[Senate Hearing 110-847]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 110-847
 
      MANAGING THE CHALLENGES OF THE FEDERAL GOVERNMENT TRANSITION

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

                                HEARING

                               before the

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

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 10, 2008

                               __________

       Available via http://www.gpoaccess.gov/congress/index.html

       Printed for the use of the Committee on Homeland Security
                        and Governmental Affairs



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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
MARK L. PRYOR, Arkansas              NORM COLEMAN, Minnesota
MARY L. LANDRIEU, Louisiana          TOM COBURN, Oklahoma
BARACK OBAMA, Illinois               PETE V. DOMENICI, New Mexico
CLAIRE McCASKILL, Missouri           JOHN WARNER, Virginia
JON TESTER, Montana                  JOHN E. SUNUNU, New Hampshire

                  Michael L. Alexander, Staff Director
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                  Trina Driessnack Tyrer, Chief Clerk


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

                   DANIEL K. AKAKA, Hawaii, Chairman
CARL LEVIN, Michigan                 GEORGE V. VOINOVICH, Ohio
THOMAS R. CARPER, Delaware           TED STEVENS, Alaska
MARK L. PRYOR, Arkansas              TOM COBURN, Oklahoma
MARY L. LANDRIEU, Louisiana          JOHN WARNER, Virginia

                   Richard J. Kessler, Staff Director
                Evan W. Cash, Professional Staff Member
             Jennifer A. Hemingway, Minority Staff Director
                    Jessica K. Nagasako, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Akaka................................................     1
    Senator Voinovich............................................     3

                               WITNESSES
                     Wednesday, September 10, 2008

Gene L. Dodaro, Acting Comptroller General, U.S. Government 
  Accountability Office..........................................     5
Hon. Clay Johnson III, Deputy Director for Management, Office of 
  Management and Budget..........................................     6
Hon. Robert I. Cusick, Director, Office of Government Ethics.....     8
Gail T. Lovelace, Chief Human Capital Officer, U.S. General 
  Services Administration........................................     9

                     Alphabetical List of Witnesses

Cusick, Hon. Robert I.:
    Testimony....................................................     8
    Prepared statement...........................................    56
Dodaro, Gene L.:
    Testimony....................................................     5
    Prepared statement...........................................    29
Johnson, Hon. Clay III:
    Testimony....................................................     6
    Prepared statement with attachments..........................    44
Lovelace, Gail T.:
    Testimony....................................................     9
    Prepared statement...........................................    61


      MANAGING THE CHALLENGES OF THE FEDERAL GOVERNMENT TRANSITION

                              ----------                              


                     WEDNESDAY, SEPTEMBER 10, 2008

                                 U.S. Senate,      
              Subcommittee on Oversight of Government      
                     Management, the Federal Workforce,    
                            and the District of Columbia,  
                      of the Committee on Homeland Security
                                        and Governmental Affairs,  
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:32 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Daniel K. 
Akaka, Chairman of the Subcommittee, presiding.
    Present: Senators Akaka and Voinovich.

               OPENING STATEMENT OF SENATOR AKAKA

    Senator Akaka. Good afternoon, everyone. This hearing of 
the Subcommittee on Oversight of Government Management, the 
Federal Workforce, and the District of Columbia is called to 
order.
    Today's hearing will discuss the important task of 
transitioning the Federal Government to a new Administration. 
Every 4 or 8 years, the Executive Branch of our government 
changes hands to a new leader through a peaceful transfer of 
power not possible in many countries around the world. However, 
with this peaceful change comes many challenges for both the 
incoming and the outgoing Administrations.
    On January 20, 2009, we face the certainty of having an 
entirely new Administration, one in which neither the sitting 
President nor Vice President will be taking the oath of office. 
With both major parties' political conventions over, now is a 
good time to focus on the looming challenges ahead. As is the 
case before almost every general election, both candidates no 
doubt have already begun laying groundwork for a potential move 
into the White House.
    The issue of especially great importance for this 
Subcommittee is bridging the gap between January 19 and January 
21, 2009, to ensure there is continuity in leadership and 
management at all Federal agencies. Now, Presidential 
appointees must be acted upon quickly. They should be ready to 
lead when they assume their new positions.
    Going back to the first transition between George 
Washington and John Adams, no two transitions have ever been 
the same. While every single one is different, many share the 
same potential barriers to success. Probably the most difficult 
problem for us to face is that of the Presidential appointment 
and nomination processes. The Senate has a direct role in this, 
but cannot act until the Administration has done its job.
    Previous Administrations typically have not filled critical 
positions for up to 6 months, or longer, after taking office. 
Unfortunately, much of the delay can come from the tedious 
vetting process that is used to get appointees confirmed. The 
White House can take its time selecting a nominee. Then the 
nominee can take his or her time filling out the paperwork 
required by both the Senate and Executive Branch before any 
hearings are scheduled. Even after that information is 
submitted, getting final security clearance determinations and 
ethics sign-off for certain positions can take a very long 
time.
    Another one of the biggest challenges to a successful 
transition lies in the transfer of knowledge from one 
Administration to the next. I know that Director Johnson has 
been aggressive in getting agencies ready for January. I want 
to thank him for his long service to our country and to this 
Subcommittee. This is likely the last time he will testify 
before us, and I want him to know that I do appreciate his 
leadership and his willingness to work with us over the years. 
One of his top priorities has been making sure that career 
civil servants are in place to bridge the gap until 
Presidential appointees are confirmed, and I strongly support 
that effort. I suspect that he holds the record for appearing 
before this Subcommittee, and I think, if I heard it correctly, 
you appeared before this Subcommittee more than half a dozen 
times. And he has been a very valuable witness before us.
    Unfortunately, the Federal Government is already facing a 
human capital crisis. Agencies will rely on career individuals 
to continue the critical needs of agency management, not the 
least of which is continuing to recruit, train, and retain an 
outstanding Federal workforce. This will be especially 
important at agencies with non-career chief human capital 
officers. I hope the President-elect will even consider keeping 
some of these political appointees in their positions.
    There is also a new issue for the incoming Administration. 
Unlike the past, especially since the creation of the 
Department of Homeland Security, there has been an explosion of 
contractors doing government work. Tremendous numbers of 
contract staff work side by side with Federal employees across 
the government. The next Administration will need to make 
oversight of contracts and contractors a high priority. With 
fewer and fewer career employees at agencies and more and more 
contractors, it is important to fill leadership positions 
quickly to ensure proper oversight.
    In closing, I want to especially thank Senator Voinovich 
for his partnership on this issue and his continued work on the 
important management issues that this transition will 
highlight. It is a testament to the bipartisan nature of our 
job here which is to make sure that the government works and 
continues to work under a new Administration. For our part, we 
will be working closely with the outgoing and incoming 
Administrations over the next 5 months. While the Senate likely 
will wind down for the year in the next few weeks, I can assure 
you that this Subcommittee and our staff will continue to 
conduct rigorous oversight of these issues.
    Let me now call on Senator Voinovich for his opening 
statement. Senator Voinovich.

             OPENING STATEMENT OF SENATOR VOINOVICH

    Senator Voinovich. Thank you, Senator Akaka, for calling 
today's hearing to examine the Administration transition. I 
would also like to acknowledge the partnership that I have had 
with you. We have been at this at least 8 to 10 years. The two 
of us have tried conscientiously to provide legislation that 
will make it easier for the Federal Government to recruit and 
to retain and to reward individuals, and hopefully this 
Administration and the one coming in will benefit from that 
effort.
    I know that we are very familiar with the transition 
progress of certain agencies, and I think that it is fair to 
say that the creation of a chief management officer whose 
statutory duties include transition planning is one of the 
reasons DHS continues to lead by example in this area. I had 
met Secretary Mike Chertoff in Cleveland and congratulated him 
on the wonderful transition plan that he has put together. He 
is conscientiously trying to make sure that when he hands off 
the baton, it is not going to be dropped. And I think that is 
pretty important, particularly in that agency.
    With just over 4 months before inauguration, I look forward 
to hearing our witnesses discuss our general level of readiness 
for the transition. I also hope we will use this time to take a 
fresh look at the Presidential Appointments Improvement Act and 
determine whether additional reform is needed. Since 1937, when 
the Brownlow committee issued the first report on improving the 
appointments process, Congress has enacted incremental changes, 
including most recently the Intelligence Reform and Terrorism 
Prevention Act. As the sponsor of the last comprehensive 
Presidential appointment reforms bill before the full 
Committee, I believe our transition process could benefit from 
further reform, including streamlining the financial disclosure 
process and reducing the time it takes for individuals to be 
nominated and subsequently confirmed. And we will probably be 
hearing from you about some of your ideas on that.
    The management challenges of GAO's high-risk list should 
serve as a reminder that all leaders, regardless of the 
position to which they are nominated, will face unique 
challenges critical to the effective functioning of our 
government. Thus, the quality of each Presidential nominee must 
be carefully scrutinized to ensure our next class of leaders 
has the capacity to identify plans for and implement reform. It 
is my hope that my colleagues in the Senate will use the 
questions being developed by GAO to assess the management 
experience and capabilities for nominees to leadership 
positions. The Senate needs to send a clear and consistent 
message that a nominee's management qualifications will be an 
important consideration in their appointment.
    And, by the way, it is disappointing to me that one of the 
first impressions of government for the new class of political 
appointees will be the antiquated security clearance system. 
And I know, Mr. Johnson, you are working on that.
    As qualified leaders begin their new roles, they must also 
dismiss the rhetoric and bias against individuals who have 
chosen to serve the public as members of the civil and 
uniformed services. The next team of political leaders must 
find ways to better engage these individuals, who often bring 
the institutional knowledge and a valid perspective to the task 
at hand. And based on my observation, it seems too often that 
these capable men and women selected on the merits are ignored 
when new political leadership takes hold.
    Last, agency management will be hindered by Congress' 
inability to pass appropriations bills, and I intend to spend 
some time on the floor of the Senate. We have been working on 
that for over a year, and I think, Mr. Dodaro, you have been 
helping us, and the Congressional Research Service. It is just 
unacceptable that we continue to pass continuing resolutions 
and omnibus appropriation bills. The impact that this has on 
the management of government is just horrendous. And then you 
cascade that down to State and county government.
    The new Presidential team will begin on an uneven playing 
field, with agencies trying to meet their program needs under a 
continuing resolution while preparing for their first budget of 
the new Administration, scheduled for release less than 20 days 
after the inauguration. The fiscal health of our Nation will 
require tough choices at every agency, an unenviable but 
necessary task.
    Mr. Chairman, before I conclude, I would like to take a 
moment to thank Mr. Johnson for his dedicated service. I think 
the Chairman of the Subcommittee has laid out pretty clearly 
that you have been around here quite often.
    Mr. Johnson. A usual suspect.
    Senator Voinovich. Yes. I suspect you have spent more time 
here than any of your predecessors. And I know that you have 
had a very difficult job. When I came here, my goal was to 
reinsert the ``M'' into OMB, and I think that when you leave, 
you can say, ``I was responsible for putting the `M' back into 
OMB.'' I really appreciate your service. Senator Akaka and I 
also appreciate the strategic plans that you have put forward 
to address the management challenges of agencies that are on 
the high-risk list. We are going to take all of that material 
and build on it.
    So, again, sharing what Senator Akaka said, you can be 
assured, all of you, particularly you, Mr. Johnson, that we are 
going to take the work that you have done, and we are going to 
continue to stay on top of it and build on what you have been 
able to achieve during your time in the Administration. We 
really appreciate the fact that you are sticking around until 
the end and not tipping your hat and leaving. Thank you.
    Senator Akaka. Well, thank you very much, Senator 
Voinovich, and I always appreciate your strong interest in 
oversight of the Administration transition.
    It is now my pleasure to welcome our witnesses here today. 
Gene Dodaro is the Acting Comptroller General at the Government 
Accountability Office.
    Clay Johnson is the Deputy Director for Management at the 
Office of Management and Budget. Mr. Johnson also led the 
transition team for President Bush in 2001.
    Robert Cusick is the Director of the Office of Government 
Ethics.
    Gail Lovelace is the Chief Human Capital Officer at the 
General Services Administration.
    As you know, it is the custom of this Subcommittee to swear 
in all witnesses, so I ask all of you to stand and raise your 
right hand. Do you solemnly swear that the testimony you are 
about to give this Subcommittee is the truth, the whole truth, 
and nothing but the truth, so help you, God?
    Mr. Dodaro. I do.
    Mr. Johnson. I do.
    Mr. Cusick. I do.
    Ms. Lovelace. I do.
    Senator Akaka. Thank you very much. Let the record note 
that our witnesses responded in the affirmative.
    Thank you, and I look forward to this hearing, and I would 
like to ask Mr. Dodaro to please proceed with your statement.

  TESTIMONY OF GENE L. DODARO,\1\ ACTING COMPTROLLER GENERAL, 
             U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Dodaro. Thank you very much, Mr. Chairman and Senator 
Voinovich. We are very pleased to have this opportunity to talk 
about GAO's planning for the upcoming transitions.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Dodaro appears in the Appendix on 
page 29.
---------------------------------------------------------------------------
    As you well know, we have a long tradition of helping each 
new Congress get its agenda together and begin its progress. 
But there were amendments made to the Presidential Transition 
Act in the year 2000 that also cite GAO as a resource for 
incoming Administrations to tap to learn about their management 
challenges and risks. And so we take these responsibilities 
very seriously and are planning our efforts to support these 
transitions with several objectives in mind.
    First, we want to provide our insights based on work we 
have done, our institutional knowledge, and to pressing 
national issues. Some examples include the oversight of the 
housing and financial institutions and markets, including 
recent developments regarding Freddie Mac and Fannie Mae, as 
well as the status of the Bank Insurance Fund, and a range of 
national security and homeland security issues, including U.S. 
efforts in Iraq and Afghanistan.
    Second, we want to underscore the need for the incoming 
Administration to realize there is a growing need to not only 
organize within departments and agencies, but more issues 
require collaborations and partnerships at different 
governmental levels and with other countries and with the 
nonprofit sector. Some examples here that we will highlight are 
financing challenges associated with modernizing our 
transportation infrastructure, food safety issues, a range of 
planning efforts for health care, emergencies as well as the 
National Response Plan for both potential manmade and natural 
disasters.
    Third, given the pressing budget challenges that we have, 
we are going to highlight and target areas where resources 
could be conserved to help support new initiatives. There are 
improper payments being made right now, over $55 billion a 
year. Efforts have been made to try to bring that down, but 
that can be a source of additional savings, as well as trying 
to bring the cost growth of DOD weapons systems under control. 
Our last report showed that the cost growth had been $295 
billion over a few years, and so that is another area.
    We also have a tax gap that IRS estimates, a net tax gap of 
$290 billion. And so there are ways to really begin with 
concerted efforts to try to tackle these areas. They will not 
be easy, but with concerted efforts, we think they could yield 
substantial benefits.
    Also, we want to highlight the capacity-building efforts 
that are required within individual departments and agencies. 
If these capacity-building efforts are not attended to, they 
are going to affect the policy implementation of whatever 
agenda the new Administration is going to pursue. Over one-
third of the Federal workforce will be eligible to retire on 
the next Administration's watch. As has been pointed out here 
today, we are going to emphasize the need to fill some of the 
senior leadership teams in those departments with experienced 
managers.
    We also agree with statements that have been made, Senator 
Akaka, by you and Senator Voinovich that there is an increasing 
reliance on contractors to carry out activities, and the new 
Administration needs to approach their management 
responsibilities with that recognition as well as bringing 
poor-performing information technology projects into line going 
forward.
    Also, we are going to continue to emphasize the need to 
maintain the momentum on the high-risk efforts. This 
Subcommittee is to be commended for the attention that it has 
given to that area. I would like to acknowledge the commitment 
that Mr. Johnson has made, and OMB, to that area. The high-risk 
area really has helped serve as a management improvement 
agenda, not only for the Bush Administration but for the 
Clinton Administration before then. And I think that great 
progress has been made, but attention needs to be continued on 
these efforts, and we are going to emphasize that going 
forward.
    Last, I would say we are going to evaluate how this 
Presidential transition unfolds. A lot of things have changed 
since the Presidential Transition Act provisions were put in 
place, and there may be a need in a post-September 11, 2001 
environment to look at other legislative provisions that could 
be modernized to help provide better transitions in the future.
    We hope that our efforts support both new leaders as well 
as returning leaders, and we look forward to working with the 
Congress and the new Administration on these challenges facing 
our country.
    I would be happy to answer questions when we get to that 
stage.
    Senator Akaka. Thank you for your statement, Mr. Dodaro. 
Now we will hear from Mr. Johnson.

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

    Mr. Johnson. Senator Akaka, Senator Voinovich, thank you 
very much. Let me in my opening remarks talk about the specific 
issue about what we are doing, what all agencies are doing to 
maximize the chance and the probability that the next 
Administration will come in and take up where this 
Administration left off in terms of working to cause the 
Federal Government to better spend, more effectively spend the 
taxpayers' money, and more effectively every year.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Johnson with attachments appears 
in the Appendix on page 44.
---------------------------------------------------------------------------
    We cannot mandate what the next Administration is going to 
do on any management front, but the one thing we are doing is 
making sure that every Federal program, every management area, 
procurement, financial management, IT management, people 
management, program management, for every GAO high-risk list 
item, for security clearance reform, for national security 
professional development, for every do-it-better initiative, 
that by the end of the year there is a very clear definition of 
success; what the definition of success is for financial 
management at DOD and by what approximate time frame. Weapons 
system acquisition, what is the definition of success for 
weapons system acquisition at DOD by what general time frame? 
Make sure that this is a definition of success that GAO is in 
agreement with, that anybody relevant to this issue in the 
Senate or the House is comfortable with and OMB is comfortable 
with and the people in the agencies are comfortable with; that 
they agree with the time frame, they agree for the 
implementation plan to get there; it is clearly defined who is 
accountable; and all of this is made very transparent and very 
public. It is made available on every agency's home page on 
their website, you are aware of it, GAO is aware of it, all the 
interest groups are aware of it, all constituent groups are 
aware of it, and employees are aware of it. And all SES who 
work on these GAO high-risk list items or on the programs or on 
financial management, whatever it is, those 2009 activities 
that are involved in getting to where we want to be on all 
these matters are built into the senior executives' formal 
performance goals for fiscal year 2009.
    This is something that would not have been possible 8 years 
ago because we were not able to hold--we did not have 
legislation that allowed us to hold senior executives 
accountable for performance. They were held accountable for 
having certain levels of competencies. Now they can be held 
accountable for the performance. And I believe you were 
integrally involved in passing that legislation. But that is a 
very valuable tool that we have now.
    But the definitions of success, what we are trying to 
accomplish, how we are trying to accomplish it, and who is 
accountable will be very clearly defined to everybody's mutual 
satisfaction, and it will be very apparent, very public, and 
very transparent.
    The next Administration, when they come in and they are 
trying to sort out what their priorities are, will inherit a 
lot of purposefulness, a lot of do-it-better, a lot of spend-
the-money-more-effectively purposefulness. They will come in 
and almost certainly seek to install different priorities. But 
they will inherit a lot of purposefulness, and they will 
benefit from the capability that agencies have now, the greater 
capability that agencies have now to spend taxpayers' money 
more effectively. Every agency can more effectively spend 
taxpayers' money today than they could 8 years ago. So that 
will benefit this next Administration and all subsequent 
Administrations. They will not inherit an empty blackboard. 
They will inherit a blackboard full of lots of clear goals, 
lots of accountability, lots of specific ways forward. They can 
replace that. They can choose to go faster. They can choose to 
go slower. But they will inherit a lot of way forward, and I am 
confident that GAO and you and your counterparts in the House 
will ensure that the next Administration continues to place the 
priority on spending the taxpayers' money effectively that this 
Administration has placed on it.
    I look forward to your questions, and anything else between 
now and the end of the year you want to engage in.
    Senator Akaka. Thank you very much, Mr. Johnson.
    And now we will hear from Mr. Cusick and your statement.

  TESTIMONY OF HON. ROBERT I. CUSICK,\1\ DIRECTOR, OFFICE OF 
                       GOVERNMENT ETHICS

    Mr. Cusick. Thank you, Chairman Akaka, Senator Voinovich, 
for inviting me here today to talk about the role of the Office 
of Government Ethics (OGE) in the Presidential transition. I 
welcome the opportunity to share with you some of what has gone 
on to prepare for this important task. Even though the 
transition will be peaceful, it will be difficult nevertheless.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Cusick appears in the Appendix on 
page 56.
---------------------------------------------------------------------------
    Our role as the leader within the Executive Branch in 
ethics is never more important than during a Presidential 
transition. Since I became Director over 2\1/2\ years ago, I 
learned and OGE has learned the lessons from past transitions 
and has prepared diligently for this one.
    There are over 1,100 presidentially appointed, Senate-
confirmed positions in the Executive Branch. As the Director of 
OGE, it is my responsibility under the law to certify that a 
nominee's financial interests do not conflict with his or her 
prospective government duties.
    This is not an easy process because the financial 
disclosure reports are like snowflakes. No two are alike, and 
the duties and issues that may pertain to a nominee will vary 
from agency to agency. Additionally, the complexity of 
investments and financial instruments is boundless and 
continues to expand.
    Frequently, a nominee will need to take certain steps in 
order to avoid conflicts of interest. These may include the 
sale of stock or other financial interests, and working with 
the White House and the agency where the individual will serve, 
we develop ethics agreements to memorialize what a nominee must 
do, or refrain from doing, in order to avoid conflicts. I 
understand fully the need for the President to have critical 
members of the national security team and others in place as 
soon as possible. And OGE is prepared to do its part to meet 
this challenge.
    My written testimony, which I ask be made part of the 
record, gives more detail about what OGE has done to prepare 
for the transition. But I do want to give the Subcommittee some 
brief examples.
    We have met with Mr. Johnson to discuss a number of 
possible actions that will speed up the financial disclosure 
vetting process. We have also had meetings with appropriate 
officials of the Department of State and have scheduled 
meetings with the Department of Defense and the Department of 
Homeland Security in order to discuss what we see as possible 
improvements to the process. We have contacted representatives 
of both Presidential campaigns to offer briefings at their 
earliest convenience concerning OGE's role and 
responsibilities.
    As the leader in Executive Branch ethics training, OGE 
trained over 250 ethics officials last February here in 
Washington. They were from more than 70 departments and 
agencies, and the training referred specifically to nominee 
financial disclosure. That training was very well received.
    We have issued written guidance to help agencies deal with 
complex financial instruments. Next week, OGE will conduct the 
16th National Government Ethics Conference. This is a week-long 
training event for over 600 Executive Branch agency ethics 
officials, and the entire theme of this year's conference is 
transition. We are producing a short video presentation 
introducing the financial disclosure process and conflicts-of-
interest analysis for PAS appointees to assist them in this 
process and help them understand it.
    After the election and before the inauguration, we will 
work intensively to review financial disclosure reports of 
potential nominees. We will ensure clear channels of 
communication between the transition teams. And we will make 
OGE personnel available to brief members of the new 
Administration. These steps will ensure, we believe, 
expeditious clearance and certification of financial 
disclosure.
    It is an honor to be here today. It is an honor to lead the 
Office of Government Ethics, and I welcome any questions you 
may have.
    Senator Akaka. Thank you very much, Mr. Cusick.
    And now we will hear the statement from Ms. Lovelace.

TESTIMONY OF GAIL T. LOVELACE,\1\ CHIEF HUMAN CAPITAL OFFICER, 
              U.S. GENERAL SERVICES ADMINISTRATION

    Ms. Lovelace. Good afternoon, Chairman Akaka and Senator 
Voinovich. I am pleased to be with you here this afternoon on 
behalf of the General Services Administration. Presidential 
transition is the top priority for GSA, as stated by our Acting 
Administrator, Jim Williams, during his confirmation hearing 
before the full Homeland Security and Governmental Affairs 
Committee. Acting Administrator Williams, and all of us at GSA, 
are fully committed to a successful and smooth transition from 
the current Administration to the next.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Lovelace appears in the Appendix 
on page 61.
---------------------------------------------------------------------------
    I believe that the transition from one Administration to 
the next is an exciting time for government. I am honored to be 
able to play a role in ensuring the smooth transition as 
envisioned by the Presidential Transition Act of 1963. Part of 
GSA's mission is to leverage the buying power of the Federal 
Government to acquire best value for taxpayers and our Federal 
customers. We deliver superior workplaces, quality acquisition 
services, and expert business solutions.
    Our responsibility during Presidential transitions is to 
provide many of these same services to the President-elect, 
Vice President-elect, and members of their President transition 
team. We have started early and have good teams in place. We 
have secured space in Washington, DC for the Presidential 
transition team and are currently well positioned to provide 
furniture, parking, office equipment, supplies, 
telecommunications, mail management, travel, financial 
management, vehicles, information technology, human resources 
management, contracting, and other logistical support as 
necessary and appropriate. We are partnering with the Secret 
Service and the Federal Protective Service as they provide 
security for the President-elect and Vice President-elect.
    We recognize that a transition can be perceived as a time 
of vulnerability for our country, and we have identified 
alternate locations and workplace solutions for the 
Presidential transition team in the event of an emergency.
    GSA provides space, services, and logistical support to the 
Presidential Inaugural Committee and the team that plans and 
stages the various events that make up a Presidential 
inauguration. GSA similar logistical support services to 
President Bush and Vice President Cheney to help them establish 
their offices when they depart the White House. GSA assists in 
establishing the former President's office, as we do for all 
former Presidents.
    The Presidential Transition Act of 2000 expanded GSA's role 
in transition specifically in two areas. We now prepare a 
transition directory, in conjunction with the National Archives 
and Records Administration, and we assist the incoming 
Administration with appointee orientation.
    The President's fiscal year 2009 budget requested $8.5 
million to support the Presidential transition. In the event of 
a continuing resolution, GSA will need to make sure that funds 
are available for obligation by the incoming Administration. 
This will require a special provision in the continuing 
resolution. We have notified the Appropriations Committee, and 
we are hopeful that Congress will ensure that these funds are 
in place.
    Looking inside Federal agencies, I have had the pleasure of 
meeting with many agencies, individually and in groups, to 
explain GSA's unique role with them and to share some ideas 
about getting ready for transition. We have created a special 
section on our gsa.gov website to share information across 
agencies and with the public. We are actively working with Mr. 
Johnson to bring all agency transition directors together for a 
special session focused on transition. This session will 
reinforce the recently transition guidance that was issued by 
the Executive Office of the President.
    Like all other agencies, GSA is diligently working to 
ensure smooth transition within our agency. As part of our 
internal efforts, GSA has created four teams to plan for a 
successful transition. These teams are focused on: One, support 
to current political appointees leaving; two, continuity of GSA 
programs, operations, and services; three, logistical support 
to Presidential transition team members that may come into GSA; 
and, four, preparing a new team of appointees. As an agency, I 
believe we are well positioned to do our part to ensure a 
smooth transition.
    In closing, Chairman Akaka and Senator Voinovich, I want to 
thank you again for the opportunity to address you this 
afternoon. I will be happy to answer any questions you may 
have.
    Senator Akaka. Thank you very much, Ms. Lovelace.
    My first question is to Mr. Dodaro. As you know, this 
Subcommittee has worked closely with GAO over the years to 
improve management at all agencies. Many of the issues you 
bring up in your testimony speak to the importance of 
management issues for the next Administration. Unfortunately, 
new Administrations often do not recognize this importance 
early enough. GAO, along with the Congress, has made it a point 
to educate Administrations about management, but often the 
information is just lost in the blizzard of other issues.
    What can we all do to focus incoming policymakers on 
management issues?
    Mr. Dodaro. Mr. Chairman, I think, first, what we are 
trying to focus on is to distill down very precisely what the 
biggest challenges are. So, in other words, prioritizing what 
those challenges are, I think, is pivotal.
    Second, I think illustrating and underscoring the effect 
that unless those challenges are made, they are going to 
implement whatever policy agenda is being pursued.
    I have been in a number of transitions over a number of 
years with different Administrations, and I would say my one 
observation consistently is that people underestimate the 
implementation challenges associated with any new policies they 
want to put into effect. And unless they understand that and we 
can communicate that to them, I think there is a tendency not 
to take some of these management challenges as seriously as 
possible.
    Third, unless the challenges are addressed, they can 
sometimes consume attention if management problems all of a 
sudden reach the point of a public story about waste or 
inefficiencies, or whatever, that divert their attention from 
other issues that they want to spend their time on and that are 
important for the country for them to spend their time on.
    So I am planning in my current capacity to try to outreach 
to new leaders as they are put in place and to underscore these 
basic points, which I think are very important and I think are 
going to become even more important given the serious budgetary 
and fiscal constraints that our government is going to face 
going forward.
    Senator Akaka. Thank you.
    Mr. Johnson, you suggest that for a successful 2008 
transition the new Administration will need to work closely 
with Congress very early on. Given your experience leading the 
2000 transition for President Bush, what should the new 
Administration do differently in working with Congress?
    Mr. Johnson. To get its new team on the field or to work on 
management matters, or both?
    Senator Akaka. Yes, both.
    Mr. Johnson. OK. Let me talk about the management 
challenges first.
    I know the next Administration is going to come in and 
inherit a lot of goals--goals that you think are important, 
that GAO thinks are important, and that career employees think 
are important--in terms of how to do their business, how to 
spend this amount of money to teach illiterate adults how to 
read. They are going to inherit a policy on this issue or that 
issue. And they can change those priorities. They could decide 
to do it faster or slower, but they are going to have to do 
that in the light of day, and I bet you they have to do it with 
your agreement and GAO's maybe editorial comment.
    So if you are inclined to encourage them to pay as much 
attention to management or even more attention to management 
matters than we did, I bet you will be able to communicate that 
to them, and they will have little choice but to take what they 
inherit and build from there. I cannot imagine that they can in 
the middle of the night simply walk away from the whole 
challenge of working to make the Federal Government more 
effective.
    So I personally am confident that the stage has been set 
primarily by the work of this Subcommittee and comparable 
committees in the House and by the continued good work with GAO 
and a little assistance from OMB and agencies and, most 
importantly, the Federal employees and agencies understand all 
this work is good for them. It is good for their agencies. It 
helps their agencies be more effective. It makes them better 
places to work. And they would make it very difficult for a new 
Administration to come in and say, we really do not care about 
this anymore.
    So I think you emphasizing, as you can do very effectively, 
to the next Administration how important these things are, and 
if they decide to change the priorities, that you ask why. Why 
are you choosing to go slow? Or why are you choosing to place 
less emphasis on this than in previous Administrations if that 
is the case? So you can bring a lot of pressure to bear on 
their continued attention to management matters?
    In terms of working with the Senate, getting the new team 
on the field, the biggest responsibility is on the new 
Administration to do the work they need to do before the 
election and during the transition and then in the early part 
of the new Administration to identify qualified people that 
they want to nominate to you and load up the Senate with lots 
of nominations. The thing that drives the Senate primarily in 
terms of the timeliness of their confirmation process is having 
a big stack of nominees that they have to process. They do not 
like it being said by the press that they are not doing a good 
job of helping the new Administration get their team in place.
    So it is their responsibility to put a lot of pressure by 
doing a lot of their work quickly, to put pressure on the 
Senate to do their work quickly. And when they are ready--so 
they need to prepare you for the kind of volumes that they are 
hoping to bring forward to the Senate. If they expand the 
capacity or change the ability to clear people more quickly, 
they need to make sure they do that in partnership with you 
because you look at the same clearance information that the 
White House looks at, and it has to be clearance information 
that you are satisfied with and that you can make a proper 
confirmation determination from.
    So when this Administration, the current Administration, is 
ready to suggest possible changes for the new Administration, 
they will come up and talk to the appropriate leaders up here. 
But all this will be done with the Senate, and it is supposed 
to be and it will continue to be.
    Senator Akaka. Thank you. Ms. Lovelace, let me ask you to 
put your CHCO hat on for a moment. Can you discuss how human 
capital leaders in career positions at agencies such as 
yourself prepare for new political leadership at their agency?
    Ms. Lovelace. Senator Akaka, I would be happy to answer 
that question. The Chief Human Capital Officers (CHCO) Council 
have spent much time talking about preparedness for the 
upcoming transition. We have spent much time talking about 
ensuring that there are no gaps behind the political leaders 
who will likely be walking out during the time of transition 
and right after the inauguration. I believe that we are all 
well positioned or well on our way to be positioned to ensuring 
that there are people ready to step up and take those 
positions, those critical positions. After all, we are there to 
ensure that agencies continue to be able to carry out their 
mission, which does require that we have people in senior 
leadership positions and in other roles within our agencies.
    I can assure you that through the Chief Human Capital 
Officer Council and some other venues, we are actively 
discussing exactly those issues at the CHCO Council.
    Senator Akaka. Thank you. Senator Voinovich.
    Senator Voinovich. Thank you, Mr. Chairman.
    Mr. Johnson, I would again like to congratulate you on 
identifying individuals in each department to handle 
transition. I understand it takes some scheduling, post-
employment training, and documenting agency priorities and 
missions for the incoming Administration.
    What efforts have you made to make sure that they get the 
job done?
    Mr. Johnson. I knew you were going to ask that question 
because we had a meeting at noon today with the President's 
Management Council, and I said, ``I will bet you one of the two 
Senators is going to ask me, `Are you doing what we instructed 
every agency to do in that memo of July 18th?' '' And so was 
anybody not aggressively doing what we instructed you to do. 
And they all agreed that they were going to accomplish all 
those goals at least by the date that was laid out, and most of 
them are October 15 and November 1, 2008.
    Most of that work had already begun before I met with the 
PMC on this subject in May. As Ms. Lovelace said, the career 
staff and the political leadership of agencies understand full 
well what the challenges are at the end of this year, and they 
did not need much whip-popping by me. It is really just a 
little orchestration and facilitation. Everybody was working on 
it. We just made sure everybody was working on the same thing 
and had the same set of priorities.
    So we are looking forward to this meeting that Ms. Lovelace 
referred to on September 24, when we are bringing in all the 
transition leaders, because they have approached Ms. Lovelace 
with questions that they have above and beyond the kinds of 
answers that I thought we provided in that July 18 memo. And 
they have other more detailed questions that we will provide 
them. And if the transition leads in every agency want to meet 
every week, we will meet every week. We will get them together 
and provide them with answers to whatever questions they have.
    So there is a really strong commitment by every agency and 
by the Administration to provide whatever support is called for 
by both candidates for President and by the career leadership 
in every agency, as we have all said, to make this as effective 
a transition as there has ever been and hopefully one that can 
be used as a model for years to come.
    Senator Voinovich. Thank you. At the July meeting that we 
had, you made reference to reforming the White House vetting 
process for high-level appointees and that you were working 
with Fred Fielding and the FBI on that.
    Mr. Johnson. Yes, sir.
    Senator Voinovich. How are you coming on that? Is it 
something that you can do from an administrative point of view 
that does not require legislation?
    Mr. Johnson. I think most of it can be done 
administratively. Fred Fielding is working with the FBI, and 
the Presidential personnel are looking at--and talking to both 
campaigns to impress on both campaigns the importance of 
preparing to make appointments--nominations to the Senate 
faster than ever before and what kind of work has to be done 
before the election and after the election and during the 
transition to make that possible. And they are meeting with the 
FBI to impress upon them the importance of clearing people 
faster than ever before and working through what has to be done 
to make that possible.
    So the leadership of the transition planning is within the 
White House, in the Chief of Staff's office, and work with 
White House Counsel and Presidential Personnel. At an 
appropriate time before you recess, they will want to come up 
and make sure that the committees know, particularly the 
committees that deal with Homeland Security, Defense, and 
State, which will be the most important nominees to deal with 
in the very month or two in the Administration, understand what 
kind of volumes both candidates hope to be presenting to the 
Senate so that the Senate is prepared to receive those and 
quickly dispense with them and effectively dispense with them 
in terms of the nomination process.
    So they will be up here when they have something that 
specifically they want to brief you on.
    Senator Voinovich. Is there a boilerplate letter that you 
send out to the candidates, Ms. Lovelace? And who sends out the 
letter to the candidates saying, ``Hey, you might get elected. 
Let's think about doing something, about putting your team in 
place?'' Who does that?
    Mr. Johnson. First of all, let me jump in here before you 
violate a law. I think that is against the law to promise--not 
that you would break the law, sir, but to promise the 
possibility of an appointment.
    Senator Voinovich. No, you misunderstand, what I am saying 
is to tell them what it is that they ought to be doing in terms 
of putting together some kind of task force to deal with the 
transition, to get them to start thinking about it. Is that a 
boilerplate letter that you send out to them and say, ``Hey, 
here are things you better start thinking about in the event 
that you are elected.''
    Mr. Johnson. Yes. I don't know of a letter. One thing that 
the Intelligence Reform and Terrorism Prevention Act allows is 
both candidates identifying before the election people that 
they want to use to advise the President-elect during the 
transition, between election and inauguration, and it calls for 
them to provide the names and background material of those 
people that they want to serve as their adviser during the 
transition to update their clearances, to provide them 
clearances, so that they are able to deal with secure 
information----
    But my point is that will allow on the national security 
front the preclearance of some number of people that will 
almost certainly be considered for Cabinet and sub-Cabinet 
positions. But I am not aware of a standard boilerplate letter 
that is typically sent out----
    Senator Voinovich. Well, having been through transitions as 
mayor and then as governor, I know that in both instances, as 
kind of a gift to the new Administration, I put a lot of work 
into a very comprehensive document about transition and what 
they should be looking for and so on and so forth.
    Are you doing that, or is that something that----
    Mr. Johnson. I believe the White House Office of 
Presidential Personnel--I know they have engaged both 
campaigns, and both campaigns are very committed to preparing 
to govern. And I know that Presidential Personnel is providing 
information to both major party candidates that they need to 
begin to think through the people part of this now before the 
election, to give them knowledge that they would be hard 
pressed to get otherwise about the positions, the kind of 
qualities you look for, the process, the confirmation process, 
the clearance process, the timing involved, the process and so 
forth.
    My impression is that both major party campaigns, 
candidates, are very pleased with the support that they are 
getting from the White House. I also believe it is the first 
time that both candidates for President have been reached out 
to by the existing Administration. It is fairly customary to go 
to a like party, but I believe it is the first time that an 
exiting Administration has reached out to candidates from both 
parties.
    Ms. Lovelace. Senator Voinovich, I would like to answer 
that question as well. GSA did not send a standard form letter 
of any type to both campaigns, but we, much like the White 
House, have reached out to both campaigns in preparation for 
Presidential transition, have been actively sharing information 
with them and asking questions of them to make sure that we are 
making it a smooth transition for them. So we have been 
actively working with them and with PPO and the Office of 
Administration and Mr. Johnson to make sure that we are meeting 
their needs for transition.
    Senator Voinovich. Well, it sounds like a lot of 
communication, but I am kind of shocked that there is not some 
document that you put together for transition to the nominees.
    Mr. Johnson. Right. Oh, I recall.
    Senator Voinovich. When was it that we finally learned who 
the President----
    Mr. Johnson. December 13.
    Senator Voinovich. December 13. I will never forget 
President Milosevic, when I congratulated him, said, ``It took 
me a shorter time to become President than your President to 
get elected''--or find out who it was.
    Mr. Johnson. There is one document that explains what 
somebody preparing for a transition needs to think about, and 
it is not an official document. It is my own personal advice on 
what--it is one of the attachments that I provided you, and I 
do know that both campaigns, their transition people have read 
it and appreciate it and are using it to structure their 
transition organizing.
    Senator Voinovich. Thank you.
    Ms. Lovelace. And, Senator, if I could add to that as well, 
to add to what Mr. Johnson is saying, we also have the 
responsibility under the Transition Act of 2000 to create a 
transition directory that pulls together a host of information 
from different agencies to help the transition. We actually 
pull information from the OGE, from GAO, from OPM, and other 
places to pull it all together in one place for the incoming 
Administration. We shared with both campaigns an outline of 
that directory and some information that will be part of that 
directory, in addition to Mr. Johnson's memo that he has 
attached to his testimony, which I think is actually very well 
written.
    Senator Voinovich. Thank you.
    Senator Akaka. Thank you.
    Mr. Johnson, in your suggestions for a successful 2008 
transition, you mentioned that the White House Personnel Office 
is working to set up road maps for the next Administration to 
work 100 appointees through by April 1, 2009. Is this something 
that you think the next Administration will use? And is there 
any coordination with GSA on these plans and how they can get 
it to the transition teams?
    Mr. Johnson. What the White House has recommended--and I 
think very persuasively--to both candidates, and they have 
agreed wholeheartedly, is that they have to nominate more 
people faster to the Senate than ever before. And the most 
number of people that have been confirmed by the Senate by 
April 1st is 25, which is just not enough. And what we have 
suggested they think about is that instead of being 25 or 30, 
it be something closer to 100. It would be great if it was 200, 
but it is hard to make the math work if it is 100.
    They have agreed that they need to be both committed to 
that, and we have provided them--the White House is in the 
process of providing them information which they can use to 
pick the most important 100 positions, to focus on what those 
people in those positions do, what the appointment process 
consists of, what the clearance process, what the confirmation 
process consists of, so that the people working on this before 
the election, during the transition, and after the inauguration 
will be very knowledgeable about what is involved and so that 
they can assemble the appropriate people to do the appropriate 
work to try to do it multiple times faster than it has ever 
been done before.
    My impression and understanding is that both candidates are 
really engaged and really eager to tackle this assignment. They 
understand the importance of it. They understand that our 
enemies understand that we are potentially weak at this time in 
a transfer of power and that we need to be well prepared to 
respond and deal with just about any national security or 
homeland security matter that could arise.
    Senator Akaka. What steps, Mr. Johnson, outside of relying 
on the Archives will you take to get this information to the 
next Administration?
    Mr. Johnson. Well, the White House is in communication with 
this and lawyers are involved, as they are with everything--
campaign lawyers and White House lawyers--and my understanding 
is they are asking lots of questions, the candidates are, the 
candidates' representatives are, and the White House is 
producing answers very quickly. So there is a good 
communication there. The specifics I do not know about. This is 
something that the White House specifically is in charge of, 
but there is lots of engagement and lots of transfer of 
information back and forth.
    Both candidates, my impression is, are very committed to 
put their team on the field much, much faster than ever before, 
primarily because they understand the need.
    Senator Akaka. Thank you.
    Mr. Cusick. Mr. Chairman, may I comment on that point?
    Senator Akaka. Yes.
    Mr. Cusick. I have been familiar for some time with Mr. 
Johnson's proposal of 100 by April and 400 by August. We, at 
OGE, are prepared for those numbers. We believe that the 
financial disclosures can be completed on time, assuming they 
are received at appropriate intervals, appropriately early in 
the Administration, or even before inauguration.
    Senator Akaka. Mr. Cusick, the Presidential Transition Act 
of 2000 required that the Office of Government Ethics submit a 
report to our Subcommittee with recommendations for improving 
the vetting process. One of the recommendations in that report 
was the simplifications of the SF-278 financial disclosure 
form. After 7 years, the forms and the process have not 
changed. Why is this?
    Mr. Cusick. Well, Senator, we have made a legislative draft 
proposal that we submitted earlier this year that would 
simplify the form. We are not able to simplify it because it is 
a creature of statute. But we have made proposals to simplify 
it.
    I agree that for the purpose of the Office of Government 
Ethics in identifying and resolving conflicts, the form is 
unnecessarily complex, and we would like to see it simplified 
to some degree in line with our proposal submitted several 
months ago.
    Senator Akaka. You have given thought to this. On this can 
there be other steps that can be taken without a new law?
    Mr. Cusick. Not with respect to simplifying that form, 
Senator. I think that requires legislation. But we would 
welcome a form that was more simple in its structure and 
detail.
    Senator Akaka. Thank you for that.
    Ms. Lovelace, GSA now provides orientation for incoming 
appointees. Could you talk more about what specific orientation 
GSA will be providing and how that orientation was developed?
    Ms. Lovelace. Senator Akaka, the Transition Act of 2000 
does give us the authority to provide for appointee 
orientation. We actually work with the incoming Office of the 
President-elect and the incoming transition team to determine 
what will be included in that orientation, how it will be 
given, who it will be given to, and when.
    In the change of Administration from the Clinton 
Administration to the Bush Administration, we actually worked 
with Mr. Johnson in making sure that appointee orientation was, 
in fact, carried out. There were specific details that were put 
in place and an action plan to carry forward.
    We have already provided both campaigns with preliminary 
information on what is required as part of the act and are just 
beginning preliminary conversations with both in terms of what 
they are looking for in orientation. We more so play a 
facilitator role than an actual provider role.
    Senator Akaka. Well, thank you very much for that. Senator 
Voinovich.
    Senator Voinovich. As you know, we have been very 
interested in developing metrics to judge the performance of 
the Department of Homeland Security. Mr. Dodaro, you probably 
remember that there was a difference of opinion about whether 
or not DHS was complying with what GAO thought they should be. 
I understand that GAO is working conscientiously with DHS to 
develop this metric system so that we will have something next 
year to look at to see how they are doing.
    Mr. Dodaro. As a result of the hearing that you are 
referring to, there was an effort made by DHS to begin to seek 
our input as they put together the performance measures that 
they were going to use, and we were providing informal comment 
in that. And we provided correspondence to the Senate saying 
that had been completed and that DHS was soon to complete their 
strategic plan. I believe they have finished that, and we are 
in the process of reviewing it now, Senator, going forward.
    But there was, as you mentioned we had created some metrics 
using some material that had been in congressional documents 
and other documents to judge the performance. In many of those 
areas, there were not performance measures that everybody 
agreed to. So we are in the process of providing them input, 
recognizing that it is their responsibility to put the metrics 
in place. And GAO is not going to put itself in a position of 
management, but we are providing our input and then are 
critiquing their strategic plan.
    Senator Voinovich. I would be interested, Mr. Johnson, in 
your thoughts about the interpersonal relationship between OMB 
and GAO because they are the group that comes and looks over 
your shoulder at the feasibility or the opportunity that is 
there in terms of getting good communication going back and 
forth so that you do not run into a situation where, when it 
comes time for the reporting, that there is a big difference 
about what the metrics are and what people are being judged as 
to.
    Mr. Johnson. Yes, for sure. And that is one thing I am 
planning to do is, here is the way I think you should relate to 
GAO and here is the relationship you should aspire to create 
and here is how to relate to the IG community and the Federal 
employee community and this Subcommittee and so forth and so 
on.
    I think that the important thing is not that DHS adopts the 
metrics that GAO recommends because there it is always 
territoriality and not invented here and it is just human 
nature to want to develop your own metrics. So the role I would 
suggest for GAO is that they insist that metrics be developed 
that can allow you and the agency, with their help, GAO's help, 
to monitor performance at DHS, and performance is defined by 
this and this and this, and they be challenged to come up with 
the metrics to do that, and then you provide the agency with 
the appropriate commentary about the adequacy of those metrics, 
and they can choose to improve them or double them or 
something.
    But I know that Homeland Security is very measure- and 
manage-oriented with a lot of prodding from you, and that Paul 
Schneider is committed to the success of the transition, which 
is written into law, I think the only agency that has that 
written into law, and to have lots of good measures they can 
use to manage performance.
    Senator Voinovich. Too bad we did not get a term, but we 
will keep working on it.
    One of the things that I remember telling Mitch Daniels and 
his successors, was that, if I were in his shoes, I would 
really work on the high-risk list.
    To my knowledge, the corrective action plans tied to the 
high-risk list are not a part of the Government Performance and 
Results Act. In other words, Mr. Dodaro, I think you said 
something about the fact that if you look at the high-risk 
list, it pretty well reflects some overall management problems 
that need to be addressed in the Federal Government across the 
board, not just one agency. But I think there are about seven 
or eight of them that are agency-wide.
    What about the feasibility of requiring that there be a 
plan to deal with those problems that they are confronted with, 
a written plan, a part of their Government Performance and 
Results Act work?
    Mr. Dodaro. One of the things that we have been very 
supportive of over time--and, actually, the problems on the 
high-risk list led to the creation of some statutory management 
reforms because of the pervasive nature of the problems, for 
example, the Chief Management Officer Act, the act that put in 
place Chief Information Officers in Government, and in part 
that led to some reforms, which information technology, 
financial management technology, human capital--we put that on 
the high-risk list, and there were a lot of reforms made there, 
my point being, Senator, that one of the ways to guarantee 
continuity between Administrations is to have some of these 
management reforms in a basic statutory framework that 
transcends Administrations. And certainly I would support the 
possibility of that being focused on some of these areas that 
we have discussed. Some of them have been on our list for a 
number of years. Other ones are new and they are changing. As 
you know, we just added the 2010 census to the list, and early 
in the next Administration, they are going to have some 
critical issues there.
    So I think having a statutory underpinning for management 
reforms conceptually is a good idea.
    Senator Voinovich. One of the things that we have yet to do 
is reach agreement on how to streamline the financial 
disclosure form for Executive Branch employees. Mr. Cusick, I 
believe you have some ideas on how to do that.
    Mr. Cusick. Yes, Senator, we do.
    Senator Voinovich. Our last attempt required agencies to 
examine the number of appointed positions requiring Senate 
confirmation; allowed Presidential candidates to receive a list 
of appointed positions after they receive the nomination, and 
required the Office of Government Ethics to review the Federal 
Government's conflict-of-interest laws. We never did get this 
passed, so shame on us.
    Do any of you want to comment on that? Mr. Johnson.
    Mr. Johnson. I have forgotten why we were asked to present 
a list of potential positions that could be reclassified from 
PAS to PA. But I had forgotten that there was actually 
legislation that had prompted that question. And I think it was 
in 2003, we submitted a list of positions that we thought it 
could be argued they should not require Senate confirmation. 
And I thought that number was 80-some. I think it was 150-some-
odd positions, full-time positions, and the Senate took that 
list of positions and considered these positions that were not 
policy positions, they were legislative affairs, government 
affairs, communications positions, general counsels. We 
recommended CFOs, some CIOs--not policy, not critical 
operational----
    Senator Voinovich. I remember that, and the people that 
were charged to do that were Harry Reid, who was running for 
leadership, and Mitch McConnell. With all due respect to both 
those gentlemen who encouraged me to do this. And then when the 
time came to look over the appointment process what happened 
was they ran into the jurisdiction of some of the committee 
chairmen who wanted to bring these people before them. Would 
you agree we ought to revisit that? And, by the way, Senator 
Akaka, I sent a letter off to them about a month ago asking 
them if they might be willing to review that now that they are 
both leaders.
    Mr. Johnson. Well, I think the White House would welcome a 
revisit of that issue.
    Senator Voinovich. Thank you.
    Senator Akaka. Mr. Johnson, as I said in my opening 
statement, I am concerned about maintaining effectiveness 
oversight of the large numbers of contracts and contractors 
during the transition. It is possible that the next 
Administration may greatly scale back on contracting or have 
different contract priorities than the current Administration 
has now.
    Has the Administration scaled back on seeking bids for new 
contracts? Or has OMB given any guidance to agencies in this 
area of contracting?
    Mr. Johnson. The percentage of contracts that are 
competitively bid has remained remarkably constant over the 
last period of time, from the prior Administration into this 
Administration. I could not tell you what the percentage is, 
but it has moved almost not at all. So there is as much 
competition in our contracting as there has always been. But 
there needs to be more. There are always opportunities to buy 
things better with the help of competition.
    I think prompted by some hearings on this subject last 
year, our Office of Federal Procurement Policy issued guidance 
to agencies and suggested best practices on--creating a 
competition officer, I think, in each agency to study this and 
monitor this and to facilitate this. So, again, we are raising 
the focus on it in response to concerns about our ability to 
contract effectively. We need to be better at managing 
contracts, whether competitively bid or not, but also 
continuing to inject--I mean, inject even more competition into 
the process.
    One of the comments you made, sir, at the beginning was 
that we are doing more contracting for government work. I think 
it is true that the work we are contracting for is not 
inherently governmental work. It is work that can be done by 
Federal employees in some cases, but it is commercial in nature 
work that is being contracted for. I am not aware of inherently 
governmental work that we contract for.
    Senator Akaka. Thank you. Ms. Lovelace, GSA has an 
interesting position in the transition. It manages the 
transition for the President-elect and at the same time is 
under the leadership of the current Administration. Do you 
foresee any problems with gaining the trust of all parties 
involved in these orientation programs and training for new 
appointeeS?
    Ms. Lovelace. Senator Akaka, I do not see any issues coming 
forth in terms of working with the current Administration or 
the incoming Administration. We are actively working with Mr. 
Johnson, with Presidential Personnel, with the Office of 
Administration at the White House, as well as both campaigns, 
to make sure that we meet the spirit and intent of appointee 
orientation. We are also starting to get engaged with the 
Office of Government Ethics, with the Office of Personnel 
Management, and other parts of the government to make sure that 
we are ready to provide orientation for new appointee 
orientations. I actually see no problems whatsoever.
    Senator Akaka. Thank you. Mr. Dodaro, your statement 
generally made the point that management needs to be a priority 
in the next Administration. Can you tell us any specific 
management issues or projects that the next Administration 
should be concerned about or what we should be concerned about?
    Mr. Dodaro. I think, first, as I mentioned in my statement 
and we talked about earlier, the No. 1 priority from my 
perspective is to get people in these senior management 
positions that have the experience of managing large 
enterprises. And I think people underestimate some of the size 
and in terms of the budgets and the dollars and also the 
ability to manage for results, to have detailed plans, 
performance measures, etc., but also to work across departments 
and agencies. It is not only managing nowadays within a 
department or agency, but managing with colleagues throughout 
the Federal Government, throughout State and local government. 
So that is No. 1, get the right people in these right positions 
that are experienced and can handle the tasks ahead of them 
because these are large enterprises with difficult issues.
    Two, there is more reliance on contracting. You need to 
have people who can effectively set requirements. Part of the 
problems with the contracts is that there is not enough 
management direction as to what the type of requirements are 
that the government is trying to buy and trying to ensure is 
put in place and that there is effective oversight over these 
contracts so that they properly deliver on what the government 
really needs and the government is not pursuing a contract that 
is not well defined and is not adequately monitored. So there 
needs to be senior people in the agencies to manage those 
contracts, and that is to include information technology 
contracts as well going forward.
    The other issue really, I think, is the question of 
capacity in the human capital area. We have put that on the 
high-risk list. I think during the 1990s there was a lot of 
downsizing in some management functions in departments and 
agencies, and I think given what the agendas are that need to 
be pursued, there really needs to be good succession planning 
in identifying what are the right skills that you need to have 
in the departments and agencies. It is fine to contract out for 
services, but you need senior people that can manage those 
contracts effectively for you to get the results.
    So the right skill level, the right mix of people, and 
really the people who are best positioned to do that are senior 
department leaders that understand what it takes and have run 
large enterprises before. So those would be the efforts.
    Then one last point I would make is that there has been 
progress made in a number of areas, and that progress needs to 
be sustained. We now have the 24 largest departments and 
agencies. At least 18 get clean opinions on their financial 
statements, and there have been efforts made to improve 
internal controls. That is largely due to the efforts of this 
Administration and a prior Administration to implement some of 
these statutory reforms, and I would encourage the next 
Administration to build on the progress that has been made 
because I think that is pivotal to have them have better 
financial information to make good decisions.
    Senator Akaka. Mr. Dodaro, what about projects? What 
projects would you recommend or signal to the new 
Administration to set those priorities?
    Mr. Dodaro. I think, Mr. Chairman, our transition work will 
highlight for every department and agency what particular 
management challenges are unique to that agency and what they 
need to do to focus on this.
    For example, let's take NASA. They are retiring the Space 
Shuttle. That to me is a huge project that needs to be focused 
on because they are going to have a gap in that process going 
forward.
    This whole issue for the Federal Housing Finance Agency, 
who is now going to be in conservatorship for Fannie Mae and 
Freddie Mac, that is a huge activity going forward.
    It was just announced today that the Department of Defense 
is deferring the contract on the tanker provision into the next 
Administration. That is a very important decision that needs to 
be made.
    So we will highlight for every major department and agency, 
we are planning to make our information available through our 
website so it is electronically available, publicly available 
as well, because I think that Mr. Johnson's point that 
providing some transparency over these issues is really 
important.
    The census is another project that is terribly important to 
apportionment and also to the distribution of hundreds of 
billions of dollars in Federal assistance, and that needs to be 
attended to.
    So we will have those projects, and, of course, our high-
risk list provides a real helpful listing and prioritization as 
well.
    Senator Akaka. Before I call on Senator Voinovich, let me 
follow up with Mr. Johnson on this same question and on 
projects that he would recommend as a priority to the 
Administration.
    Mr. Johnson. The most important thing that I believe is 
missing in the Federal Government is the proper--what we need 
more of is we need clearer goals and we need more 
accountability for accomplishing them. Too often, employees 
will answer the question, ``What do you do?'' Well, I work on 
this or I work on that. We have to get beyond that. We need to 
be trying to accomplish specific goals in specific time frames, 
and people really need to be held accountable for doing--that 
does not mean punish them if they miss them, but that means 
that the goals are real and that you and the leaders in the 
Executive Branch really want them to be accomplished by the 
dates that the agency leadership said they can be accomplished, 
and that there be a level of purposefulness that today does not 
exist in the Federal Government.
    We had the beginnings of that. The first thing you have to 
have is every program has to have a goal, an outcome goal. That 
exists. It took 5 years to do it and then another 2 years to 
improve it. But every program has outcome goals and efficiency 
goals. They have a plan for accomplishing them. These are 
public so that agencies can be held accountable for 
accomplishing them.
    If you could only ask one question of an agency head or a 
program head up here, the question I would suggest you ask is: 
What are you being held accountable for accomplishing this next 
year? And then when the year is up, how did you perform 
relative to your goals? You missed them or you did better? What 
are you going to do as a result of that? That question is not 
asked often enough within the Executive Branch or by Congress 
of the Executive Branch.
    And so the goals are not clear enough--they are not 
outcome-oriented enough, they are not clear enough, and there 
is not enough real accountability for it.
    We have goals now--when we first started evaluating 
programs 8 years ago, half the programs in the Federal 
Government that we looked at could not demonstrate a result--
good or bad. Nobody had ever asked the question. That is 
different now. So a foundation has been laid to go to the next 
level, which is continue to improve the goals, but continue to 
build more ``So what?'' into the fact that we have goals, and 
we can now start holding managers, leaders, employees 
accountable for accomplishing the goals. So that the level of 
purposefulness to get to a desired outcome is real and 
significant. To me, that is the primary--whether it is high-
risk weapons systems acquisition, adult literacy, whatever it 
is. To me, that is the primary thing that we need to add to 
what goes in the Federal Government that does not exist now, to 
the extent to which we desire it to exist.
    Senator Akaka. Thank you very much for that. Senator 
Voinovich.
    Senator Voinovich. I am interested in following up on that. 
As you know, we passed legislation to strengthen pay for 
performance for the Senior Executive Service, and 
implementation is still a little bit uneven. But if you really 
get at management, what you were just talking about, it begins 
with your Senior Executive Service and the whole idea of a 
performance evaluation is to sit down with an individual and 
talk about the goals and what is expected of them and then 
continue to have a dialogue with them.
    Maybe you can answer this next question privately sometime. 
I wonder how often were the Secretaries of the various Federal 
agencies evaluated by anybody--you or anyone else? One of the 
hardest things I had to do when I was mayor and governor, was 
the evaluation of the people who ran the department. So I 
started out with them about what it was that I expected of them 
and held their feet to the fire and we have that.
    I've introduced legislation to strengthen performance 
management that includes a provision whereby if somebody's 
performance was not acceptable, they would not get a pay 
increase. Of course, there was a lot of noise about this 
provision. But it seems to me that one of the ways you can 
accomplish what you have just been talking about, Mr. Johnson, 
is to follow up on that kind of a program. I would like to get 
the comments here of all four of you in terms of what you think 
about that.
    Mr. Johnson. Well, one thing, the legislation that called 
for pay for performance for SES was really important, and we 
are now in the second or third year, I guess, of the 
implementation of it, and the implementation quality is not 
what it needs to be, but it is a priority of OPM to work with 
agencies to make sure that there are meaningful distinctions 
being made between the evaluation of the performance of all the 
senior executives. I agree with you. If you can get those 7,000 
career and 700 political SESs moving in the right direction at 
the right speed, the whole government will follow.
    And so we have the legislation we need now, and I think we 
know what we need to do, led by OPM, to implement it more 
effectively this next year than the year before.
    Along the same lines, but there is no pay tied to it, every 
agency for every employee by the end of fiscal year 2009 is 
being held accountable by OPM to implement a--I forget the 
title. It is something like an ``Effective Performance 
Management System,'' so that every employee is evaluated on 
their performance, a significant portion on their performance, 
not just on competencies. That is a big step forward. There is 
no pay tied to it, but most people would agree that the primary 
value of a pay-for-performance system is the performance 
management part of the pay for performance. The pay part of it 
is a way to drive the seriousness of it because you have to 
give someone an $800 raise versus a $600 raise, so they have to 
take it really seriously and explain why they are getting $600 
and not $800 or $800 and not $600. But the key is that you be 
able to evaluate performance and define goals effectively and 
so forth with every employee.
    Every agency will be formally committed to do that by the 
end of fiscal year 2009. That was a pipe dream 8, 10 years ago.
    So the foundations are being put in place to do what you 
are talking about, and the key going forward will be not to get 
it launched, but to get it implemented and realize the full 
potential of it.
    Senator Voinovich. I think it would really be interesting, 
too, Mr. Dodaro, if GAO looked at the TSA. I have gotten to 
know a lot of these people because I have a pacemaker, and so I 
just stop and say, ``How is your pay system coming along--
PASS?'' I would say about two-thirds of them think it is a good 
idea, and some really complain that they do not like it, it is 
arbitrary and so forth. But I would really like to know what 
difference that kind of thing has made, if any. I think it has 
made a difference on how we get things done.
    Are there any other comments from the other two witnesses?
    Mr. Cusick. Senator, we have in OGE what we refer to as the 
Leadership Initiative. What we try to do is to push discussions 
of ethical conduct as high in an agency as we can get it, often 
with the Secretary of the agency. And we believe that the good 
example of senior leaders is the single biggest driver of 
ethical conduct in an organization.
    With that in mind, the Interior Department has been 
particularly responsive to our suggestions that performance of 
employees--in particular, senior employees--include the ethical 
dimension. If you have a lackadaisical approach to deadlines on 
disclosures, for example, or if you are perhaps enduring or 
tolerating something in your division or agency that you should 
not be from an ethical point of view, in the Interior 
Department, Secretary Kempthorne has made important policy 
changes.
    Now, it is a little difficult when you are talking about 
pay for performance to take my narrower ethical scope and make 
generalizations about it, but----
    Senator Voinovich. I have to tell you that to me would be 
maybe the No. 1 criteria. The problems we have seen in 
government have been ethical breakdowns that have embarrassed 
individuals and departments.
    Mr. Cusick. I could not agree more, and that is why we 
think the engagement of leaders--in particular, senior 
leaders--is essential to the reputation of the government, its 
individuals departments, its various levels of leadership. And 
so we encourage the active involvement--Secretary Kempthorne 
has in particular taken our suggestions and I think made them 
work in the Interior Department.
    I am not as well informed about other departments, but I 
know that the general notion has been well received when we 
have presented it.
    Senator Voinovich. Thank you.
    Ms. Lovelace. Senator Voinovich, we work very actively in 
GSA, and I know in other government agencies, to implement the 
SES pay-for-performance system.
    Senator Voinovich. Well, I know one thing, that Steve Perry 
did it.
    Ms. Lovelace. Yes, he did.
    Senator Voinovich. Because he worked with me, my goal when 
I came here, we were going to do Total Quality Management, and 
it got lost somewhere. I guess we were worried about the human 
capital crisis that we had. But I know at least Mr. Perry 
worked on that pretty hard when he came in.
    Ms. Lovelace. You may remember that Mr. Perry and I came up 
and briefed you several times in terms of what we were doing. 
We both talked--and Mr. Perry actually helped us design our 
system within GSA when the act was first implemented for us to 
implement pay for performance. The cornerstone for that system 
then and the cornerstone for it now is having a really strong 
performance management part of the system.
    Senator Voinovich. You have cascaded it down all the way 
through the department, I know, not connected with pay 
increases, but just letting folks know that you like what they 
are doing and you have a feeling that they belong to the 
organization and are making a difference. Yes?
    Ms. Lovelace. You gave my answer for me. [Laughter.]
    I am thrilled that you remember that, yes, and we have 
actually strengthened our goals and our measures, both at the 
Senior Executive Service level and down throughout the 
organization, and a very clear connection with our strategic 
plan. And, clearly, as Mr. Johnson, I think, suggested, we can 
all make improvements on this, but we think we have made great 
strides to implement pay for performance.
    Senator Voinovich. Meaning that some other agencies could 
do it without legislation if they wanted to.
    Ms. Lovelace. At the SES level, we needed legislation in 
order to be able to do that. Below, we are cascading it down, 
but it is not linked directly to compensation changes.
    Mr. Johnson. They all are doing it.
    Senator Voinovich. This is a question--and this will be my 
last one--that I think Senator Akaka will like. At the 
beginning of this Administration--first of all, in the Clinton 
Administration, they had a labor-management partnership, and I 
recall recommending to Mitch Daniels that they should continue 
it, because my experience was when I was mayor and when I was 
governor that I had--I wanted communication with my labor 
unions. And as you know, we have been up and down on some of 
this. Early on, I think, Senator Akaka, we were doing pretty 
good. A lot of that legislation we got passed was only passed 
because the labor leaders went along with it. And since that 
time, I think things have kind of gotten a little bit tight.
    You are on your way out. What are your thoughts about the 
next Administration putting together a labor-management partner 
where even the President would meet periodically with the labor 
leaders to hear what they have to say to soften things up? 
Because I think in many instances--I mean, I am not telling you 
how you should answer this, but I think in many instances there 
were real concerns that the communication really was not there. 
They felt like they did not have access to the people that they 
needed. And in some instances, I have to say that it was just 
an excuse not to go along with something. So it is both of it. 
But it would seem to me that if you have some kind of a 
dialogue going on that level, that would help matters and maybe 
a lot more could be accomplished because there would be a 
better dialogue between management and labor.
    Mr. Johnson. I have made efforts when I first went over to 
OMB to reach out and establish strong lines of communication 
with the heads of the two unions, and what I found it to be a 
function of was not whether they had a union or not, but which 
one it was. And so I found I was able to establish a strong 
line of communication with one but not the other. So it is 
personality driven, not subject driven, topic driven, or union/
non-union driven.
    I also found that as soon as the leadership of the Congress 
changed from Republican to Democrat, union leadership's 
interest in communicating at all with my office went to zero. 
But there are examples of it working very effectively. When 
Homeland Security was developing their personnel system, when 
DOD and Gordon England was developing their personnel system, 
Mr. England went to great lengths to establish an effective 
working relationship with union leadership, and I think did so. 
And they had the difference of opinion, and agreed and 
disagreed and so forth. But that would never have happened if 
Mr. England had not been as effective as he was, Secretary 
England, working with union leadership.
    Senator Voinovich. I am familiar because I told them to 
slow the thing down because they were moving too quickly on 
that. And I said it will never work, it will blow up in your 
face. But I still think today that had we provided in that 
legislation that there would be a more robust dialogue back and 
forth and that if there were differences between management and 
labor and had it gone to an arbitration and let that decide, I 
think both parties would have done a better job of putting 
their best foot forward because there would be some downside if 
they did not; and then once it was done, no one could complain 
afterward that we did not have our say. And to this day, if you 
talk to the labor leaders, they say they just did what they 
wanted to do, in spite of the fact that for sure I know Mr. 
England really worked at it conscientiously.
    One last thing. I know I am taking too much time, but, Mr. 
Dodaro, you did pay for performance, and Senator Akaka and I 
just passed legislation dealing with some people in your shop 
that were unhappy with what you did. And I think that it was 
kind of a shock to your predecessor about--would you like to 
comment on it?
    Mr. Dodaro. Yes. As a result of some of the dissatisfaction 
of our employees--as you know, we have a union now at GAO. I 
just had a meeting with them this afternoon. I have opened up 
the dialogue. I am trying to create a constructive dialogue 
with them. We have these meetings. We are in our first effort 
to structure an interim collective bargaining agreement. So I 
think only good can come from good constructive communications, 
and that is the tenor that I am taking at the GAO as a follow-
up to the creation of a union within our organization.
    I would also like to go back to your point on the SES 
performance evaluation process and pay for performance. We 
would be happy to take a look at that, but when we do, I think 
the most important thing would be to see how that is anchored 
and the clear goals and objectives of the agency from the very 
beginning because if that is not there, then you are not going 
to have an outcome-oriented link going forward. And I would 
relate what Mr. Johnson said before, and I would agree with 
him, that the single biggest problem is not clear goals and 
objectives with clear outcomes to know where you are going to 
be at the end of the day. If you have that, the SES pay-for-
performance system can be a powerful tool to ensure that it is 
implemented and cascaded throughout the organization. That is 
how we run the GAO, and it is a very effective system.
    Senator Voinovich. Senator Akaka, thank you for 
entertaining this long questioning, but I thought you might be 
interested.
    Senator Akaka. Thank you very much, Senator Voinovich. This 
has been a great hearing for us, and I just want to mention 
that I have a labor-management partnership bill that I would be 
glad to have passed this year. Unfortunately, it is not the way 
the schedule is set up at the present time, but I think we need 
to continue to pursue that.
    Let me say that your statements will be included in the 
record for all of our witnesses. And at this time, Senator 
Voinovich and I would like to thank all of you for appearing 
here today and for your service to our country. The upcoming 
transition is a critically important issue, and you are 
critical players in making sure that it succeeds.
    I also want to especially thank again Deputy Director 
Johnson for coming before this Subcommittee many times over the 
years, as well as thank you to GAO. While we have often 
disagreed, it has proven that working together can achieve 
results, and I hope that we can all come back a year from now 
and look back on a successful transition.
    At this point let me ask, Senator Voinovich, whether you 
have any compelling remarks?
    Senator Voinovich. No. Thank you.
    Senator Akaka. Otherwise, the record of this hearing will 
be open for 2 weeks for additional statements or questions 
other Members may have pertaining to this hearing.
    This hearing is adjourned.
    [Whereupon, at 4:17 p.m., the Subcommittee was adjourned.]


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