) and Component 
Portal. In time, DHS may grant access to external audiences such as: 
interagency, state, tribal and local government, academics, and other 
stakeholders as well as the general public.
    Expected benefits for DHS employees of DHS 101 include:
         Establishes standardized, broad based organizational 
        knowledge such as: who DHS is, why DHS exists, where DHS comes 
        from and where it is going in the homeland security arena, 
        mission, role and associated relationships, roles and missions 
        of DHS Components to provide relevant knowledge, understanding 
        and significance of the DHS organization and DHS culture to new 
        and existing employees.
         Increases the retention and application of required 
        content; provides context for each employee's job.
         Serves as a mandatory core course for employee 
        orientation.
         Can serve as a prerequisite to other courses (such as 
        proposed follow on interactive classroom course).
         Maximizes and enhances learner's future classroom time 
        and learning.
         Allows learner to interact sooner and at a higher 
        level of engagement on the job; increases productivity through 
        inclusiveness and effective orientation to the organization.
         Allows learner to take responsibility for contributing 
        value to the organization.
         Provides consistent content and cost effectiveness--
        reduces travel and classroom time, delivery expenses, etc.
         Offers maximum accessibility, reaching internal and 
        external target audiences 24/7.

    Question 16.: Please discuss your Recruitment Summit with the DHS 
Office of Civil Rights and Civil Liberties.
    Going forward, what did you learn from the Summit that you plan to 
apply to future recruitment efforts?
    Response: The first Department of Homeland Security (DHS) 
Recruitment Summit on March 7, 2007, began with a welcome from the 
Chief Human Capital Officer and Officer for Civil Rights and Civil 
Liberties. Both expressed their appreciation to the group for their 
willingness to participate in what was intended to be the first step in 
developing a continuing relationship aimed at recruiting, hiring and 
retaining a qualified diverse DHS Workforce. After introductions, there 
was a discussion of the current status of minorities and women in the 
Department.

    Initiatives discussed included:
         Spearheading DHS corporate-level participation in job 
        fairs (e.g., FOSE, LULAC, Black Engineers, etc.)
         Meeting with each DHS Component Head to reinforce 
        diversity objectives
         Completing a year-long review of DHS employment 
        policies, practices, and complaints of discrimination to 
        identify barriers to full employment and retention
         Expanding scholarship and internship opportunities for 
        Minority Servicing Institutions
         Increasing participation in our leadership development 
        programs.
         Identifying and expanding initiatives that will help 
        retain a diverse workforce.
    A study conducted by Women in Federal Law Enforcement found that 
women identified family friendly policies and sexual harassment as 
issues related to retention. The isolation of many Border Patrol 
positions was considered a problem for both men and women. As a 
counter, it was pointed out that with development of career paths, the 
Border Patrol Agents could serve as feeder positions for other 
enforcement and investigative officers.
    Going forward the Department will act on the following 
recommendations from the attendees:
         Stress strong leadership and accountability at all 
        levels. Both were described as paramount to success.
         Implement learning and development strategies at all 
        levels. Development was seen as a key for the progression of 
        internal candidates.
         Attract candidates from other Departments. Mobility 
        was described as contributing to the development of well 
        rounded candidates and an asset whether obtained through 
        movement across DHS agencies or in other Departments.
         Expand the Recruitment Summit to include more non-
        governmental professional organizations.
         Conduct workshops and meetings with local chapters of 
        national organizations. Such engagements were considered 
        excellent ways to connect with possible recruits.
         Give school presentations to introduce students to 
        career possibilities.
         Consider the use of on-site delegated examining and 
        hiring authorities as a key to competing for candidates.
         Solicit resumes in advance of going on site to 
        identify top candidates.
         Develop mentoring programs including the use of 
        retired senior executives.

    Question 17.: When will the Department of Homeland Security 
University System by up and running? Which categories of DHS officials 
will be able to take advantage of the course offerings?
    Response: The HS University System and its four program areas: 
Leadership Institute, Preparedness Center, Homeland Security Academy 
and Center for Academic & Interagency Programs are up and running.
    Currently we have deployed several Leadership Institute programs 
including the DHS Fellows experience, SES-Career Development Program 
and a ``Results Driven Communications for Supervisors'' course.
    The HS Preparedness Center is facilitating a pilot Critical 
Infrastructure Protection Qualification Course this June for DHS and 
interagency employees. Other Preparedness Center courses include the 
National Planning & Execution Systems Course, Homeland Security 
Strategic Studies, and a Terrorism/Countering Terrorism Course.
    The Homeland Security Academy, which cultivates strategic analysis 
and decision making skills through a fully accredited graduate degree 
program, will be piloted in June 2007 in the National Capital Region at 
the Federal Executive Institute in West Virginia. The Center for 
Academic & Interagency Programs supports all HS University System 
Program areas by establishing relationships with academe and 
interagency partners. For example some of the Preparedness Center 
Programs will be financially supported in fiscal year 07/08 by DoD.

    Question 18.: DHS employees have gone through three reorganizations 
in just over four years--the creation of DHS in 2003; implantation of 
the Secretary's Second Stage Review in 2005; and now reform of FEMA.
    In your view, what impact do such reorganizations have on employees 
and could this have been a major contributing factor to the low 
rankings in the OPM survey?
    Do you believe morale among DHS employees would improve if the 
Department's organizational structure had time to solidify, thereby 
providing more certainty to employees?
    Response: Reorganizations, like any major change, are not easy. It 
takes time for people affected by change to fully accept and commit to 
a new organization. In its short history, the Department has gone 
through a series of organizational changes, which have directly 
affected DHS employees in a variety of ways and no doubt have had an 
impact on the results of the Federal Human Capital Survey. Nonetheless, 
DHS employees have accomplished much to protect our Nation, and they 
remain committed to the homeland security mission.
    In an effort to ensure employee satisfaction and our continued 
success, one of the Secretary's Near-Term Goals is to strengthen and 
unify DHS operations and management--this includes taking steps to 
improve hiring and retention programs, build career paths, and enhance 
Department-wide training and leadership development opportunities. With 
time, and through the continued commitment of DHS leadership, enhanced 
employee communications and human resources programs, these efforts 
will further transform DHS into a single, unified agency where 
employees feel more part of a ``Team DHS'' culture.

    Question 19.: The Administration has proposed consolidating many of 
the DHS facilities in the National Capital Region in one central 
location at the campus of St. Elizabeth's Hospital in the District of 
Columbia.
    In your view, what impact would this centralization of DHS 
facilities have on the morale and performance of DHS employees who work 
in the Washington, DC area?
    Response: Initially, like any change, the move may be expected to 
have a short term negative impact on morale. But in the long term, it 
is expected to be an improvement and plans are being developed to 
minimize negative consequences. More than 60 buildings housing DHS 
employees are currently scattered widely throughout the National 
Capital Region. A single campus facility will improve operational 
effectiveness and efficiency. A single campus headquarters will help 
foster a ``Team-DHS'' culture that will compliment other Department 
efforts to elevate employee morale. Moreover, it will offer a 
tremendous opportunity to create a secure, state-of-the-art Federal 
campus focused on achieving the Department's core mission objectives.
    The Department is working with the General Services Administration 
(GSA) on a Housing Master Plan for DHS and the St Elizabeths facility. 
The Housing Master Plan addresses:
         Unique and specialized requirements of the 
        Department's components and employees
         Opportunities for improved organizational efficiencies 
        through functional integration and shared services provided at 
        a single campus facility
         Individual component working relationships
         Anti-terrorism and force protection considerations
         Suitability to the functions being housed
    The Department is also concerned with how the move would impact our 
employees personally from a transportation perspective. DHS and GSA are 
working together to develop a comprehensive Transportation Management 
Plan that addresses employees' transportation needs. The first 
component of that Plan, an employee survey on transportation needs, is 
already underway.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

Questions from the Honorable Mike Rogers, Ranking, Member, Subcommittee 
              on Management, Investigations, and Oversight

                        Responses from Max Steir

    Question 1.: In your testimony you note that the General Schedule 
is ``no longer good enough to attract and retain the best and 
brightest.'' You also note that the Department of Homeland Security 
back to the 1949-era General Schedule would likely have greater costs 
than benefits.''
        a. Please discuss what some of these costs would be.
    The biggest cost to government is that it will fall farther behind 
in the competition for top talent. Talented people at all levels look 
to work environments that reward hard work and recognize high 
performance. The decades-old General Schedule system was designed for a 
federal workforce that was 70% clerical in nature; today's workforce is 
70% professional, and highly focused on results. The General Schedule 
is not performance-sensitive, and is no longer adequate to attract or 
retain the talent that government needs. Prolonging the system will 
only cause agencies to fall farther behind the race for talent.
    The deficiencies of the General Schedule system are well 
documented. For example, the U.S. Office of Personnel Management's 2002 
White Paper, ``A Fresh Start Federal Pay: The Case for Modernization, 
``provides data showing that not only is the GS system not performance 
sensitive, but it frequently either underpays or overpays various 
occupations in various geographic locales. Requiring DHS to return to a 
1949-era compensation system that detracts from its ability to recruit, 
reward, and retain motivated, highly talented individuals simply does 
not make sense.

        b. How well do provisions in the General Schedule address 
        concerns raised by DHS employees in the Federal Human Capital 
        Survey?
    Given that no DHS employees have actually been placed under the 
alternative pay system proposed by DHS as a replacement for the General 
Schedule, it's fair to say that of the GS system do not address the 
concerns raised by DHS employees in the Federal Human Capital Survey 
(and also rejected in the Partnership's 2007 Best Places rankings). In 
both the 2004 and the 2006 Federal Human Capital Surveys, the 
responding employees were working under the GS system and their average 
responses continued to be among the lowest in government.
    We note, however, that while the General Schedule will not help 
address the problems revealed in the Federal Human Capital Survey 
results, there is much that all agencies--regardless of their pay 
system--can and should do to improve employee engagement. Strong 
leaders who communicate clearly about agency objectives and the role of 
each employee in meeting those objectives are key. We also know that 
employees thrive on opportunities for teamwork and professional 
development are important ingredients in building a highly engaged

    Question 2.: You recommend that ``Congress should encourage and 
support Department efforts to hire and retain top talent, create a 
performance-based culture, create learning and development 
opportunities for DHS employees and improve leadership.''
        a. Does the Majority's goal of repealing the Department's 
        personnel management flexibility heed this recommendation?
    While we concur with the to ensure that employee collective 
bargaining rights and employee appeals rights are preserved, a 
wholesale repeal that includes the pay and performance management 
provisions of the DHS alternative HR system would do nothing to assist 
DHS in hiring and retaing top talent, creating a performance-based 
culture, and developing the talents.

    Question 3.: In your testimony, you recommend that ``any DHS 
alternative pay system must meet certain requirements, and be certified 
by OPM, GAO or another entity specified by Congress, before it is 
implemented.''
        a. What requirements do you believe an alternative pay system 
        should meet?
    We believe that an alternative pay system should be based on a 
strong performance management system that incorporates the following 
elements:
         Adherence to merit principles set forth in Section 
        2301 of Title 5 U.S.C.
         A fair, credible, and transparent employee performance 
        appraisal system
         A link between the performance management system and 
        the agency's strategic plan.
         A means for ensuring employee involvement in the 
        design and implementation of the system.
         Adequate training and retraining for supervisors, 
        managers, and employees in the implementation and operation of 
        the performance management system.
         A process for ensuring ongoing performance feedback 
        and dialogue between supervisors, managers, and employees 
        throughout the appraisal period, and setting timetables for 
        review.
         Effective safeguards to ensure that the management of 
        the system is fair and equitable and based on employee 
        performance.
         A means for ensuring that adequate agency resources 
        are allocated for the design, implementation, and 
        administration of the performance management system.
         A pay-for-performance evaluation system to better link 
        individual pay to performance, and provide an equitable method 
        for appraising and compensating employees.

    Question 4.: What are the greatest challenges faced by the federal 
government in recruiting top-notch employees?
    The challenges faced by federal government in recruiting are many. 
The Partnership's ``Back to School'' report found that on college 
campuses, few students know about federal job opportunities, and those 
that are familiar with the opportunities in federal service have no 
idea where to start or how to navigate the federal hiring process. One 
of the greatest challenges is the government's inability to offer 
competitive salaries to top talent in critical occupations for which 
there is shortage of quality candidates. In addition, the inability to 
adequately reward top performing employees and the lack of incentives 
for marginal employees to either improve or leave has hampered the 
government's ability to attract and retain top-notch employees at all 
levels. It is this inability that the DHS alternative pay system was 
intended to address.

    Question 5: You not that the Department will once again rank at the 
bottom of the list in the Best places to Work in the Federal 
Government.
        a. Do you believe that the implementation of the provisions of 
        the New Human Capital Operational Plan (HCOP) will help the 
        Department rank higher on the list next year?
    We think the new Human Capital Operational Plan has the potential 
to help DHS improve its Best Places score over time. To do so, the HCOP 
must be conscientiously implemented and the resources must be available 
to provide the planned investment in training, improved system design, 
progress monitoring, and so on. We encourage the subcommittee to 
conduct regular oversight of DHS personnel issues and the 
implementation of the HCOP.

                                 
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