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


 
                FEDERAL PAY POLICIES AND ADMINISTRATION 

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

                                HEARING

                               before the

                   SUBCOMMITTEE ON FEDERAL WORKFORCE,
                    POSTAL SERVICE, AND THE DISTRICT
                              OF COLUMBIA

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 31, 2007

                               __________

                           Serial No. 110-151

                               __________

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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 HENRY A. WAXMAN, California, Chairman
TOM LANTOS, California               TOM DAVIS, Virginia
EDOLPHUS TOWNS, New York             DAN BURTON, Indiana
PAUL E. KANJORSKI, Pennsylvania      CHRISTOPHER SHAYS, Connecticut
CAROLYN B. MALONEY, New York         JOHN M. McHUGH, New York
ELIJAH E. CUMMINGS, Maryland         JOHN L. MICA, Florida
DENNIS J. KUCINICH, Ohio             MARK E. SOUDER, Indiana
DANNY K. DAVIS, Illinois             TODD RUSSELL PLATTS, Pennsylvania
JOHN F. TIERNEY, Massachusetts       CHRIS CANNON, Utah
WM. LACY CLAY, Missouri              JOHN J. DUNCAN, Jr., Tennessee
DIANE E. WATSON, California          MICHAEL R. TURNER, Ohio
STEPHEN F. LYNCH, Massachusetts      DARRELL E. ISSA, California
BRIAN HIGGINS, New York              KENNY MARCHANT, Texas
JOHN A. YARMUTH, Kentucky            LYNN A. WESTMORELAND, Georgia
BRUCE L. BRALEY, Iowa                PATRICK T. McHENRY, North Carolina
ELEANOR HOLMES NORTON, District of   VIRGINIA FOXX, North Carolina
    Columbia                         BRIAN P. BILBRAY, California
BETTY McCOLLUM, Minnesota            BILL SALI, Idaho
JIM COOPER, Tennessee                JIM JORDAN, Ohio
CHRIS VAN HOLLEN, Maryland
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
JOHN P. SARBANES, Maryland
PETER WELCH, Vermont

                     Phil Schiliro, Chief of Staff
                      Phil Barnett, Staff Director
                       Earley Green, Chief Clerk
                  David Marin, Minority Staff Director

Subcommittee on Federal Workforce, Postal Service, and the District of 
                                Columbia

                        DANNY K. DAVIS, Illinois
ELEANOR HOLMES NORTON, District of   KENNY MARCHANT, Texas
    Columbia                         JOHN M. McHUGH, New York
JOHN P. SARBANES, Maryland           JOHN L. MICA, Florida
ELIJAH E. CUMMINGS, Maryland         DARRELL E. ISSA, California
DENNIS J. KUCINICH, Ohio, Chairman   JIM JORDAN, Ohio
WM. LACY CLAY, Missouri
STEPHEN F. LYNCH, Massachusetts
                      Tania Shand, Staff Director




















                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 31, 2007....................................     1
Statement of:
    Faleomavaega, Hon. Eni F.H., a Delegate in Congress from 
      American Samoa; and Hon. Patrick J. Kennedy, a 
      Representative in Congress from the State of Rhode Island..    42
        Faleomavaega, Hon. Eni F.H...............................    42
        Kennedy, Hon. Patrick J..................................    43
    Kelley, Colleen, National president, National Treasury 
      Employee Union; J. David Cox, National secretary-treasurer, 
      American Federation of Government Employees; and Curtis 
      Copeland, Congressional Research Service...................    62
        Copeland, Curtis.........................................    95
        Cox, J. David............................................    76
        Kelley, Colleen..........................................    62
    Springer, Linda, Director, Office of Personnel Management, 
      accompanied by Nancy Kichak, Assistant Director, Strategic 
      Human Resource Policy, Office of Personnel Management......    49
Letters, statements, etc., submitted for the record by:
    Copeland, Curtis, Congressional Research Service, prepared 
      statement of...............................................    97
    Cox, J. David, National secretary-treasurer, American 
      Federation of Government Employees; and Curtis Copeland, 
      Congressional Research Service, prepared statement of......    78
    Davis, Hon. Danny K., a Representative in Congress from the 
      State of Illinois:
        Prepared statement of....................................     3
        Various prepared statements..............................     6
    Kelley, Colleen, National president, National Treasury 
      Employee Union, prepared statement of......................    65
    Kennedy, Hon. Patrick J., a Representative in Congress from 
      the State of Rhode Island, prepared statement of...........    45
    Springer, Linda, Director, Office of Personnel Management, 
      prepared statement of......................................    51


                FEDERAL PAY POLICIES AND ADMINISTRATION

                              ----------                              


                         TUESDAY, JULY 31, 2007

                  House of Representatives,
Subcommittee on Federal Workforce, Postal Service, 
                      and the District of Columbia,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 3:30 p.m. in 
room 2154, Rayburn House Office Building, Hon. Danny K. Davis 
(chairman of the subcommittee) presiding.
    Present: Representatives Davis of Illinois, Sarbanes, 
Lynch, and Marchant.
    Staff present: Tania Shand, staff director; Caleb 
Gilchrist, professional staff member; Lori Hayman, counsel; 
Cecelia Morton, clerk; Ashley Buxton, intern; and Alex Cooper, 
minority professional staff member.
    Mr. Davis of Illinois. I call the subcommittee to order and 
thank all of you who have been inconvenienced.
    Given the fact that this is the last week before our 
proposed summer recess, lots of things are going on, and 
schedules are being changed, and there is a strong effort to 
get as many things done before the end of Friday as we possibly 
can. As a matter of fact, we passed so many bills yesterday 
until I couldn't keep count of them, so nobody can suggest that 
this Congress is not working. As a matter of fact, it is 
working, and working well.
    Welcome Ranking Member Marchant, members of the 
subcommittee, hearing witnesses, and all of those in 
attendance. Welcome to the Subcommittee on Federal Workforce, 
Postal Service, and the District of Columbia hearing on Federal 
Pay Policies and Administration.
    Hearing no objection, the Chair, ranking member, and 
subcommittee members will each have 5 minutes to make opening 
statements, and all Members will have 3 days to submit 
statements for the record.
    I know that my ranking member is on the way and will be 
here, so I will just go ahead, and if he comes and wishes to 
have an opening statement we will make arrangements for that to 
happen.
    Welcome Ranking Member Marchant, members of the 
subcommittee, hearing witnesses, and all of those in 
attendance. More than 100 Federal agencies employ about 2.7 
million civilian workers, approximately 2 percent of the total 
U.S. work force, in jobs representing more than 800 
occupations. In March 2007 the Congressional Budget Office 
issued a report entitled Characteristics and Pay of Federal 
Civilian Employees. The report examined a subset of the 
civilian work force, approximately 1.4 million salaried 
workers, not including the employees of the Postal Service, who 
fill full-time, permanent positions in the executive branch.
    The report states that, while there is a common view that 
the Federal Government is a monolithic employer with a standard 
pay schedule and hiring rules, Federal agencies, through 
current laws, executive orders, and regulations, have been 
granted considerable latitude in hiring and setting pay. This 
hearing is being held to examine the Federal Government's wide 
range of pay and administration policies.
    Federal agencies compete with one another for talent. From 
2001 to 2005, more than 50,000 employees transferred from one 
agency to another. While these employees saw their basic pay 
rise about $1,800, there is some concern that, as the Federal 
Government's pay system becomes more fragmented, it will make 
it more difficult for employees to transfer from one agency to 
another.
    Furthermore, this subcommittee has much to learn about how 
pay is established in the Federal Government and what roles the 
Bureau of Labor Statistics, the Federal Salary Council, and the 
Federal Prevailing Rate Advisory Committee play in setting pay. 
We need to know more about agencies' experience with pay for 
performance systems and market-based compensation studies. 
These issues are critical as the Federal Government seeks to 
recruit and retain a quality work force.
    This hearing is the first step in examining Federal pay 
issues. Future hearings will take a more focused look at pay 
compression, pay for performance systems, and market-based 
compensation studies. Today's witnesses will help set the 
foundation for those hearings.
    [The prepared statement of Hon. Danny K. Davis follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Davis of Illinois. I would like to ask unanimous 
consent that the statements of Representative Barney Frank, who 
could not be here today due to a full committee markup he had 
to chair; Representative Luis Fortuno; the Senior Executive 
Association; and the Forum of U.S. Administrative Law Judges be 
submitted for the record. Hearing no objection, that will be 
the order.
    [The prepared statements of Hon. Barney Frank, Hon. Luis G. 
Fortuno, the Senior Executive Association, and the Forum of 
U.S. Administrative Law Judges follow:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Davis of Illinois. We are, indeed, fortunate that we 
have some distinguished witnesses here. Before I swear them in, 
I will just indicate who they are. Even though they have been 
sworn as Members of Congress, let me just indicate that our 
first panel is the Honorable Eni Faleomavaega, the 
Congressional Delegate representing American Samoa. Delegate 
Faleomavaega served as a staff counsel for the House Committee 
on Interior and Insular Affairs from 1975 to 1981, and as 
Deputy Attorney General for the Territory of American Samoa 
from 1981 to 1984. Mr. Faleomavaega was elected to the House of 
Representatives January 3, 1989.
    The Honorable Patrick Kennedy is serving his seventh term 
in Congress as the Representative from the 1st District of 
Rhode Island. Representative Kennedy was appointed to the House 
Appropriations Committee in December 1998, but requested a 
leave of absence in order to fulfill a 2-year term as chairman 
of the Democratic Congressional Campaign Committee. 
Representative Kennedy now sits on the House Appropriations and 
Natural Resources Committee.
    Gentlemen, we thank you so very much for your presence. We 
will begin with Delegate Faleomavaega. You may proceed.

    STATEMENTS OF HON. ENI F.H. FALEOMAVAEGA, A DELEGATE IN 
 CONGRESS FROM AMERICAN SAMOA; AND HON. PATRICK J. KENNEDY, A 
   REPRESENTATIVE IN CONGRESS FROM THE STATE OF RHODE ISLAND

            STATEMENT OF HON. ENI F.H. FALEOMAVAEGA

    Mr. Faleomavaega. Thank you, Mr. Chairman, for giving me 
this opportunity to testify before you on an ongoing issue 
regarding COLA practices that discriminate against Federal 
employees in my District.
    I am deeply concerned that Federal employees in my District 
do not receive the non-foreign-area cost of living allowance 
that the Office of Personnel Management provides in other non-
foreign areas in which Federal employees are eligible to 
receive additional compensation.
    As you know, Mr. Chairman, OPM is authorized to designate 
places in non-foreign areas eligible to receive additional 
compensation by virtue of costs of living that are 
substantially higher than in the Washington, DC, area. Federal 
statute provides authorization for COLA, and Executive Order 
10,000 establishes two separate programs providing compensation 
in non-foreign areas, including COLA, based on higher costs and 
post-deferential pay as an incentive to work in non-foreign 
areas with extraordinarily different difficult living 
conditions.
    Regulations governing administration of the COLA program 
are found in Title 5 of CFR Part 591.
    Mr. Chairman, to determine eligibility for COLA and the 
rate of COLA payment, OPM conducts price surveys for comparison 
with prices in the base area of Washington, DC. Using these 
survey results, OPM has determined that Federal employees in 
all non-foreign areas except my District are eligible to 
receive COLA.
    In response to a recent inquiry from my office seeking data 
to determine why Federal employees in my District do not 
receive COLA, OPM staff explained that OPM has never conducted 
a survey in American Samoa. Since American Samoa clearly falls 
within OPM's definition of non-foreign area, it seems highly 
unreasonable that OPM asserts that the cost of living in my 
District is not high enough to justify payment of COLA. How in 
the world can you do this when no survey was ever done by OPM 
in my District? To me, that is ridiculous.
    Although I have discussed these concerns with OPM 
officials, I have yet to receive an explanation that justifies 
withholding non-foreign COLA from American Samoa's Federal work 
force. Overall, my discussions with OPM have not proven 
fruitful. At this point I am looking to explore other options 
that could lead to a more fair and equitable treatment of the 
Federal employees in my District.
    Given that American Samoa faces the same issues driving 
higher prices for goods, services, and travel that face all 
other insular areas in similar situations, it seems highly 
discriminatory that OPM chooses not to survey my District or 
provide COLA to Federal employees in my District.
    The bottom line, Mr. Chairman, is that I just don't 
understand why OPM treats my little District in such a cavalier 
fashion, in my humble opinion. I don't even have COLA. My 
understanding is that now there is a new proposal coming out 
from the administration about having locality pay as another 
option that is possible for Federal employees to participate 
in.
    I did introduce legislation to provide that COLA should be 
given to my Federal employees that work in American Samoa.
    I sincerely hope, Mr. Chairman, that we will pursue this 
issue, and whatever proposed legislation that the 
administration has to offer and what we could do simply to 
correct this inequity that has existed for too long.
    With that, Mr. Chairman, I will be happy to receive any 
questions. Thank you.
    Mr. Davis of Illinois. Thank you very much. We appreciate 
your testimony.
    We will move to Mr. Kennedy.

              STATEMENT OF HON. PATRICK J. KENNEDY

    Mr. Kennedy. Thank you, Mr. Chairman.
    I appreciate the opportunity today to have a chance to 
testify on behalf of the critical issue of pay equity for our 
workers in the New England area. In particular, I also want to 
commend my colleague, Congressman Barney Frank, who has been a 
leader on this issue but who has been unable to join us due to 
other committee action in the Financial Services Committee, 
which he is at currently.
    As Federal officials, both Congressman Frank and I are very 
familiar with the economy and job opportunities and the 
commuting patterns in our area. In fact, I have to drive 
through Congressman Frank's District to get back to home every 
evening from parts of my District, so we absolutely are in the 
same area, and so we share the same market in terms of our 
workers, and we also share the same economy as Boston in terms 
of the cost of living.
    There is a very real case for treating our workers in the 
Massachusetts/Rhode Island area the same as the Boston area for 
the Federal wage area. In fact, it is already the case where 
white collar Federal workers are at present treated as if they 
are working in the Boston areas for purposes of pay parity. The 
irony is that blue collar workers in the Federal civilian 
system are not paid according to the same pay parity system for 
cost of living.
    That logic just doesn't wash, Mr. Chairman. I don't care 
how the Office of Personnel Management justifies it. If they 
have already determined that it is good enough for the white 
collar employees to be treated on pay parity for purposes of 
the market-based compensation and so forth to be paid the same 
because of the cost of living and the like, why are they not 
treating those at the lowest ends of the pay scale, the blue 
collar workers, the same? They are living in the same 
marketplace. In fact, the case should be made that they deserve 
to be compensated even more so on the same parity level as the 
Boston pay scale, which is higher, because, frankly, they are 
the ones who are on the lowest end of the scale and they have 
the toughest time making ends meet.
    Frankly, we have a tough time filling these civilian slots, 
and this is, I think, a matter of great importance to us as 
people who are concerned about the strength of our civilian 
work force and the continuity of that work force and the 
longevity. I believe it is something that needs to be 
rectified, and that is the reason why I am here today to 
testify on behalf of these workers and say that it is just not 
justified that wage rates in Boston could be up to 33 percent 
higher than the ones in Rhode Island, and yet these workers in 
Rhode Island are essentially looking for homes and are paying 
for cost of living rates that are roughly the same as those 
that are working in and around Boston. It is just unjustified, 
and we need to get this remedied.
    We have report language in the House Appropriations 
Committee to address this through the financial services and 
general Government appropriations bill, but the real solution 
lies with the Office of Personnel Management, and the decision 
to make this correction is now in their hands. This 
discrimination for blue collar workers needs to end, and it has 
been going on too long. I hope that we are finally making 
progress to have hourly workers who labor just as hard for less 
pay have their work redeemed and treated the same as those who 
are white collar workers whose work is acknowledged to be 
worthy of being paid on the same scale as their counterparts in 
the Boston area.
    With that, I conclude my testimony and submit my fuller 
statement for the record. Thank you, Mr. Chairman.
    [The prepared statement of Hon. Patrick J. Kennedy 
follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Davis of Illinois. Thank you, gentlemen, very much. I 
will begin with some questions.
    I must confess that I find both sets of testimony to be 
quite intriguing, and it causes me some thoughts that I had not 
really spent a great deal of time pursuing.
    Mr. Faleomavaega, how many Federal employees work in 
American Samoa, and how does this number compare with the 
number of Federal employees in the Commonwealth of the Northern 
Mariana Islands?
    Mr. Faleomavaega. I don't know if there is a threshold that 
OPM determines to say, well, because of a certain number 
therefore we will look after you and check what the situation 
is. I don't want to mislead you, Mr. Chairman. I want to give 
you a more specific number. Also, when you say Federal 
employees, I have about 600 of my men and women who just came 
back from Iraq. I consider them as Federal employees and when 
they came to Hawaii they don't get a post differential and 
soldiers from Hawaii get that increase in their wages. A lot of 
these measurements that are taken are from some regulatory 
portions of the OPM regulations that say the cost of living or 
the standard of living may be the basis.
    I don't want to render a guess here, Mr. Chairman, as to 
the exact number, but I will get that number and may it be made 
part of the record.
    Mr. Davis of Illinois. All right.
    Let me ask you how much does a gallon of milk, for example, 
cost?
    Mr. Faleomavaega. Mr. Chairman, we don't drink that much 
milk. [Laughter.]
    Maybe a loaf of bread might be better. It is very similar 
to the cost of bread in the State of Hawaii.
    One of the things that I am always confronted with is that 
our friends at the OPM say the cost of living in your District 
is small. Well, how can they ever make such generalizations and 
statements when there has never been a survey done by OPM of 
the cost of living in my District? It just doesn't make sense.
    Now, what they have done is they have taken the cost of 
living study out of the Territory of Guam and just simply 
tacked on the Northern Marianas as part of it, and yet they 
never conducted a survey for the Northern Marianas also. I find 
it highly questionable in terms of what procedures they follow. 
They treat two insular areas in one way and then treat my 
little insular area in a different way. I think that is unfair.
    Mr. Davis of Illinois. Let's just say if I was to go to 
dinner at a moderate-priced food establishment and have myself 
a couple of those exotic drinks that probably exist. When I 
finished, what would my check likely be?
    Mr. Faleomavaega. Mr. Chairman, I think maybe if I can 
respond to your question this way, all the insular areas have 
to import everything, from fuel to milk, if you will, the gas. 
So if I would just simply respond, it is similar to the State 
of Hawaii. They have to import practically everything. The 
State of Hawaii is one of the highest cost of living States, 
comparable or perhaps even higher than the Washington, DC, 
area.
    Now compare that, the State of Hawaii, where we have to 
import just like Hawaii our goods. The gas now is $3-something 
a gallon. So I don't find it any different from any of the 
States, probably even higher than some of the States, simply 
because we have to import practically everything that we have. 
We don't have oil. We have a lot of fish, we have a lot of 
sharks, but we don't have oil.
    Mr. Davis of Illinois. You don't eat the sharks, do you?
    Mr. Faleomavaega. Yes, we do. Shark is delicious. In fact, 
shark fin is the highest-cost soup in Asia. It is about $100 
for a little bowl of shark fin soup. By the way, we don't like 
killing sharks indiscriminately like that, cutting only the 
fins and then get rid of the carcass. We do have a Federal law 
that puts restrictions on that. But shark meat is good if you 
know how to prepare it.
    Mr. Davis of Illinois. Well, thank you very much.
    Let me ask you, Mr. Kennedy, do you know why the Federal 
Prevailing Rate Advisory Committee has not made a determination 
to calculate the pay of southeastern Massachusetts and Rhode 
Island with the prevailing rate?
    Mr. Kennedy. Well, I understand that there is a new 
director coming on, in fact, tomorrow. There has been a delay 
here and I think it is unfortunate that the delay has taken 
place, because we are talking about people's livelihoods, and 
as we spoke about today in the floor and yesterday with the 
Lenny Ledbetter case, time equals money. When you are delaying 
justice in terms of people's pay equity, every time that check 
is less than that is another unjust check and it is another 
sign of discrimination. So we need to get this rectified as 
soon as possible, and I hope that administratively with the new 
regional director coming onboard that will be expedited with 
their new leadership as soon as possible.
    I might add that this means that within the blue collar 
wage scale the gap will be within the Boston market. It doesn't 
mean it is going to be within the same higher pay scale as the 
white collar; we are just asking for it to be on the same scale 
for that type of work that is now currently being performed.
    Mr. Davis of Illinois. What is there that is unique about 
this area that may have caused this disparity to exist?
    Mr. Kennedy. I think probably the demand, perhaps. They 
could make the claim that there is a greater demand for the 
white collar workers, so they made the exception for the pay 
for white collar workers to accede into the Boston area pay 
scale as an incentive for them to bring in those white collar 
workers into a very needed area, which is the Navy Undersea 
Warfare Center's very important work in Rhode Island, for 
example. That could be the one explanation, and they could say, 
well, we needed to do that for the purposes of attracting 
people to these positions, whereas the need for us to attract 
people for the positions of these other civilian jobs is not of 
that critical a nature, and so we don't need to put them in the 
same category.
    But the problem with that is you have already defied your 
own rule in terms of fairness. If you have given a break to one 
class of workers that you are paying one set of wages to in the 
same building, and yet the workers that are working hourly 
wages in that same work force that are working alongside those 
same workers are now not treated equitably for purposes of that 
regional pay scale.
    Mr. Davis of Illinois. Thank you, gentlemen, very much.
    Let me ask Mr. Sarbanes if he has any questions.
    Mr. Sarbanes. Mr. Chairman, I don't really have any 
questions. I appreciate your holding the hearing. I do want to 
say that I have benefited, as you have, from getting a deeper 
understanding on these two issues which go to questions of 
within the pay structure whether there is the kind of parity 
and fairness there needs to be. I am interested in that, and 
equally interested in the question of how the overall pay 
structure for Federal employees compares to the work force at 
large, so I look forward to hearing the rest of the testimony.
    Thank you.
    Mr. Davis of Illinois. Thank you very much.
    Mr. Kennedy. Mr. Chairman, if I could just finally say, I 
mean, it would be one thing if I was here just saying that I 
would like to see my workers paid the same as the ones up in 
Boston, and I could make a strong case because the cost of 
living, we are all geographically so close, so the cost of 
everything doesn't vary greatly because it is the proximity of 
everything. The region is a high-cost region as it is. But 
really a salient point is the fact that there is already a 
double standard where they are already paying those same 
workers in my area that are white collar the prevailing, higher 
Boston wage rate, but they are not doing so for the hourly wage 
workers. That is what I think is the nub of the issue here.
    Thank you.
    Mr. Davis of Illinois. Thank you gentlemen very much.
    Mr. Faleomavaega. Mr. Chairman, I was humoring my good 
friend from OPM here earlier before the hearing started, but, 
on a more serious strain, I sincerely hope that OPM will be 
more forthcoming and try to resolve this little problem that we 
have out there in the middle of the Pacific.
    I don't think it is a complicated issue, but it just seems 
that when I request information or trying to find out how to go 
about doing things, they don't seem to care. That disturbs me.
    So with that humor, Mr. Chairman, I want to thank you for 
allowing me to come.
    Mr. Davis of Illinois. I thank the gentlemen very much. 
There may be some written questions that we may submit for you 
and ask you that you answer them.
    With that, I would ask Ms. Springer to step forward. We are 
always pleased to have join us for these hearings and 
discussions. The Honorable Linda Springer, who is the eighth 
Director of the U.S. Office of Personnel Management. She was 
unanimously confirmed by the U.S. Senate in June 2005, and as 
the OPM Director Ms. Springer is responsible for the Federal 
Government's human resources planning, benefits program, 
services, and policies for the 1.8 million employee civilian 
work force worldwide.
    Thank you so much, Ms. Springer. If you would, stand and 
raise your right hand. It is the custom of this subcommittee to 
swear in our witnesses.
    [Witness sworn.]
    Mr. Davis of Illinois. The record will show that the 
witness answered in the affirmative.
    Thank you so much. It is good to see you.
    Ms. Springer. Thank you, Mr. Chairman. It is good to see 
you, as well.
    Mr. Davis of Illinois. And you may proceed.

  STATEMENT OF LINDA SPRINGER, DIRECTOR, OFFICE OF PERSONNEL 
 MANAGEMENT, ACCOMPANIED BY NANCY KICHAK, ASSISTANT DIRECTOR, 
STRATEGIC HUMAN RESOURCE POLICY, OFFICE OF PERSONNEL MANAGEMENT

    Ms. Springer. Mr. Sarbanes, also thank you for your 
interest and for the opportunity to appear before you today to 
discuss the Federal Government's pay administration policies.
    OPM does have responsibility for setting pay rates for the 
general schedule, which covers about 1.3 million employees. We 
also manage the Federal wage system, which covers about 200,000 
employees, and the certification process for the Senior 
Executive Service performance-based pay system, which covers 
about 7,000 employees.
    In addition, OPM administers special pay rates; regulates 
recruitment, retention, and relocation incentives; conducts and 
evaluates demonstration projects in alternative personnel 
systems. Our specific responsibilities in administering these 
systems and incentives is presented in my written statement. I 
would like to use the balance, though, of my opening statement 
time to discuss performance-based alternative pay systems and 
various legislative proposals that we have.
    Alternative pay systems fall into three major categories: 
demonstration projects, independent systems, and Government-
wide executive pay. These systems are characterized by such 
features as performance-based pay and broad pay bands.
    OPM can establish and evaluate personnel motion projects to 
test changes in Government-wide human resources management 
systems. In excess of 50,000 employees are covered by alternate 
pay system demonstration projects. The Navy's China Lake 
demonstration project established in 1980 was the first of 
these and was made permanent in 1994. Since 1980, OPM has 
approved 17 additional demonstration projects. Four were 
completed, three were made permanent by separate legislation 
based on successful evaluation results, and the balance are 
currently active.
    The second group of alternative pay systems are agency 
specific. These were established under independent authority 
granted by Congress. In several of these cases, agencies 
successfully argued that their recruiting and retention efforts 
would have been seriously impeded by continued coverage under 
the general schedule's outmoded system. Over 30,000 employees 
are covered by independent systems in place in such agencies as 
the FDIC, the IRS, FAA, Office of the Comptroller of the 
Currency, and others. This figure does not include employees 
covered by the newer NSPS and Homeland Security Department 
systems.
    The third category, Government-wide executive pay, applies 
to the Senior Executive Service and the Senior Foreign Service, 
covering about 8,000 employees. These alternative pay systems 
have existed for as long as 25 years, and today cover over 
90,000 Federal employees.
    OPM has studied the experience under these systems and 
issued a comprehensive report in October 2005 at the request of 
Senators Collins and Voinovich, with our evaluation. The entire 
report is available at the OPM Web site, OPM.GOV, but I would 
highlight that in all these systems we have observed that 
performance, not time, drives pay; success depends on effective 
implementation; and employees have come to support those 
alternative pay systems.
    As a result of these efforts, we have learned what works 
and what does not work when it comes to implementing successful 
performance-based pay systems. Challenges must be addressed, 
but done right. I emphasize that--done correctly. Better 
performers get higher pay. Agencies can better compete for and 
retain top talent. And the associated accountability structures 
support agency missions.
    Mr. Chairman, I also want to bring to this committee's 
attention three legislative proposals related to pay. First is 
the Senior Professional Performance Act of 2007. This would 
increase the maximum rate of basic pay for certain senior level 
and senior technical positions to executive level three from 
the current limit of executive level four. It is similar to the 
SES system, and that proposal further provides that, in the 
case of an agency that has a certified performance application 
system, the maximum rate of basic pay for those positions could 
be as high as executive II, so very similar to the SES.
    Our second proposal would provide that certification of an 
agency's Senior Executive Service performance application 
system would be in effect for a 24-month period, beginning on 
the date of certification, with the opportunity to extend it 
for 6 months. This remedies an unintended disadvantage in 
agencies where the system is certified near the end of a 
calendar year, so it is kind of a technical fix.
    Mr. Chairman, we are pleased that both of these proposals 
were recently approved by the Senate Committee on Homeland 
Security and Governmental Affairs, and we are hopeful that both 
the Senate and House will be able to adopt them before the 
current session of Congress.
    There is a third legislative initiative that I would like 
to comment briefly on, and that is that we have proposed 
legislation that would extend locality pay to non-foreign areas 
outside the contiguous 48 States. Currently, employees in some 
of these areas receive COLA adjustments, but, as we heard 
earlier, there are some exceptions. What this would do is to 
extend locality pay to all these areas, including American 
Samoa, so that would resolve the question that was raised 
earlier about them not having parity with other areas.
    What we would do would be to phase that in over a 7-year 
period to mitigate any transition effects, but that would be 
the way we would propose addressing that problem.
    This concludes my opening statement, Mr. Chairman, and I 
would be happy to answer any questions you or any other Members 
would have.
    [The prepared statement of Ms. Springer follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Davis of Illinois. Thank you very much for your 
testimony. Let me just ask, now that we have been joined by our 
ranking member, if he had any comments prior to the 
questioning.
    Mr. Marchant. No, Mr. Chairman, I don't. I apologize. I had 
votes in another committee. Thank you.
    Mr. Davis of Illinois. Thank you very much, Mr. Marchant.
    Let me just ask Director Springer, in testimony that he 
submitted for the record, Representative Barney Frank notes 
that OPM took over a year to appoint a Chair to the Federal 
Prevailing Rate Advisory Council. Could you share with us why 
that may have taken such a long time?
    Ms. Springer. I can, Mr. Chairman. That position was 
previously paid as if it were a full-time commitment, a very 
significant salary. In fact, what I learned when I got to OPM 
was that the Chair position required no more than half of 
someone's time, and so I re-set the conditions there to be that 
we would hire someone and only pay them commensurate with the 
amount of time they would spend.
    Now, the other condition on that position is that the 
incumbent cannot accept any other position, so you have a 
situation where someone is not able to get compensation from 
another position but can only, because this is a half-time 
position, receive half of a full salary. That is very difficult 
to find candidates that can work under those circumstances, so 
we started from the very beginning. When the previous Chair 
left we tried to find someone. We have someone who is very 
qualified. He has just recently retired from Federal service in 
many capacities, Peace Corps among them, and others, but who 
was looking for exactly that type of situation. But it is not 
easy to find when you have the constraint of not being able to 
supplement that position with another one. That is the reason 
why it took so long. I'm being very candid with you. It is not 
for lack of effort. But we do have a good candidate now. His 
first day is tomorrow.
    Mr. Davis of Illinois. I guess it is not a problem now 
because you have found the ideal candidate. Do you think it 
might make any sense to change some part of it? I mean, can the 
person do what they need to do just on a part-time or half-time 
basis?
    Ms. Springer. I interviewed the previous Chair about that, 
because it wasn't a decision to make lightly, obviously. I 
wanted to make sure it wasn't a temporary change in workload or 
something like that, and they said no, consistently that 50 
percent was the maximum. In some cases over the course of a 
year it was less than that.
    They set their own agenda, and I don't set it for them. So 
it just depended on the agenda, but at most it was 50 percent. 
I didn't feel it was a good use of taxpayers' dollars to be 
paying a large annual salary to someone who only worked at most 
50 percent of the time.
    Mr. Davis of Illinois. Let me ask, do you think it is maybe 
something that we would want to take a look at?
    Ms. Springer. I am certainly happy to do that, but at this 
point the good news is that we do have a very qualified 
candidate who is very happy with those conditions.
    Mr. Davis of Illinois. Could you explain to us how locality 
pay is calculated?
    Ms. Springer. I am going to probably ask for a little help 
from my associate director here on that, but clearly at this 
point there are different areas which, for the general schedule 
locality pay, that we look at, and look at the relative 
relationship to the District of Columbia as sort of a baseline, 
and then set the locality adjustment relative to that for, I 
believe, a comparable work force.
    This is our associate director, Nancy Kichak.
    There are 32 areas. We deal with Bureau of Labor Statistics 
data and we compare Federal pay to Federal pay. I don't know if 
there is anything else you would like for her to add to that 
might be helpful. She is the expert.
    Mr. Davis of Illinois. You mentioned the District of 
Columbia. Is that sort of a starting place in any kind of way?
    Ms. Kichak. That is one area. District of Columbia is the 
locality base. Then we look at the rates in those areas.
    Ms. Springer. Right. We look at the rates in 32 areas, but 
the D.C. area is the base area.
    Mr. Davis of Illinois. So if the cost of living is as high 
or higher than what it is in the District of Columbia, then 
that area would, in all likelihood, qualify for a pay 
differential?
    Ms. Springer. I believe that is correct, yes. It is wages, 
though. It is not cost of living; it is the actual wages that 
we are looking at.
    Mr. Davis of Illinois. All right.
    Well, let me go to Mr. Sarbanes and see if he has some 
questions.
    Mr. Sarbanes. Thank you, Mr. Chairman.
    I was just curious. I am learning. I am in a heavy learning 
mode here, and I appreciate the hearing for that purpose, 
alone.
    I was curious about the demonstration projects which you 
referred to, of which there have been a number, I guess, since 
1980. Seventeen of them are mentioned in your testimony having 
been approved. I am just interested in how you determine. I 
guess my first question would be: what drives the kind of 
demonstration project that sort of bubbles up as something that 
ought to be done? What are the different factors that drive 
that? I imagine there would be concerns about competing for 
work force, about looming retirements and how to deal with 
them. I imagine it would also include responding to complaints 
or critique that get generated internally or externally. So my 
first question is: what are the factors that drive the impetus 
for these demonstration projects? And then the second is: what 
criteria do you use in approving them, deciding which ones 
should go forward?
    Ms. Springer. That is a good question, because we have had 
requests just recently--and I would say recently within the 
past year or so--for additional demonstration authority. There 
is a very long process, by the way. It is not as simple as an 
agency coming to OPM and saying, We don't feel we are 
competitive enough so we want to have authority to have an 
alternate pay system, and OPM just blesses it and they go on 
their way. There is a Federal Register notice process. There is 
a whole set of requirements that an agency is required to do, 
as well as giving public notice of how that system will work.
    We have learned over the years what constitutes a sound 
alternative pay system, and we look for those things. Among 
them are good performance management structures and 
accountability structures, ways that feedback is given to 
employees, ways that the different pay bands are set up, 
manager requirements, training requirements. Have the managers 
been trained in how to function in this environment in a fair 
way for employees?
    It is not something that happens lightly or quickly. There 
are limitations by Congress on the number of demonstration 
projects you can have, and I think that limitation is 10 at any 
given time, and the maximum number of people that could be in a 
demonstration project I believe is capped at 5,000, if I am not 
mistaken. And so Congress has given limited authority to 
agencies to step out in that area.
    The reasons why they do it are ones that you mentioned. It 
often deals with competitiveness, it deals sometimes with the 
mission of an agency that is considered to be very important in 
the sense that they can't take the time it takes to go out and 
hire on a protracted basis. They want to be a very attractive 
employer in the talent market. And they want to retain those 
people, and they feel that to get the very best and the very 
brightest they need to have a more contemporary pay structure.
    Mr. Sarbanes. Thank you. I don't have any other questions.
    Mr. Davis of Illinois. Thank you very much, Mr. Sarbanes.
    Mr. Marchant.
    Mr. Marchant. Ms. Springer, of the legislative proposals 
that OPM has submitted to Congress this year, which ones do you 
think are absolutely critical to be enacted?
    Ms. Springer. With respect to pay? These particular three? 
Well, I think they all are, actually, but of those three I 
think that the two of the three, the SES, the senior technical 
and the senior level employees, those executives, letting them 
have the opportunity to go to higher levels is important.
    We need those people. We have a great dependency on them, 
their leadership, their experience, especially with the 
retirement wave. I have said this so many times, people think 
it is the only thing I focus on, but we have to keep them. We 
have it for senior executives who are managers. We need it for 
these senior leaders who are the professional, technical 
leaders, as well. I would say that is very important.
    A close second would be moving from COLA to locality. If we 
don't do that, then we are going to have to come back on a 
case-by-case basis and try and deal with this COLA issue that 
was commented on earlier. But I would rather do it across the 
board.
    That would be sort of my one and two.
    Mr. Marchant. What sort of improvements in programs 
regarding Federal pay would you like to see implemented during 
the remainder of your term?
    Ms. Springer. I wish I had more time, to be honest with 
you, because I believe today that we have a patchwork system of 
pay in the Federal Government. We have systems that I have 
listed in my written statement. There are other systems that 
are smaller and less, maybe, widely known, but it creates 
internal inequities.
    If I had all the time in the world, what I would do is step 
back and come up with a whole new system. But what I hope that 
we can do in this time is to just continue to raise awareness, 
pass these proposals, and raise awareness of the need for 
contemporary pay systems. We need to be competitive in the 
market for talent that everybody else is going after, and this 
is, in some cases, a competitive disadvantage in certain areas. 
Not all areas.
    People often say, Well, how do you think we compare to the 
private sector? It really depends on the occupation, the 
geographic area, tenure, all those things.
    I can find people who, in my own experience, are paid 
higher than what I know to be the case in the private sector, 
and others that are lower. But the fact of the matter is that 
we have an antiquated system that does not reflect performance. 
It pays for people to show up at work. I hope we will continue 
to get educated about that.
    Mr. Marchant. Did you use any business models, large 
corporate business models? If you did, did you find any large 
corporation in America that operates under this kind of a 
system?
    Ms. Springer. I can't say that I have conducted or OPM has 
conducted an exhaustive study, but we certainly don't find it 
to be prevalent. I mean, I am not going to say there aren't 
some. I am sure there are some in certain areas. But in the 
companies that we have looked at, not exhaustively, but the 
ones that we have and that we are competing with for talent, we 
find that there is a performance element to pay, many times, to 
a much greater extent than what we have. All we are talking 
about is the increase in pay being a function to some degree of 
how well you did your job, not that your whole pay is at risk 
or half your pay is at risk the way it is found in the private 
sector.
    Mr. Marchant. Thank you very much. Thank you for your visit 
to my office.
    Ms. Springer. Thank you.
    Mr. Marchant. I appreciate it.
    Mr. Davis of Illinois. Thank you very much.
    Mr. Lynch.
    Mr. Lynch. Thank you, Mr. Chairman.
    Ms. Springer, I appreciate your coming before the committee 
and trying to help us with our work. I am a little bit 
flabbergasted about the delay on the chairman's position at the 
Federal Prevailing Rate Advisory Committee. I understand that 
it was vacant for almost 2 years. What I thought I heard you 
say was you had changed the position to a part-time position 
and also added a requirement that person do nothing else but 
that job.
    Ms. Springer. If I may?
    Mr. Lynch. Yes. Go ahead. I hope I am wrong. I hope that is 
not what I heard.
    Ms. Springer. The latter requirement that you said was not 
one that I set; that is a pre-existing requirement, that the 
individual in that position not hold another position. That is 
not my requirement. That had been there. That was in place.
    Mr. Lynch. OK. Not hold another position?
    Ms. Springer. Right.
    Mr. Lynch. OK.
    Ms. Springer. As far as the part-time, yes, what I did was 
to say that we will pay for the amount of essentially the time 
commitment of the individual, which was 50 percent or less. We 
are not going to pay someone--you can pick a figure. Let's say 
it is $140,000 for doing a half year's work. I don't think that 
would be what the taxpayers would expect us to do.
    Mr. Lynch. No, but I wouldn't expect there to be a job open 
for almost 2 years while we are waiting to fill it. That would 
give you a little indication about the desirability of that 
job.
    Let me just say something else. There are five other 
members on this committee. What the heck were they doing while 
they had no chairman? I don't expect that there was very high 
productivity in the other five people.
    Ms. Springer. Well, if I may again----
    Mr. Lynch. Well, let me just tell you----
    Ms. Springer. We don't set the agenda for that.
    Mr. Lynch. Go ahead.
    Ms. Springer. They don't come under my control. They don't 
set the agenda. OPM does not set the agenda. They could meet 
whenever they wanted to, but I thought----
    Mr. Lynch. Without a chairman?
    Ms. Springer. I believe they can, but without having the 
chairman I think they were not able to----
    Mr. Lynch. I think they would be rudderless without a 
chairman. That is why you have a chairman.
    Ms. Springer. That is very possible.
    Mr. Lynch. OK. You know, this reminds me of a story one of 
my local mayors used to tell me. When we asked them how many 
people worked at City Hall, he said, about half of them. You 
know, this is the height of bureaucracy that this position 
remained open, vacant, because we or you, more specifically, 
made a part-time job out of this that we cant fill for 2 years.
    Ms. Springer. It was about a year and a half, by the way.
    Mr. Lynch. A year and a half.
    Ms. Springer. Yes. I am not saying that is good.
    Mr. Lynch. That is much too long, though. That is much too 
long. That is low. We got zero productivity out of that 
position for a year and a half, and now we think we have the 
perfect candidate.
    Ms. Springer. Yes.
    Mr. Lynch. After a year and a half. Any company in America 
that worked like that would go right out of business. You have 
to realize that. You see, that is not success. You think you 
saved something, but you left the job empty for a year and a 
half. We have to do better than that. That is unacceptable. OK? 
This is an important position. We should have figured out. 
There are 55,000 Federal employees. We should have been able to 
figure out some way to give that person something else to do. 
Give them a broom, give them a mop, give them something, but 
they should have been able to fill a full-time position and pay 
them a decent salary. It is not successful to leave the job 
open for a year and a half trying to find somebody willing to 
take the job, unless you want to leave the job open 
purposefully.
    Ms. Springer. Which is not the case.
    Mr. Lynch. Well, I hope it is not. It sure looks that way 
to me.
    I yield back, Mr. Chairman.
    Mr. Davis of Illinois. Thank you very much, Mr. Lynch.
    Let me just ask Ms. Springer, could you define pay 
compression for us?
    Ms. Springer. There are various places where pay 
compression manifests itself. I will give you one that is very 
noticeable. When the Senior Executive Service, which is tied to 
the Executive level salary levels, when those salary levels 
only increase, when they increase at a lower percentage rate 
than the rate the general schedule levels increase, then you 
have a problem where the level 15 in the general schedule, for 
example, starts to butt up against the lowest or the first 
level of senior executive pay.
    What happens is that you have people in that general 
schedule level 15 who don't find it particularly attractive to 
move to the Senior Executive Service level.
    Another one is where you have people who start to max out 
within the senior executive level so that you are unable to 
give them the type of performance-based pay increase that they 
have earned.
    Those are two examples right there.
    Mr. Davis of Illinois. There seems to be a great deal of 
discussion and conversation continuing about the effectiveness 
of pay for performance.
    Ms. Springer. Yes.
    Mr. Davis of Illinois. Could you tell us your department's 
views on that? How do you think it is going?
    Ms. Springer. Yes, Mr. Chairman. We think that the place to 
look for where the ultimate success story would be or where to 
learn is from looking at these projects and systems covering 
90,000 employees that have been in effect for a number of 
years, to look at their experience. That is why we did the 
study in late 2005.
    Systems like this need to be around long enough to deal 
with the cultural issues, the training issues, the migration 
from an old system to a new system. It takes time. So to look 
at some of the more recent examples, the newer systems, and to 
pass judgment is really premature, so our agency--and I believe 
I can speak for the agency in this, because we published a 
report--would say that these systems over time are successful 
and meet their objectives. They have to be done properly, and 
there are instances where people rushed, went out too quickly, 
didn't do all their training or their homework. But done 
properly, as has been the case predominantly in this 90,000 
employee group, we find, by and large, that they are 
successful.
    Mr. Davis of Illinois. You did mention some concern about 
our pay system being somewhat patchy or a patchwork and in need 
of review, and certainly some further scrutiny. I guess I kind 
of took your thoughts on that to be similar to Representative 
Lynch's conversation with his mayor in terms of half the people 
down at City Hall working, and some of the individuals who show 
up for work but we don't have a good way of determining what 
they have done or how much they are doing or how they should be 
compensated.
    Other than pay-for-performance, are there other thoughts 
and ideas that the department has as to what we look at as we 
go through some review?
    Ms. Springer. One of the things that they need to look at 
before they get to any type of a pay for performance type 
structure is to have the underpinning of a good performance 
management system. I don't care what type of pay structure you 
go to or compensation structure, you have to make sure the 
agencies' managers are trained in how to set goals with 
employees and that employees have their say in that, and that 
there are good performance management practices through the 
cycle, the performance year; that there are accountabilities; 
that things are measurable. All those things are rudimentary 
before you even move to a new pay system. That has been a focus 
of OPM in working with the agencies, even when they don't have 
an authority to move to a performance-based pay structure.
    Some of the other things, though--and I will give you an 
example, Congressman--you can have two people, a senior 
executive who is in a performance-based pay system, and a GS-13 
or -14, both working on the same project. They meet success. 
They achieve it beyond expectations. The senior executive will 
have that be a factor in getting an above-average adjustment to 
their pay. The general service person doesn't get that 
opportunity. They get the same as the person who didn't reach 
for that higher level of performance.
    I don't think that is fair for the rank and file employees 
to not have the same up-side opportunity that the person in the 
Senior Executive has. The boss has the up-side opportunity, the 
rank and file person doesn't because they are stuck on this old 
one-size-fits-all system.
    So I am not saying that there aren't many ways to do this, 
and we can look at it, but I think that to stay where we are in 
a 1950's vintage system that pays everybody the same, 
regardless, is just unfair.
    People will say, well, you can give them a performance 
award or a special act award. A dollar of a special act award 
is not as valuable as a dollar of a salary increase. It is not 
there the next year in your starting opening salary. It doesn't 
count toward your pension. There are a lot of reasons why that 
special act or performance award does not have the same value 
proposition for an employee who has worked just as hard as the 
boss has, who has the up-side potential.
    Mr. Davis of Illinois. Any my last question is: you did 
mention that over time pay for performance could prove itself, 
or you can make some determination. Do you have any notion of 
how much time a system would need to be in place before you 
could make a real determination about its effectiveness?
    Ms. Springer. I would like to get back to you on that, 
check our report, and look at those particular cases to see how 
long, but it is not 1 year. It is a few years, I think, before 
you really start to see that it takes hold.
    Mr. Davis of Illinois. Thank you very much.
    Either one of you gentlemen have any further questions?
    [No response.]
    Mr. Davis of Illinois. Thank you very much. We appreciate 
your being here and appreciate your testimony.
    Ms. Springer. Thank you, Mr. Chairman.
    Mr. Davis of Illinois. And we will go to our next panel. 
While they are coming, I will introduce them.
    Our third panel is Ms. Colleen Kelley. She is the president 
of the National Treasury Employee Union, the Nation's largest 
independent Federal sector union, representing employees in 31 
different Government agencies. As the union's top elected 
official, she leads NTEU's efforts to achieve the dignity and 
respect Federal employees deserve. Ms. Kelley represents the 
NTEU before Federal agencies, in the media, and testifies 
before Congress on issues of importance to the NTEU members and 
Federal employees. Welcome.
    Mr. J. David Cox is the National secretary-treasurer of the 
American Federation of Government Employees, the Nation's 
largest union representing Federal and District of Columbia 
government employees. He was elected during the union's 37th 
convention in August 2006. Welcome, Mr. Cox.
    And Mr. Curtis Copeland is currently a Specialist in 
American Government at the Congressional Research Service 
[CRS], within the U.S. Library of Congress in Washington, DC. 
His specific area of research expertise is Federal rulemaking 
and regulatory policy.
    If you all would stand and raise your right hand to be 
sworn in.
    [Witnesses sworn.]
    Mr. Davis of Illinois. The record will show that each of 
the witnesses answered in the affirmative.
    We thank you all again for coming, for being with us. Ms. 
Kelley, we will begin with you.

  STATEMENTS OF COLLEEN KELLEY, NATIONAL PRESIDENT, NATIONAL 
   TREASURY EMPLOYEE UNION; J. DAVID COX, NATIONAL SECRETARY-
  TREASURER, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES; AND 
        CURTIS COPELAND, CONGRESSIONAL RESEARCH SERVICE

                  STATEMENT OF COLLEEN KELLEY

    Ms. Kelley. Thank you very much, Chairman Davis, Ranking 
Member Marchant, Mr. Lynch. I appreciate the opportunity to be 
here today to talk about this important matter.
    First, much has been made about a recent study by the 
Partnership for Public Service suggesting that the general 
schedule system of pay should be immediately dismantled. 
Despite the press attention, I believe it is important to point 
out that the study surveyed 55 human capital officers, mostly 
political appointees, with five questions. A minority of them 
recommended immediately scrapping the GS system, which covers 
1.3 million Federal employees. No hard data was unearthed to 
support the recommendations that the GS pay system needs 
replaced by what they call a market- and performance-sensitive 
pay system.
    In fact, the GS is market based. It has the goal of 
achieving comparability with the private sector through the 32 
different locality pay areas that were talked about, and 
employees received pay raises based on merit, which in my mind 
is synonymous with performance. It is a structured system, and 
yet managers currently have trouble implementing it. It does 
not make sense to me that a more subjective system will solve 
anything.
    In fact, the alternative pay experiments being promoted to 
replace the GS system have been dismal failures. For example, 
the IRS pay banding compensation system for managers is clearly 
not working, and I would recommend that this subcommittee take 
a close look at that.
    Just this month on July 3, 2007, the Treasury Inspector 
General for Tax Administration released a report that he 
titled, ``The Internal Revenue Pay for Performance System May 
Not Support Initiatives to Recruit, Retain, and Motivate Future 
Leaders.'' Most alarming was the finding that the IRS, 
according to TIGTA, has, ``Risked its ability to provide 
quality service to taxpayers, because the system hindered the 
agency's ability to recruit and keep skilled leaders.''
    NTEU strongly believes that in the absence of a statutorily 
defined pay system like the GS system that pay should be the 
subject of collective bargaining, as it is in the private 
sector. At the FDIC, NTEU bargains today for pay on behalf of 
its employees, and there are still problems at the FDIC. The 
FDIC divorced its pay system from its performance management 
system and it established a separate set of what they call 
corporate contribution factors to determine employee annual pay 
increases. With the heavy reliance on these vague and 
subjective corporate contribution factors, employees do not 
clearly understand what they must do to be evaluated at the 
highest level, and the forced ranking system prevents them from 
ever knowing how this might translate into a pay increase, so 
the pay system does little to actually motivate performance.
    In TSA, due to the lack of collective bargaining rights, 
serious problems abound at that agency with the transportation 
security officers' new PASS system. Allegations of favoritism 
and cronyism surround the system, and no meaningful employee 
appeals process exists.
    At the Department of Homeland Security, while the pay for 
performance system 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.
    The proposed system is not set by statute, nor is it 
subject to collective bargaining. It will have employees 
competing against each other and discourage teamwork. It is 
subjective and enormously complex.
    Before Congress considers any further limitations of the GS 
system, it should require OPM to promote existing flexibilities 
and authorities that could help agencies recruit and maintain 
talented Federal employees. These range from cash awards to 
individuals and groups to quality step increases, retention 
allowances, student loan repayments, foreign language awards, 
travel incentives, referral bonuses, and many others.
    Federal employees deserve what every other employee 
deserves: a system that offers fair compensation for a fair day 
of quality work.
    When the administration proposed its fiscal year 2008 
budget with a 3 percent pay raise, I spoke out in opposition 
and called for a minimum 3.5 increase. That level continues the 
tradition of providing Federal employees and military personnel 
a pay increase based on the employment cost index plus one-half 
of a percent. It also begins to close the 13 percent pay gap 
between civil servants and the private sector. If we are 
serious about addressing the needs of the Federal work force, 
fair and adequate pay is the first place to start.
    Fortunately, Congress is moving legislation with this pay 
level and NTEU will not rest until both military and civilian 
employees receive their fair raise.
    In conclusion, there is no hard evidence that the current 
pay system for Federal employees needs to be changed. The 
current experiments with alternative pay systems are failing, 
and the Government should use the flexibilities it currently 
has before moving to new pay system experiments.
    I thank you again for the opportunity to testify today and 
will be happy to answer any questions you have.
    [The prepared statement of Ms. Kelley follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Davis of Illinois. Thank you very much.
    Mr. Cox.

                   STATEMENT OF J. DAVID COX

    Mr. Cox. Thank you, Mr. Chairman, for the opportunity to 
testify today on an important issue such as Federal pay. As has 
been the case for so many issues, the Bush administration has 
been relentless in its efforts to politicize Federal pay. The 
methods used have been numerous and sometimes clandestine, but 
unfortunately very effective.
    First and foremost has been the campaign to replace a 
system based on objective market data with one based on 
subjectivity and discretion.
    Second has been a campaign to suggest that the data 
produced by the Department of Labor and calculated according to 
sound statistical procedures by professionals at OPM are 
fatally flawed and should be replaced by back-of-the-envelope 
calculations, so-called market research, and private data on an 
agency-by-agency, supervisor-by-supervisor base.
    Next come the contrary claims that the Government must 
contract out because it cannot match the high salaries demanded 
by cutting-edge professionals versus the Government overpays 
its lazy bureaucrats and needs a new personnel system with the 
flexibility to deny raises to those judged over market by their 
bosses. We have seen bonus programs at the DOD that have 
substantially given more to political appointees than career 
employees, and pay for performance schemes that want to judge 
Federal employees on how effective they carry out the 
President's management agenda.
    The list is long and threatens to grow longer.
    When the administration hasn't been busy trying to 
privatize our jobs, it has been focused on taking away our 
rights and protections as Federal employees. There is a reason 
Federal employees have had job protections that are different 
from the private sector. The merit system principles ensure 
that Federal agencies and programs are administered by a work 
force that is hired and paid solely on the basis of objective, 
apolitical criteria.
    Pay for performance is a grave threat to this merit system, 
and the political independence of the Federal work force, since 
it is a political initiative that can be sold using slogans and 
assurances that are difficult to review. After all, how can one 
oppose the concept of rewarding excellence or giving workers 
financial incentive to become more efficient and productive. 
When said in this context, pay for performance sounds as though 
it will both pay for itself and improve the output and morale 
of the work force. Who could oppose it? But what is really at 
work with pay for performance is the ability of a Federal 
manager to discriminate among employees for any reason and call 
it performance.
    Pay is such a crucial aspect of employee that the authority 
to manipulate it by setting a worker's base pay and deciding 
whether and by how much to adjust that pay each year gives the 
political appointees that control agencies enormous power.
    Under the general schedule, Federal jobs are classified 
according to duties. Salaries are assigned to jobs on the basis 
of market data. Employees are able to progress through a career 
ladder if they meet objective performance criteria. And 
Congress each year decides salary adjustments on the basis of 
national and local labor market data collected by the Bureau of 
Labor Statistics. No political interference whatsoever.
    Pay for performance schemes also undermine congressional 
authority. Law makers may vote to fund annual payroll 
adjustments to express their support for Federal work force and 
the programs they administer and the services they provide, but 
giving political appointees the discretion to manipulate the 
distribution of those payroll dollars means a simple vote to 
adjust Federal pay will not produce the intended result.
    However much power Congress means to accede to the 
executive branch, this administration always takes the ball and 
runs with it. With pay for performance, that means the merit 
system protections get the shaft.
    It is in this context that I hope you consider the recently 
published Partnership for Public Service Survey of Human 
Capital Officers' Opinions on the GS System. All of these 
individuals are political appointees by the President charged 
with carrying out his agenda. We know how this administration 
feels about folks who think for themselves; as such, it is no 
more surprising to learn that they all think the general 
schedule must go and then to learn that the Bush administration 
appointees all think the war in Iraq is going great. It doesn't 
deserve any more comment than that, Mr. Chairman.
    Federal pay should not be a contentious issue. It should be 
a matter of market data. It should be subject to public 
scrutiny, should be adequate to allow the Government to recruit 
and retain high-quality work force dedicated to public service, 
and should allow its employees to at least take the Federal 
employee health insurance, participate in the thrift savings 
plan, and, most of all, have a decent quality of life, raise 
their children, and pursue the American dream.
    Mr. Chairman, this concludes my statement. I will take any 
questions.
    [The prepared statement of Mr. Cox follows:]

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    Mr. Davis of Illinois. Thank you very much, Mr. Cox.
    Mr. Copeland.

                  STATEMENT OF CURTIS COPELAND

    Mr. Copeland. Thank you, Mr. Chairman, Mr. Marchant. Thank 
you for inviting me to testify at today's hearing on Federal 
pay.
    Although there are dozens of different Federal pay systems 
currently in use, I will focus on three issues related to the 
major Federal white collar pay systems, the first of which is 
the annual general schedule pay adjustment process.
    Although this is commonly referred to as a cost of living 
adjustment [COLA], the actual adjustment is driven by measures 
of the cost of labor outside the Federal Government. The 
adjustment process was established by the Federal Employees Pay 
Comparability Act of 1990 [FEPCA], which actually requires two 
kinds of adjustments, one which is the same for all covered 
employees, and the other which varies depending on non-Federal 
pay rates in 32 areas of the country.
    The locality pay portion of the adjustment was intended to 
eventually bring Federal salaries to within 5 percent of non-
Federal pay in those areas; however, Federal pay adjustments 
have almost never been implemented through this FEPCA process, 
with either the President or Congress intervening to determine 
the size of the overall increase.
    Another major Federal pay issue is the increasing degree of 
pay compression occurring within and between the different 
white collar pay schedules. For example, the difference in pay 
between Cabinet Secretaries and the top of the Senior Executive 
Service is now only about one-third of what it was in 1991. 
Senior-level employees can currently earn more than the heads 
of small agencies that are statutorily paid at executive levels 
four and five.
    Members of the Senior Executive Service who work in 
agencies with performance appraisal systems that have been 
certified by OPM can receive pay and bonuses that equal the 
salary of the Vice President, more than Cabinet Secretaries who 
are not eligible for bonuses.
    Pay compression is also starting to affect regular GS 
employees. For example, because GS pay cannot exceed executive 
level schedule four, certain GS employees in nine locality pay 
areas are currently unable to receive full locality pay 
adjustments. Without changes in executive schedule pay caps or 
linkages, these pay compression problems will only become more 
severe over time.
    There have also been a number of proposals to reform the 
Federal pay system, as has been mentioned today, such as making 
employee pay more a function of organizational performance or 
employee performance, which has been referred to as 
performance-based pay. Some agencies have already begun 
implementing these reforms, as has been mentioned, and studies 
of the implementation of the performance-based pay systems in 
the Federal Government have been done by GAO, MSPB, and a 
number of other organizations. They have all generally reached 
the same conclusion: agencies must have valid, reliable, 
accepted performance appraisal systems in place before linking 
pay to performance.
    Legislation has been introduced in this Congress that could 
make Federal pay systems somewhat more performance based. For 
example, S. 1045 introduced by Senator Voinovich would require 
employees to have a performance rating of at least fully 
successful to receive annual pay adjustments, locality pay, or 
other types of increases.
    Market base pay is another type of pay reform that has been 
garnering attention, as has been mentioned. Although the market 
has always been a factor in the implementation of FEPCA and in 
setting special pay rates, GAO, as you know, recently used 
market pay data to conclude that some of its employees were 
already over-paid and therefore should not receive an annual 
pay adjustment. However, at a hearing in this subcommittee in 
May an expert in market-based pay criticized how this market 
study was conducted and how GAO used the results.
    This experience suggests that great care must be taken in 
determining what constitutes the relevant market and the 
relationship of individual Federal occupations to that market.
    OPM has submitted draft legislation on yet another pay 
reform, as the Director mentioned, converting white collar 
Federal employees in what are known as non-foreign areas like 
Alaska, Hawaii, Guam, Puerto Rico, and the Virgin Islands, into 
the locality pay system. Since 1948, these employees have 
received tax-free supplements of up to 25 percent of base pay 
in order to improve recruitment and retention, but those 
supplements have not counted toward their pay when calculating 
retirement.
    Switching from these cost-of-living-based supplements to 
cost-of-labor-based compensation, which do count as base pay--
these locality payments--represents a major change in 
compensation philosophy. OPM has estimated that doing so will 
cost more than $100 million over the next 10 years.
    Mr. Chairman, this concludes my prepared statement. I would 
be happy to answer any questions.
    [The prepared statement of Mr. Copeland follows:]

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    Mr. Davis of Illinois. Well, thank you all so very much.
    Those buzzers have been votes that we actually have, but 
they are procedural votes. One is a quorum call. The other one 
is a motion to adjourn. I don't think we are going to be doing 
that, so I am just going to skip the vote and continue.
    Let me thank you for your testimony. Ms. Kelley and Mr. 
Cox, if both of you would respond to this question: how would 
you evaluate the implementation of pay for performance and the 
market-based compensation studies that we have gotten up to 
this point? In an overall sense, in your analysis, how is pay 
for performance working?
    Ms. Kelley. In NTEU's experience, the agencies that have 
moved in this direction have failed miserably and have caused a 
lot of problems among the employees. It has caused morale to 
decrease even lower than it had been otherwise. There is no 
credibility with employees that there is any interest on the 
part of the agencies in putting a system in place that would 
meet the employees' criteria.
    And for employees, it is very simple. They are looking for 
a system that is fair, that is credible, and that is 
transparent. They want to know that at the beginning of the 
year if they are told that they do A, B, and C, that they will 
have excelled, and that the recognition and reward at the end 
of that time will be X, they expect that the X will be there. 
That is not the case.
    Many of the demonstration projects and alternative systems 
that OPM reports on failed to tell you is that many of those 
projects were given additional funding in order to be able to 
pay the top performers, and not to have to decrease or flat-
line the pay of other employees who were doing not only the job 
that was expected of them but excelling at their job also.
    You know, I must say I was very surprised and disappointed 
to hear Director Springer say two things. No. 1, she said that 
employees today under the current system are paid to show up. I 
think that is an insult to the Federal employees who work hard 
every day. They not only meet the expectations laid out for 
them, but they work hard to excel. They shouldn't have to guess 
what it is they have to do to excel. That would be very clear 
and specific and transparent, and they should be able to reach 
those goals if they so choose.
    The other example she gave, though, that was very 
surprising to me was about the SESer and the grade 14 working 
on a project together, and that there is a way to reward the 
SESer but not the grade 14. Well, NTEU does not represent 
SESers, but everyone that I have ever talked to does not 
applaud the system that is in place for them, their pay banding 
system. In fact, what they do is trash it. They have done their 
own study and analysis, and all of the results show that they 
are not satisfied with that system that seems to be held out as 
a model by OPM.
    The grade 14, the example that they cannot be compensated 
other than with the lump sum cash is absolutely false. This is 
one of the sore points with NTEU and with Federal employees 
there are so many flexibilities that agencies have the 
authority to use today that they do not use. OPM should be 
leading the way, not only encouraging but providing them with 
the support, assistance as to how to do this.
    One of the ways to reward that grade 14 is with a high-
quality increase or a step increase. That does go into their 
base pay. They carry it forward. It is part of their retirement 
contributions. It is not a one-time cash payment.
    So, you know, that is just one example of misinformation 
that is out there that the SES system is so good and should be 
used for all Federal employees. SESers will not tell you that.
    Mr. Cox. Mr. Chairman, in DOD obviously at this point none 
of our bargaining unit has been put under pay for performance. 
There has been the demonstration project, and, again, as Ms. 
Kelley said, additional money was given in those projects, so 
therefore employees got a little more money and seemed to like 
it. Then, as the money dried up, it did not happen and the 
employees felt discriminated against.
    I am a registered nurse. I worked for the VA Medical Center 
in Salisbury for 23 years as a registered nurse. Registered 
nurses in the VA are under that type of performance pay and the 
promotion process. I saw in my 23 years registered nurses that 
did all the criteria, worked very hard, achieved the goals that 
were established by regulations for them to be paid and to be 
promoted, a pay for performance system. It would go to the 
Professional Standards Board, they would vote the person met 
the criteria, but the medical center director would stamp it 
disapproved. I don't want to do this, I don't have the money.
    That goes all the way back to the process, too, as Director 
Springer talked about bonuses and performance awards. 
Throughout the Federal Government I hear frequently about 
SESers and the higher grade employees and performance awards 
and things of that nature, but a lot of our members are 
housekeeping aids. They are those wage-grade employees that Mr. 
Lynch was speaking of earlier that are not getting recognized 
in any way whatsoever. They don't get performance awards, even 
with an outstanding performance, because, again, some manager 
says, I don't want to spend the money that way, I would prefer 
to spend it this way.
    So pay for performance doesn't work. It has not worked well 
in these demonstration projects. I have personally experienced 
it in my Federal career that it is not the way to go. There has 
to be a system, and I believe that is why Congress established 
the merit system in the beginning, so that the work force would 
not be hooked to the political system.
    Mr. Davis of Illinois. Thank you both very much.
    Mr. Lynch.
    Mr. Lynch. Thank you, Mr. Chairman.
    You know, at the outset I just want to say thank you, Mr. 
Chairman, for holding this hearing. I was an iron worker for 20 
years, and I firmly believe that the American workers don't 
have a better friend in the Congress than you, Mr. Chairman. I 
appreciate all the work you do.
    Mr. Chairman, following the implementation of the civilian 
personnel system reform--they call it reform; changes are more 
likely--at the Department of Homeland Security in 2002 and the 
Department of Defense in 2003, the current administration has 
continually sought to erode the rights and protections afforded 
to our Federal civilian employees at other Government agencies. 
Most notably, in July 2005 the White House circulated draft 
legislation to abolish the longstanding general schedule pay 
system across the Federal Government by 2010, in favor of a 
variety of untested and extremely subjective pay for 
performance compensation schemes.
    While the proposal was never enacted, recent agency 
personnel reforms have evidenced the administration's continued 
willingness to experiment with alternative compensation 
systems, and specifically pay for performance, all at the 
expense of the Nation's nearly two million Federal civilian 
employees, their pay, and their future retirement security.
    As a former union president, I can tell you that pay for 
performance implementation is simply not in the best interest 
of the employee morale. It is not what its title implies. It 
destroys workplace unity and productivity. And with employee 
pay becoming highly dependent on subjective assessments and 
evaluations, it often results in vastly different salaries for 
employees with identical job duties and seniority.
    As a Member of Congress and the Oversight Committee, in 
particular, I can tell you that the implementation of such a 
highly subjective pay system across our Federal agencies defies 
common sense.
    Remember, this committee not very long ago, a few weeks 
ago, amidst reports that officials from the White House's 
Office of Political Affairs were conducting political briefings 
on Federal agency property--these are the same people that are 
going to review the employee performance. Specifically, earlier 
this year our committee, as well as the Office of Special 
Counsel, determined that they had meetings on how to help 
Republican candidates win future elections, and it was 
conducted on General Services Administration property in the 
presence of the GSA Administrator Lurita Doan and over 30 other 
GSA political appointees. These would be the people who would 
be making judgments on the performance of these employees.
    During a subsequent hearing in June of this year we 
examined allegations that Ms. Doan sought retaliation against 
GSA officials that were cooperating with the Special Counsel 
and investigators. According to an interview transcript 
released by the Special Counsel's office, the head of GSA, Ms. 
Doan, asserted that, ``Until extensive rehabilitation of their 
performance occurs, they will not be getting promoted and will 
not be getting bonuses or special awards or anything of that 
nature.'' This is retaliation against employees, and the 
Government. The Bush administration is trying to put this 
system in over our Government employees, Defense Department and 
other employees.
    In addition to the GSA investigator, our committee is 
continuing to investigate reports that at least 20 other 
political briefings were given to officials of at least 15 
other Federal agencies. The implications are clear: either you 
play ball with this administration or you don't get the raises, 
you don't get your bonuses.
    This is going back to the early 1920's and the patronage 
and corruption that was attached to these jobs before we had 
reform. That is a step we should not be taking.
    Mr. Chairman, for these reasons I am very concerned about 
this administration's inclination toward abandoning the current 
Federal pay system in favor of a pay-for-patronage compensation 
structure.
    Again, I thank you for holding this hearing.
    I just want to say that I remember the first changes that 
were put in on our Defense Department employees and Homeland 
Security employees. What happened is they were stripped of 
their rights to bargain collectively. Their rights were taken 
away, and the reason that was given by the Republican 
administration for stripping them of their rights was that they 
could not be trusted. They could not be trusted. The national 
security would suffer if the Defense Department and Homeland 
Security, the very employees who are on the front lines, they 
could not be trusted with negotiating over the terms and 
conditions of their own employment. That is a slap in the face. 
That is a giant step backward. That will cause good-quality 
employees to walk away from Government service.
    I think that is something that we should reject. If there 
are going to be standards for giving people raises, they should 
be objective so that anyone looking at the performance of that 
employee will know whether they deserve a raise or they don't 
deserve a raise. That should not be allowed to be a decision 
within the mind of someone who is holding Republican party 
meetings in Government offices on Government time at Government 
expense.
    Mr. Chairman, I just think we should reject this proposal 
and I yield back the balance of my time.
    Mr. Davis of Illinois. Well thank you very much, Mr. Lynch. 
I would have been pleased to have been a member of your union.
    Mr. Lynch. I am sorry, Mr. Chairman?
    Mr. Davis of Illinois. I said I would have been pleased to 
have been a member of your union.
    Mr. Lynch. Thank you.
    Mr. Cox. I would have, too, Mr. Chairman.
    Mr. Davis of Illinois. Let me ask you, Mr. Copeland, could 
you share what the thinking may have been around the idea that 
executive schedule positions are not eligible for locality pay?
    Mr. Copeland. Sure. Essentially, the decision was made that 
these executive schedule positions really should be paid on a 
national basis rather than a local basis, but it is interesting 
when you look at where these people are. 402 of the 475 people 
in the executive schedule are in Washington, DC. In fact, 470 
of the 475 are in Washington, Virginia, or Maryland. So it is 
basically a pay system for people that are in this area.
    Mr. Davis of Illinois. Yes. I guess one could kind of 
understand, because there aren't many people who are going to 
be in other locations.
    Mr. Copeland. Right.
    Mr. Davis of Illinois. Because this is kind of where the 
action is. Well, let me ask you, this talk about pay 
compression and its impact, does it limit unrealistically the 
ability of certain categories of individuals to continue to 
progress relative to compensation for their work and 
experiences?
    Mr. Copeland. I believe it does. One of the best examples 
of that would be to compare people in different pay systems. 
For example, in 1964, when the executive schedule was set up, 
the executive schedule five, which is the lowest level of the 
executive schedule, were paid 6.1 percent more than the top end 
of the GS system, so there was a gap between the executive 
schedule and the regular GS.
    Right now executive schedule five is paid 13.5 percent less 
than the top of the general schedule. Even looking within the 
general schedule, you have nine locality pay areas where people 
cannot get locality pay increases, basically that they are due, 
because they are bumping up against the cap, which is executive 
schedule four for the GS-15 step 10's. And in San Francisco it 
has even been down to step seven.
    Mr. Davis of Illinois. Are the administrative law judges 
sort of caught in a bind in a sense in terms of comparability? 
How do they rank or rate with other individuals who hold the 
title of law judge and their compensation?
    Mr. Copeland. It is hard to compare regular judicial 
salaries to administrative law judge salaries because they are 
really apples and oranges, but administrative law judges are 
among the most compressed of all the pay schedules. One of the 
statements that was submitted for the record today documents 
that much better than I can, but I could just note that 
administrative law judges are paid basically at the same level. 
If you look in the Federal Employees Almanac, for example, 
there is a listing for the top, I think, three or four levels 
of administrative law judges. They are all paid exactly the 
same, so there is no advantage to moving above a certain level. 
The same thing that used to occur in the Senior Executive 
Service where, once you got to a certain pay level, there was 
no advantage to going up to higher levels.
    Mr. Davis of Illinois. Ms. Kelley, let me just revisit if I 
could a moment. You did not express a great deal of confidence 
in the current implementation of the pay for performance. Do 
you think it can be made to work? If so, what would need to 
change about it? Or does it just need to be junked and say it 
is not going to work?
    Ms. Kelley. Well, I have not seen anything yet that I can 
say I am convinced would work, but I would also not say that 
the current system is perfect. We have said this to the 
administration and we have said it to Homeland Security when we 
were going through the meet and confer process in Homeland 
Security. We said to them, look, identify the valid problems 
you have with the GS system and we will sit and work with you 
to change those. But they have to be valid problems, not just 
change for the sake of change.
    What we really have heard throughout any conversation we 
have ever had is this focus of just wanting to dismantle the 
entire system. They really don't want to fix it or have an up-
front conversation about what needs to be fixed.
    They say, for example, that they cannot compensate the 
highest performers. Well, I want the highest performers 
compensated, too, so we would welcome the opportunity to be in 
that conversation. But the answer is not scrap the current 
system and then ask us to take on faith some unknown system.
    So I have not seen anything that I am convinced will work, 
but I want a system that allows employees to be compensated a 
fair wage at market rates compared to the private sector, and 
that is not happening today. So, I am interested in being in 
that conversation.
    Mr. Davis of Illinois. Well, Mr. Cox, we all continue to 
suggest that we want Federal employment to be comparable with 
private sector in terms of the ability to recruit to get some 
of the best and the brightest and to make sure that the Federal 
work force is as productive and as effective as any work force 
that we would find any place. Do you think we can accomplish 
that under the pay for performance system?
    Mr. Cox. The pay for performance system will not accomplish 
that for you. Pay for performance in reality is about lowering 
pay and controlling pay, sir. It is about being able to give 
money to who you want, how you want, when you want. We all 
understand those type systems.
    The GS system may have its flaws, but at this point it is 
the best system that we have and we need to work to improve 
that again, not just throw it out, scrap it up, tear it down, 
and start from scratch again. The system does work. It 
recognizes employees. There are many things in the system, 
again, that is not used by the managers and the agencies to 
give within-grade increases and to recognize employees because 
it comes back to how the agencies want to spend their money 
instead of recognizing employees.
    Mr. Davis of Illinois. Well, thank you all so much. I 
always thought that politics was giving money to who you wanted 
to when you wanted to where you wanted to. Sounds like you are 
defining a system that is fraught with some political 
implications. But it has certainly been a pleasure to have you 
all come and testify. We appreciate your patience and we 
apologize for any inconvenience that we may have caused with 
changing our schedules.
    Thank you all so much.
    This hearing is adjourned.
    [Whereupon, at 5:08 p.m., the subcommittee was adjourned.]

                                 
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