[Senate Hearing 113-708]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 113-708
 
                       NOMINATION OF EARL L. GAY

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

                                HEARING

                               BEFORE THE

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS


                             SECOND SESSION

                               __________

                 NOMINATION OF EARL L. GAY TO BE DEPUTY
                DIRECTOR, OFFICE OF PERSONNEL MANAGEMENT

                               __________

                           NOVEMBER 18, 2014

        Available via the World Wide Web: http://www.fdsys.gov/

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs
        
        
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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                  THOMAS R. CARPER, Delaware Chairman
CARL LEVIN, Michigan                 TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin             KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota

                  Gabrielle A. Batkin, Staff Director
               John P. Kilvington, Deputy Staff Director
            Deirdre G. Armstrong, Professional Staff Member
     Ashley E. Poling, Counsel, Subcommittee on the Efficiency and 
      Effectiveness of Federal Programs and the Federal Workforce
               Keith B. Ashdown, Minority Staff Director
         Christopher J. Barkley, Minority Deputy Staff Director
               Andrew C. Dockham, Minority Chief Counsel
                  Sally Anne Braeuer, Minority Counsel
  Darien B. Flowers, Minority Research Assistant, Subcommittee on the 
   Efficiency and Effectiveness of Federal Programs and the Federal 
                               Workforce
                     Laura W. Kilbride, Chief Clerk
                   Lauren M. Corcoran, Hearing Clerk
                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Tester...............................................     1
    Senator Portman..............................................     4
    Senator Ayotte...............................................     8

                               WITNESSES
                       Tuesday, November 18, 2014

Rear Admiral Earl L. Gay, USN (Ret.), to be Deputy Director, 
  Office of Personnel Management
    Testimony....................................................     2
    Prepared statement...........................................    17
    Biographical and financial information.......................    19
    Letter from the Office of Government Ethics..................    35
    Responses to pre-hearing questions...........................    37
    Responses to post-hearing questions..........................    55
Hon. John Lewis, A Representative in Congress from the State of 
  Georgia                                                            11


                       NOMINATION OF EARL L. GAY

                       TUESDAY, NOVEMBER 18, 2014

                                     U.S. Senate,  
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:30 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Jon Tester, 
presiding.
    Present: Senators Tester, Portman, and Ayotte.

              OPENING STATEMENT OF SENATOR TESTER

    Senator Tester. I call this Committee on Homeland Security 
to order. Good afternoon. We are going to convene this 
afternoon's hearing to consider the nomination of Rear Admiral 
Earl Gay to serve as Deputy Director of the Office of Personnel 
Management (OPM).
    Rear Admiral Gay, thank you for seeking this position and 
thanks for being here today. We appreciate your service to this 
country.
    Admiral Gay. Thank you, sir.
    Senator Tester. It should be noted that Rear Admiral Gay 
has filed responses to his biographical and financial 
questionnaire. He has answered prehearing questions submitted 
by the Committee, and his financial statements have been 
reviewed by the Office of Government Ethics. Without objection, 
this information will be made part of the hearing record, with 
the exception of the financial data, which are on file and 
available for public inspection in the Committee's offices.
    Rear Admiral Gay currently serves as Senior Adviser to 
Director Katherine Archuleta at the Office of Personnel 
Management. He has been in this position since early this fall. 
A graduate of the U.S. Naval Academy, Rear Admiral Gay has a 
distinguished career of service in the United States Navy 
serving as a naval aviator from 1980 to 2013. With a master's 
degree in human resources management, Rear Admiral Gay's 
experience will definitely be an asset as he seeks the No. 2 
position in the Federal agency tasked with managing the Federal 
workforce.
    As we heard from witnesses at the hearing of our 
Subcommittee on the Efficiency and Effectiveness of Federal 
Programs and the Federal Workforce in May, there are a growing 
number of significant challenges to our efforts to recruit and 
retain experienced and skilled Federal employees. These folks 
are too frequently used by politicians as their punching bag 
when the budget season rolls around. Their integrity is often 
questioned. The retirement benefits are targeted, and pay and 
hiring freezes are often instituted.
    At the same time, these same folks, these politicians, also 
demand an efficient and effective Federal Government. You would 
never know it by the way they view and often treat the Federal 
workforce.
    Rear Admiral Gay, I would actually like to see us invest a 
little more time and resources into initiatives that allow 
agencies to better recruit, cultivate, and retain a quality and 
experienced Federal workforce. And I am not just talking about 
Federal employees in Washington. I am also talking about 
Federal employees on the ground in hard-to-recruit areas, for 
instance, in the Bakken in Glendive Montana.
    Whether you are talking about an engineer at the Bureau of 
Land Management or a doctor at the Department of Veterans 
Affairs, there is a job that needs to be done, and oftentimes 
these agencies need greater flexibility to incentivize 
recruitment and retention packages for the folks that they 
really need to do the job.
    Today we will also touch upon work done by OPM in carrying 
out 90 percent of the background investigations for the Federal 
Government. Along with Ranking Member Portman, Senators 
McCaskill, Johnson, and others, we have been putting forth a 
number of ideas to reform the process.
    In terms of the security clearance process, I look forward 
to hearing some of your thoughts on where we are and where we 
need to go in that vein.
    When Senator Portman gets here, we will certainly give him 
time for his opening statement, but since he is not, I will 
turn the floor over to you, Rear Admiral Gay, for your opening 
statement.

  TESTIMONY OF REAR ADMIRAL EARL L. GAY, USN (RET.),\1\ TO BE 
        DEPUTY DIRECTOR, OFFICE OF PERSONNEL MANAGEMENT

    Admiral Gay. Thank you, Chairman Tester, Ranking Member 
Portman, and Members of the Committee for the opportunity to 
appear before you today. It is indeed an honor for me to be 
considered as the nominee to be Deputy Director of the Office 
of Personnel Management, and I want to thank President Obama 
for nominating me to this important position and Director 
Archuleta for her support.
---------------------------------------------------------------------------
    \1\ The prepared statement of Rear Admiral Gay appears in the 
Appendix on page 17.
---------------------------------------------------------------------------
    I especially want to thank and recognize my wife of 32 
years, Ardella, who joins me here today and is a retired, 26-
year civilian Federal employee; and our two daughters, Faythe, 
who is a former naval officer, and Carmen, a pharmacist, 
collectively known as ``Earl's Girls.'' The fact that I am here 
today is because of their unwavering love and support.
    Growing up in Atlanta, Georgia, my parents instilled in me 
the importance of education and a sense of civic duty. I chose 
to embrace a life of service to my country by applying to the 
U.S. Naval Academy. It was there that I learned the essence of 
leadership--defining your vision, articulating expectations, 
and overseeing progress through transparency and 
accountability. These guiding principles have served me well 
throughout my career and made me the leader I am today. If 
confirmed, I will continue to follow these principles as I work 
to ensure that OPM is successful in its efforts to recruit, 
retain, and honor a world-class workforce for the American 
people.
    Throughout my 33 years in the Navy, I have had the honor to 
serve my country in various roles. I have deployed overseas, 
commanded a naval strike group, served as the Commandant of the 
Naval District Washington, and managed congressional affairs. 
These opportunities have afforded me the privilege of working 
with countless dedicated, patriotic public servants--both 
military and civilian alike. I am excited about the opportunity 
to continue to lead and learn from the most committed and 
capable individuals our government has to offer.
    If confirmed, I will use my skills in strategic planning 
and team building to assist Director Archuleta in leading and 
management of the agency. Under her leadership, OPM has 
improved our processing of new retirement claims, and we are 
now completing over 82 percent of cases in 60 days or less. The 
agency has also made great progress to strengthen our quality 
oversight controls within our background investigations 
program, and we continue to provide high-quality investigations 
for 95 percent of government. I am excited about the 
opportunity to play a significant role in advancing Director 
Archuleta's vision and the agency's strategic plan.
    Given my military and national security background, 
Director Archuleta has asked that I focus a significant amount 
of my time on Federal Investigative Services (FIS), working 
with the program office leadership and our Administration 
partners to implement the reforms directed in the President's 
120 Day Suitability and Security Review. I have also been asked 
to take the lead in working with our agency partners on efforts 
to recruit more veterans into our Federal Government. If 
confirmed, I look forward to working with Director Archuleta on 
her initiatives related to strengthening our recruitment 
efforts of women veterans. We must all ensure that we continue 
to honor the service of our military men and women, especially 
those returning from conflicts in Iraq and Afghanistan.
    Public service is a noble profession, and we must do all we 
can to recruit, retain, and honor a world-class workforce and 
strengthen and improve the services offered by OPM, from resume 
to retirement and beyond.
    Serving as Commander of U.S. Navy Recruiting Command prior 
to my own retirement, I was able to share my love of country 
and dedication to public service with young men and women and 
encourage them to join our ranks. I witnessed over 97,000 
patriotic Americans stand like I did so long ago and dare to 
take an oath and serve their country. I could not have picked a 
more fitting end to my Navy career, and I believe serving as 
the Deputy Director of OPM is a natural progression for me to 
continue to inspire Americans to join the Federal Government 
and serve their country.
    I thank you again for allowing me to appear before you 
today, and at this time, I would be pleased to answer any 
questions the Committee may have.
    Senator Tester. Before we get to the questions--and thank 
you for your testimony, Rear Admiral Gay--I am going to offer 
Senator Portman the opportunity for an opening statement.

              OPENING STATEMENT OF SENATOR PORTMAN

    Senator Portman. Thank you, Mr. Chairman, and thank you for 
having this hearing. And, Admiral Gay, congratulations on your 
nomination.
    Admiral Gay. Thank you, sir.
    Senator Portman. I hope my friend John Lewis shows up here 
in a minute to add his accolades to your service to our 
country. Thank you for your willingness to step up for this new 
job.
    We need you. OPM has got a lot of responsibilities right 
now. In fact, they are increasing, as the Chairman and I have 
learned through being on our Subcommittee, and there has not 
been a Deputy Director, I am told, for 3 years. So it is 
critical that the President nominated someone, and I am glad he 
has nominated someone who has the experience and the background 
to be able to be of immediate value to the leadership team at 
that agency.
    At its core, I think that your job is to recruit, train, 
and retain this 21st Century Federal workforce, and, again, as 
the Chairman and I have found out, we have some challenges. A 
lot of people are retiring. We have a lot of needs, 
particularly on the technology front, cyber front, that we need 
to fill.
    Health care is a big responsibility, of the Office of 
Personnel Management. It is both the Affordable Care Act and 
implementing that, but also existing responsibilities for 
Federal employees, and so you are going to be charged with a 
lot, tackling some big management challenges.
    On the cybersecurity front, we need better skills to be 
able to confront the serious threats we have right now to our 
Federal information technology (IT) systems. I am sure you are 
well aware of that in your work on the Navy side, but this is a 
really difficult challenge. Agencies have, we have determined, 
significant challenges in determining the size and composition 
of their cybersecurity workforce. We think the way the work is 
defined needs some work. We need to address that, and we think 
OPM can play a leading role in that.
    There is bipartisan legislation I have introduced with Mike 
Bennet called ``The Cybersecurity Workforce Assessment Act'' 
that we would love to get your input on. And then more 
generally we have to give the Federal Government the right 
tools to recruit the best and the brightest and, again, to 
retain those people.
    The Chairman has been working on that. The Federal agencies 
need the ability to share their qualified candidate lists so 
that potential hires do not fall through the cracks and I was 
glad to join the Chairman on his bill, which is called ``The 
Competitive Service Act,'' to address that very issue. I hope 
the full Committee will pass that legislation soon, and, again, 
we would love your input on that legislation. We think it could 
help your new role.
    So we look forward to getting into some questions with you, 
and, again, thank you for your willingness to step up to serve 
your country in a little different capacity but an equally 
important one.
    Admiral Gay. Yes, sir.
    Senator Tester. Well, thank you, Senator Portman.
    Our Committee rules require that all witnesses at 
nomination hearings give their testimony under oath, so I would 
ask you, Rear Admiral Gay, to please stand and raise your right 
hand and attest in the affirmative at the end. Do you swear 
that the testimony you are about to give the Committee will be 
the truth, the whole truth, and nothing but the truth, so help 
you, God?
    Admiral Gay. I do.
    Senator Tester. Let the record reflect that the witness 
answered in the affirmative. You may be seated.
    There are a number of questions that are stock general 
Committee questions, that are asked to every nominee, standard 
three questions.
    The first one is: Are you aware of anything in your 
background that might present a conflict of interest with the 
duties of the office to which you have been nominated?
    Admiral Gay. No, sir.
    Senator Tester. Do you know of any reason, personal or 
otherwise, that would in any way prevent you from fully and 
honorably discharging the responsibilities of the office to 
which you have been nominated?
    Admiral Gay. No, sir.
    Senator Tester. Do you know of any reason, personal or 
otherwise, that would in any way prevent you from serving the 
full term of office to which you have been nominated?
    Admiral Gay. No, sir.
    Senator Tester. Thank you very much.
    I am going to turn the questions over to Senator Portman 
while I get my throat cleared out, so, Senator Portman, if you 
would take over.
    Senator Portman. Thank you, Senator Tester. And I am going 
to start on something that actually Senator Tester and I have 
spent a lot of time on, both in hearings and also through some 
specific legislation, and that is these background 
investigation problems that we have had.
    The problem that we have identified is that some of the 
background investigations have not been done properly, that 
there is a backlog, and if anything, I think we are more 
concerned than ever because the Federal Investigative Service 
has just removed this contractor, United States Investigations 
Services (USIS), from their contract. And this has to be 
placing enormous demands on the remaining contractors. The 
other two contractors combined were only doing about 25 percent 
of the background investigations. So, our concern is heightened 
even further. If you could answer these questions to the best 
of your ability, we would appreciate it.
    One, do you know how big the current backlog is that was 
created when the USIS contract was ended?
    Admiral Gay. Not the precise number, no, sir, but I can 
provide that.
    Senator Portman. Are you aware that there is a significant 
backlog?
    Admiral Gay. Yes, sir, I am.
    Senator Portman. Do you think it is best to manage this 
transition, both the timeliness of these reports but also the 
quality of these reports, by bringing on additional 
contractors? Or would you stay with the contractors who are 
there?
    Admiral Gay. I know for a fact that we have brought on an 
additional contractor, NT Concepts. Back to the question of 
quality and timeliness, quality is first and foremost our major 
priority, our No. 1 priority.
    Senator Portman. On the investigations, do you know if 
there has been consideration to seek a memorandum of 
understanding with other agencies that already have background 
investigation firms on contract to be able to expedite that 
process?
    Admiral Gay. Not specifically, but I know that we are 
considering other alternatives so that we are not stuck with 
one major contractor or two. So we plan on looking at market 
research to make solicitations to diversify our contractor 
pool.
    Senator Portman. Just in general, do you have anything to 
add to this in terms of the Federal Investigative Service and 
how we are going to go about having more timely and higher 
quality reviews?
    Admiral Gay. Well, right now, sir, I would ask for a little 
patience because, as I stated before, the quality and integrity 
of the background investigations remains the No. 1 priority, 
and the two companies that took on the USIS absence have 
increased their capacity, and we are in close coordination with 
them weekly. I know that we receive weekly updates as they 
continue to increase their capacity.
    Senator Portman. This is going to be a big challenge for 
you. We look forward to working with you on it, and we hope you 
will take a look again at some of the work we have done, some 
of the hearings we have had.
    With regard to cybersecurity, I mentioned in my opening 
statement that this is another issue we have spent a lot of 
time on. These threats continue to grow, and they are not just 
growing in terms of the quantity but also the quality of the 
attacks, and, therefore, we need a highly skilled cybersecurity 
workforce to be able to deal with them.
    One of the things that I have been concerned about in 
particular--that we do not know what the current capability is 
of the Federal Government. We have tried to figure out, what 
skills we have in the current workforce. There was a 2011 U.S. 
Government Accountability Office (GAO) report that found that 
agencies are facing significant challenges in this because the 
size and composition of the cybersecurity workforce is like 
comparing apples to oranges. There is not a common lexicon on 
how do you define the work. There are not common job codes. And 
so agencies are struggling to even know what they have and then 
certainly what they need in terms of personnel.
    So we are looking for some help here, maybe a uniform 
classification for job functions, specific employment codes, so 
that agencies can map out the Federal Government's workforce to 
identify what the skill shortages are and where they might be 
able to help other agencies if they have a surplus.
    The full Committee recently passed an amendment to help 
with this, and, again, I am working on this proposal with 
Senator Bennet and others called ``The Federal Cybersecurity 
Workforce Assessment Act.''
    From your perspective, what are some of the challenges the 
government faces in terms of cyber workforce needs?
    Admiral Gay. Well, as you stated, sir, the cybersecurity 
area is one of the skill gaps that we must close, and that has 
been identified. What I plan on doing is to personally engage 
the Chief Human Capital Officers (CHCO) Council--the CHCOs of 
each agency--to ensure that they are invoking the correct 
applications to seek out those with those critical skills. And 
so from my military background, I am very well aware of and 
appreciate the importance of cybersecurity. Out in the fleet, 
it is absolutely vital that we preserve it because to lose it 
could cause damage or it could be a matter of life or death. So 
I take it very seriously.
    So I am looking forward to getting engaged with those 
efforts, sir.
    Senator Portman. OK. My time has expired, so I want to turn 
it back to the Chairman, but I do think this is an area where 
having a new Deputy will be really important, and we want to 
work with you on this to try to find out what we need and then 
close that gap as quickly as possible.
    Thank you, Mr. Chairman.
    Senator Tester. Thank you, Senator Portman, and once again, 
it is good to have you here today, Admiral Gay, and a special 
welcome to your wife. Thank you for coming to this hearing.
    I guess the first question would be: Why do you want this 
job?
    Admiral Gay. Well, sir, I have worn the cloth of our Nation 
since 17, and I retired last December. I am used to being on a 
team, and I like to work with people that are driven. I just 
think that this is a natural progression for me to continue to 
serve my country.
    Senator Tester. So as I referred to in my opening 
statement, the morale of the Federal workforce it is low. It 
may be as low as it has ever been. And the question is: There 
are some issues that revolve around it when you have low 
morale. Recruiting becomes a problem; retention becomes a 
problem. And these jobs are important.
    You have spent a career in the Navy. Do you have any ideas 
on what we could do to improve morale or what we could do to 
better recruit and better retain employees?
    Admiral Gay. Well, yes, sir, I do. Again, based on my 
experience--I will tackle recruiting first and then retention.
    In recruiting, I personally have used the USAJOBS website 
before, and it has vastly improved from the last couple of 
years. But I think we can get better. I think we at OPM can 
help the agencies better craft their announcements. Also, in 
the area of strategic recruitment to find out where the IT 
specialists are and so on and so forth.
    We had the same issues in my previous job. One of the 
critical occupations was nuclear power, and so we had to go out 
and seek those pools to see where the talent was at. I think 
that is one area that I am looking forward to engaging in from 
my past experience.
    As far as retention goes, I think we need to increase 
employee engagement, empower the employees to make sure that 
they feel empowered to be a part of the team, and that 
involves, in my mind, increasing efforts in developing their 
careers and training, by offering them training opportunities 
to succeed in the individual agencies.
    Senator Tester. OK. Veteran employment is about 30 percent 
of the civilian workforce, and it has been rising over the last 
few years. A lot of credit can be attributed to the 
Administration's Veterans Employment Initiative, which has the 
goal of enhancing recruitment and retention and promoting 
employment opportunities for veterans.
    Can you provide an update on that initiative?
    Admiral Gay. Yes, sir. As I stated before, that is one of 
the areas that I am closely, intimately involved with, and we 
have increased our veterans' new hiring. From 2009 to 2013, it 
rose from 24 percent to 31 percent. We still have to get 
better. There are a lot of initiatives out there, and we are 
currently working with the agencies. We have an Interagency 
Veterans Employment Initiative Council that meets monthly. One 
of my assignments is to become co-chair of the working group to 
advance their efforts.
    Senator Tester. OK. So would it be fair to say you think we 
are heading in the right direction?
    Admiral Gay. Yes, sir. I think the needles are moving in 
the right direction. That said, through, Director Archuleta in 
her various travels around the country, we also have noted that 
there will also be a 57-percent increase in women veterans 
coming into the workforce.
    Senator Tester. Yes, correct.
    Admiral Gay. So we are leaning forward in our efforts. We 
meet with the women veterans organizations to ensure that all 
veterans have equal opportunity to come and join our workforce.
    Senator Tester. OK. So in the hiring process of veterans, 
do you see any major challenges that still need to be 
addressed?
    Admiral Gay. In my opinion, as a new veteran, I plan on 
ensuring that the veterans better translate their military 
skills to civilian skills. We are also involved with helping 
them with hiring and interview training as well.
    Senator Tester. OK. Senator Ayotte.

              OPENING STATEMENT OF SENATOR AYOTTE

    Senator Ayotte. Thank you, Mr. Chairman.
    I want to thank you, Admiral Gay, and your wife for your 
willingness to serve and your prior service to the country.
    I wanted to followup on what Senator Tester just asked and 
your last answer. As I understand it, the area that we can also 
all work on together is that our veterans have incredible skill 
sets and how do we translate the understanding of those skill 
sets to a civilian sector position. So some of the things that 
are being done by our military, whether it is out in places 
like Afghanistan or even home side, making sure that the 
civilian sector understands what type of leadership skills that 
means, what kind of skills and training they got for that, so 
any thoughts you have on how we can work on that together I 
think is really important.
    Admiral Gay. Yes, ma'am. Right now I think the main impetus 
is to ensure that the agencies know the skill sets that these 
veterans bring to the table. As you mentioned, there are a lot.
    Senator Ayotte. Right.
    Admiral Gay. Including leadership. Some attempt to quantify 
leadership, because it is a multiplier. It really is.
    Senator Ayotte. Well, thank you. I appreciate that. I think 
that is really important given what our veterans can bring from 
their experiences to our civilian workforce, to the Federal 
workforce.
    I wanted to follow-up on the issue of security clearances, 
and I know Senator Portman had asked you in particular about 
the backlog that we have, addressing that backlog of security 
clearances. And what I wanted to followup on is another 
question related to the security clearance question, and that 
is the insider threat. So whether we saw a situation like 
Edward Snowden or Aaron Alexis, both who happened to work with 
the Federal Government but in a contract capacity, and as the 
background clearance system works right now, if you have a Top 
Secret clearance, you are reviewed every 5 years; Secret is 
about 10 years; and then Confidential is about 15 years.
    One of the things I have introduced with a number of my 
colleagues on this Committee and outside the Committee has been 
to introduce the idea of random audits in that process, because 
right now it is much more a self-reporting-oriented process. 
But as you know, a lot of things can change in people's lives, 
even over the course of a 5-year period, and never mind what 
can change over the course of a 15-year period.
    What are your thoughts on how we can work to better--not 
only address this backlog, which is critical, but also to 
address the issue of insider threats? I wanted to get your 
thoughts on the idea of random audits and any other thoughts 
you have on how we can do better in this regard.
    Admiral Gay. Yes, ma'am. The Suitability and Security 
Clearance Performance Accountability Council (PAC) has come out 
with 13 recommendations, and the areas that you just spoke of 
were covered in resolving those issues, including continuous 
evaluation. And so the Director of National Intelligence (DNI), 
OPM, the Office of Management and Budget (OMB), and other 
agency partners are authoring recommendations to improve that. 
Continuous evaluation is very important, having held a security 
clearance myself. And also decreasing the periodicity of the 
secret checks to 5 years, I personally feel that is an 
important move. So I am quite certain that I will spend a bulk 
of my time implementing those recommendations, ma'am.
    Senator Ayotte. Great. I appreciate that very much.
    And, finally, I just wanted to ask you, Senator Warner from 
Virginia and I recently co-authored a book chapter together, 
and the book is actually called ``Moneyball for Government.'' 
It is about how to make government smaller and smarter by using 
actually performance data to evaluate how well programs are 
doing and measuring programs. It is a really simple concept 
about how we need to measure what works and what does not work 
in order to know what policies to implement and what 
investments to make, especially as we look at a constrained 
environment.
    So the GAO released a report in September that reported 
that a lot of agencies are not using this kind of data to make 
decisions, but OPM is actually one of the two agencies that has 
improved its use of performance data. How will you in your role 
as Deputy Director make sure that OPM is doing all that it can 
to assure that it continues to use this performance data and 
really becomes a role model for other agencies on this?
    Admiral Gay. Yes, ma'am. As you stated, OPM is intimately 
involved with that. We consider ourselves the thought leader 
for data-driven metrics. So I plan on personally engaging the 
agency leadership--although Director Archuleta has been very 
forward in dealing with Cabinet members, I see myself as 
connecting personally with the other agency leadership to 
ensure that they have all the tools that they need. There are a 
lot of tools out there that are available, and so my job is to 
find out, one, if they know about them and, two, why aren't 
they using them.
    Senator Ayotte. Great. Well, thank you very much. I 
appreciate it.
    Admiral Gay. Yes, ma'am.
    Senator Ayotte. Thank you.
    Senator Tester. Senator Portman.
    Senator Portman. Thank you, Chairman Tester.
    I was going to talk a little about health care. I mentioned 
in the opening that it is one of your big responsibilities at 
OPM, and particularly in this new role, you are going to be 
asked to weigh in on a lot of these issues. You administer, as 
you know, the largest employer-sponsored health care plan in 
the United States of America, the Federal Employees Health 
Benefits (FEHB)--and its $45 billion in annual costs, and 8 
million individuals. Healthcare is obviously a very complicated 
issue, but specifically this plan puts OPM right in the middle 
of one of the tough issues to manage these days, costs and 
quality.
    One question for you is: Can you give us a sense of your 
background in this? You go into this job with, again, a great 
military background, but do you have any background in managing 
health care programs, in particular managing change or reform 
efforts within health care?
    Admiral Gay. Well, as far as health care is concerned, 
throughout my career I have been responsible for Sailors and 
Marines, but not only them but their families as well. And so I 
am well versed in it.
    As far as the meticulous management of health care plans, I 
have not been involved with that, but I have been involved with 
oversight and management of budgets and also strategic plans 
and campaigns. So I think those rich experiences will bode me 
well as I delve into this new area.
    Senator Portman. Admiral, I do not know if you have seen 
the President's proposal for the Federal Employees Health 
Benefit Plan, but he has basically said he would like to enable 
you at OPM to be able to contract out beyond those insurance 
companies that are currently in the FEHB. The Congressional 
Budget Office (CBO) has given us two very different scores in 
the President's last two budgets. The first budget they said it 
is actually going to cost a lot of money, and the second one 
they actually said that it is likely to have a savings of about 
$300 million. And we have been asking CBO to give us a detailed 
explanation of that. They really cannot.
    So let me ask you this: Are you aware of that? And how do 
you feel about it? Do you think that is a good idea to permit 
OPM to contract with new types of health plans that do not 
currently participate in the Federal Employees Health Benefit 
Plan?
    Admiral Gay. Yes, sir, I have not read the CBO report--I 
will read it--but I agree with the proposal.
    Senator Portman. Great. I think it sounds interesting, and 
I think it might give us some opportunities to allow employees 
some different kinds of plans than are currently there.
    I see that John Lewis has arrived. I described you earlier 
as ``my friend John Lewis,'' and it is rare that you actually 
get a visa to come over to this side of the Capitol, so this is 
a big deal. But welcome, and I will allow the Chairman to give 
you a proper introduction.
    Senator Tester. Well, I do not know if it will be proper or 
not, Ranking Member Portman, but I would just say welcome to 
John Lewis. Welcome to the side where only good and proper 
things happen in Congress. It is great to have you over here 
advocating for Rear Admiral Gay. The floor is yours.

OPENING STATEMENT OF THE HONORABLE JOHN LEWIS, A REPRESENTATIVE 
             IN CONGRESS FROM THE STATE OF GEORGIA

    Mr. Lewis. Well, thank you very much, Mr. Chairman. Thank 
you, my friend. We have been knowing each other for a long 
time, and I am glad that you extended me a visa to come over. I 
am delighted to be here to introduce--and I know he does not 
need an introduction--Rear Admiral Earl Gay, who was a neighbor 
of mine. I no longer live in the same neighborhood, but we 
lived in the same neighborhood for many years, and your parents 
still live in the neighborhood. And I am honored and delighted 
to be here to say a few words about this young man, the 
Presidential nominee for Deputy Director at the Office of 
Personnel Management.
    I apologize for being late. On the House side, we are 
organizing our committees and trying to go to work.
    I frequently run into my neighbor in the airport when he is 
heading home to visit his proud parents. This young man is very 
active and very involved. I see him just moving all the time.
    He is a proud native of the Venetian Hills neighborhood 
where I lived for more than 36 years in the same house. And I 
decided to be closer to the airport, a lovely neighborhood but 
I wanted to not drive so much on those highways and roads and 
streets in Atlanta and decided to move.
    He graduated from the Naval Academy in 1980 and completed 
flight training at the Pensacola Naval Air Station the 
following year. Throughout his career he continued to further 
his education. In addition to earning a master's degree in 
financial management from Troy State University, the 
university--you probably did not attend the site, but it was 
only 10 miles from where I grew up. When I was 17 years old, I 
wanted to attend Troy State, but I was denied admission because 
they did not admit African American students. And to be here 
today to introduce you as a graduate of Troy University says 
something about the distance we have come and the progress we 
have made in laying down the burden of race. So it is a great 
honor to be here. You also attended the Joint Forces Staff 
College and the business school at the University of North 
Carolina.
    Admiral Gay's Navy career took him from Atlanta across the 
country and around the world, deployed twice to support combat 
action in the Middle East, and his unit colleagues were 
repeatedly recognized with the Battle Efficiency ``E'' Award.
    His leadership and experience on the homefront is just as 
impressive. Rear Admiral Gay was the Navy's congressional 
liaison officer in the U.S. House of Representatives, after 
which he was appointed as the 86th Commander of the Naval 
District Washington and Deputy Commander of the National 
Capital Region Joint Force Headquarters.
    Rear Admiral Gay then moved across the country to San 
Diego, California, where he commanded the Expeditionary Strike 
Group 3 before serving as Commander of the Navy Recruiting 
Command until 2013.
    Following his retirement from an esteemed Navy career,
    Rear Admiral Gay returned to Washington, DC, to advise the 
OPM Director, and after three decades, he still wants to 
contribute more to our great Nation.
    Again, I thank you, Mr. Chairman and Senator Portman, for 
hearing me and allowing me to come here to say just a word and 
to introduce Rear Admiral Gay, a neighbor and a son of Atlanta, 
a son of Georgia, to you and to the Members of this Committee. 
I hope that you will find him to be a strong nominee for the 
position of Deputy Director of the Office of Personnel 
Management.
    Thank you, and I yield back.
    Senator Tester. Thank you, Congressman Lewis. Thank you for 
the kind introduction, and you are welcome anytime on this 
side--providing he has the right paperwork. No, it is good to 
have you here, and you are welcome anytime.
    Mr. Lewis. Well, thank you for having me, and you all come 
over to see us sometime.
    Senator Tester. Yes, we will do that. Thank you very much.
    Mr. Lewis. Come by and visit my office. We can offer you 
some peanuts and a Coca-Cola from Georgia. [Laughter.]
    Senator Tester. Well, Rear Admiral Gay, that was a great 
introduction by your friend Congressman Lewis.
    I have a few more questions, and we talked about this in my 
office a little bit. It deals with the issue of locality pay 
where, in some areas of this country, there is much more demand 
on the workforce. It is harder to get them. One of those areas 
is the Bakken, which is in eastern Montana and western North 
Dakota right now, where to get an engineer or to get anybody, 
it costs more than just about anywhere else in the country. In 
fact, I think Williston, North Dakota, was the most expensive 
place to live in the country, believe it or not. So that tells 
you what wages are.
    When I had a hearing out in Sidney, Montana, they were 
talking about the rent for a one-room apartment that was 
somewhere between $2,000 and $2,500 a month. So it is pretty 
crazy. So the pay has to reflect that cost of living.
    Do you believe you have adequate flexibility to utilize 
locality pay, to be able to bump it up, to be able to get the 
people we need in areas like the Bakken? And the Bakken is not 
the only place, by the way. There are other areas like that in 
the country.
    Admiral Gay. Yes, sir, locality pay in my opinion would be 
the long-term solution. A short-term solution, as Director 
Archuleta visited out in the Minot area, is to use the existing 
pay flexibilities where the three R's, as we call them, 
recruitment, retention, and relocation bonuses at one time to 
retain those great workers. All of those could be done without 
OPM approval. If that does not help out in those efforts, they 
can request through the applicable agencies special salary 
rates. And we found out last night that the Department of 
Interior has submitted that special salary request to OPM. So 
we are looking into that, yes, sir.
    Senator Tester. OK. So currently I believe there is a 2,500 
Federal employee threshold to be considered a metropolitan area 
so that you can utilize locality pay. Of course, we are talking 
about areas that are very rural, where the Federal workers cost 
more than they should, quite frankly, because of the demand in 
the private sector.
    Can you figure out a way to make locality pay or do you 
need our help to do that or can you do that through rural or 
can you do it--how can you do it to make it work in the rural 
areas?
    Admiral Gay. Yes, sir, I think that would require all of 
the agencies involved, including the Bureau of Labor Statistics 
(BLS), the Department of Labor, and I am willing to engage in 
that conversation, sir.
    Senator Tester. OK. The number of Federal workers retiring 
this year is double from 2009. As many as one-third of the 
Federal workforce will be eligible for retirement in 2017. That 
is not very far off. OPM's paper-based system has a significant 
backlog that leaves retirees waiting a long time, as long as a 
year, for their retirement paperwork to be processed.
    Can you give me an idea on what OPM is doing to modernize 
the retirement processing system?
    Admiral Gay. Yes, sir. Since I have been there, I have had 
the opportunity to work with Ken Zawodny and ask questions 
about our efforts at improving that time, decreasing that time. 
And as part of our strategic IT plan, we are procuring an 
electronic case management system. We are now in the last 
stages of the Request for Proposal (RFP) stage, to implement 
that.
    We are also looking at improving our customer service 
standards because the surveys that we have taken--and we take 
them seriously--found that those retirees that conduct business 
online are very satisfied. So we are trying to drive a lot of 
our customers to the online usage as well.
    Senator Tester. OK. Thank you. Senator Portman.
    Senator Portman. Admiral, I want to talk for a second about 
administrative leave. The GAO released a report recently--it 
was October--about the Federal agencies that have abused the 
lack of guidelines, clear guidelines regarding administrative 
leave. And as you know, administrative leave is paying 
employees not to work. The GAO report said that the most 
extended administrative leave is a result of agency 
adjudication of alleged employee misconduct or criminal 
activities. So it is for various things, but a lot of it is for 
misconduct. They also said some of it is for physical fitness 
activities, rest and recuperation for overseas employees. But 
it looks like from this report a lot of it is, an allegation of 
misconduct that has not been yet resolved, and so people go on 
administrative leave. And during that time they get their pay. 
They also get further accrued time toward their pension and for 
their vacation time.
    Fifty-seven thousand Federal employees were placed on paid 
administrative leave for a month or longer in fiscal years 2011 
through 2013. Four thousand employees were on administrative 
leave for over 3 months, 3 months to 12 months. Over 260 were 
on leave for 1 to 3 years. And, again, unlike medical leave, 
family leave, vacation leave, most of them were on paid 
administrative leave, according to GAO, for alleged misconduct.
    So this seems to be something where OPM needs to get 
engaged and involved, and, we are looking at this on our 
Subcommittee, obviously, but it is kind of a backward incentive 
system.
    By the way, that cost is about $700 million, over $12,000 
per employee.
    One, are you aware of this? But, two, do you have any plan 
to develop new guidance regarding the recording and reporting 
of paid administrative leave?
    Admiral Gay. On the administrative leave, our current 
policy is unless the member poses a threat on themselves or the 
work environment, that member is expected to return back to 
work in a duty status. To me, duty status means being 
productive.
    That said, the leadership of each agency has the inherent 
authority to manage their employees time. Again, I plan on 
personally engaging the agencies to find out how we can better 
provide them tools.
    Senator Portman. I like the idea of, while something is 
pending, having people work if they do not, again, create a 
danger to others. And one thing this report leads me to wonder 
is, can we streamline the adjudication process, too. When you 
have people out of work for months and in some cases a couple 
years waiting to get some misconduct resolved, it seems like we 
have a problem on timeliness of resolution of these alleged 
misconduct investigations.
    So what guidance would you as Deputy Director recommend 
agencies on this topic of adjudicating more quickly?
    Admiral Gay. Yes, sir, the performance management system 
that we have in place is not complicated, and it is based 
basically on the system that I am accustomed to in the 
military, and that is holding people accountable for 
performance: first of all, defining what the plans are and the 
mission set; second, articulating the expectations on all 
sides; and, third, throughout the process making sure that you 
provide feedback to the employees on their performance and 
documenting that feedback.
    If you do those three basic things, I think that we could 
preclude a lot of the issues, and the tools are there. We 
provide classroom training. We provide website instruction. And 
the agencies get together to talk about these. So that is one 
area that I plan to get personally involved with, speaking with 
some of the agency leadership on, because the tools are there, 
sir.
    Senator Portman. Great. Well, thank you for coming before 
us today and answering these questions, and your willingness 
again to step forward and serve your country again, this time 
in a little different capacity. I found it particularly 
interesting, as someone who is now in his late 50s, that our 
friend John Lewis called you a ``young man'' twice.
    Admiral Gay. Yes, sir. He is an American icon and one of my 
personal heroes.
    Senator Portman. He is an icon. But I thought that was very 
nice of him to call people of our generation ``young men.'' But 
we are glad that a man like you is willing to step forward to 
take on this task. And as I said, there are lots of challenges. 
You are jumping into a really difficult situation with all the 
potential retirements and actual retirements that the Chairman 
talked about, and the difficulty of attracting some of the 
talent to deal with the cybersecurity issue, and then some of 
the other issues we talked about that are just endemic to 
government where health care and all the other benefit 
programs, but also how do you be sure that the taxpayers are 
getting their money's worth. So we look forward to working with 
you on these and other issues.
    Thank you, Mr. Chairman.
    Senator Tester. Thank you, Senator Portman.
    I just want to followup just a little bit on the 
administrative leave stuff, because I do not think it is going 
to happen unless you are very proactive on it. I think the 
figures that Senator Portman put out, $12,000 per person of the 
ones who got administrative leave, this is the kind of stuff 
that drives taxpayers crazy and it drives people like Senator 
Portman and me crazy, too.
    The truth is that if you have the tools, I would just say 
use them. I think these agencies need to be educated on what is 
right, and if you are paying somebody not to work, there better 
be a very good reason for it. And I think you gave a couple 
good reasons, harm to others or themselves; otherwise, they 
ought to be working.
    In closing, I just want to say one thing. For the last 2 
years, we have had a chance to work with Senator Portman as 
Ranking Member on the Subcommittee on the effectiveness and 
efficiency of government, and I just want to for the record say 
it has been a pleasure. I do not know what is going to happen 
in this next Congress, but if I get to be a Ranking Member on a 
Committee that you are chairing, I look forward to that 
opportunity. So thank you, Senator Portman.
    Senator Portman. Could you indulge me for just a minute?
    Senator Tester. Sure.
    Senator Portman. It is funny. I was thinking the same thing 
earlier, that it has been great working with Senator Tester. He 
is no-nonsense, kind of gets to the point, calls everybody by 
their first name except for you, Admiral. You are the first 
one. That is a Montana thing. And I do not know where I am 
going to end up, on which Subcommittee, but I hope we will get 
to work together again. And, if I am fortunate enough to chair 
one of these Subcommittees, I am going to be lobbying you to 
come on as the Ranking Member.
    Thank you.
    Senator Tester. Well, for the record, I look forward to 
that, Rob.
    In closing, I will just say thank you, Rear Admiral Gay, 
for appearing before us today, for your opening statement, for 
your answers to our questions, for your confirmation as OPM 
Deputy Director.
    Without objection, the record will be kept open until 5 
p.m. tomorrow for submission of any written questions or 
statements for the record.
    With that, I would say this hearing is adjourned. Once 
again, thank you.
    [Whereupon, at 3:22 p.m., the Committee was adjourned.]
                            A P P E N D I X

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