[Senate Hearing 115-195]
[From the U.S. Government Publishing Office]







                                                        S. Hrg. 115-195

                         DEPARTMENT OF DEFENSE
                       CIVILIAN PERSONNEL REFORM

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

                                HEARING

                               before the

                       SUBCOMMITTEE ON PERSONNEL

                                 of the

                      COMMITTEE ON ARMED SERVICES
                          UNITED STATES SENATE

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 23, 2017

                               __________

         Printed for the use of the Committee on Armed Services



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                              COMMITTEE ON ARMED SERVICES

                           JOHN McCAIN, Arizona, Chairman       
JAMES M. INHOFE, Oklahoma           JACK REED, Rhode Island
ROGER F. WICKER, Mississippi        BILL NELSON, Florida
DEB FISCHER, Nebraska               CLAIRE McCASKILL, Missouri 
TOM COTTON, Arkansas                JEANNE SHAHEEN, New Hampshire
MIKE ROUNDS, South Dakota           KIRSTEN E. GILLIBRAND, New York
JONI ERNST, Iowa                    RICHARD BLUMENTHAL, Connecticut
THOM TILLIS, North Carolina         JOE DONNELLY, Indiana
DAN SULLIVAN, Alaska                MAZIE K. HIRONO, Hawaii
DAVID PERDUE, Georgia               TIM KAINE, Virginia
TED CRUZ, Texas                     ANGUS S. KING, JR., Maine
LINDSEY GRAHAM, South Carolina      MARTIN HEINRICH, New Mexico
BEN SASSE, Nebraska                 ELIZABETH WARREN, Massachusetts
LUTHER STRANGE, Alabama             GARY C. PETERS, Michigan
                                     
                                     
            Christian D. Brose, Staff Director
                  Elizabeth L. King, Minority Staff Director

                                   _______

                       Subcommittee on Personnel

                  THOM TILLIS, North Carolina, Chairman
JONI ERNST, Iowa                     KIRSTEN E. GILLIBRAND, New York
LINDSEY GRAHAM, South Carolina       CLAIRE McCASKILL, Missouri
BEN SASSE, Nebraska                  ELIZABETH WARREN, Massachusetts
           
                                     
                                    
                                  (ii)

  






























                           C O N T E N T S

                            ____________

                             March 23, 2017

                                                                   Page

Department of Defense Civilian Personnel Reform..................     1

Junor, Honorable Laura J., Former Principal Deputy Under              3
  Secretary of Defense for Personnel and Readiness, Department of 
  Defense.
Levine, Honorable Peter K., Performed the Duties of the Under         9
  Secretary of Defense for Personnel and Readiness, Department of 
  Defense.
Zakheim, Honorable Dov S., Former Comptroller, Department of         13
  Defense.

Questions for the Record.........................................    33

APPENDIX A.......................................................    34

                                 (iii)

 
                         DEPARTMENT OF DEFENSE
                       CIVILIAN PERSONNEL REFORM

                              ----------                              


                        THURSDAY, MARCH 23, 2017

                               U.S. Senate,
                         Subcommittee on Personnel,
                               Committee on Armed Services,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:33 p.m., in 
Room SR-232A, Russell Senate Office Building, Senator Thom 
Tillis (chairman of the subcommittee) presiding.
    Members present: Senators Tillis, Ernst, Gillibrand, and 
Warren.

            OPENING STATEMENT OF SENATOR THOM TILLIS

    Senator Tillis. Thank you all for being here, and I am 
sorry, we are running a little bit late. I do not like starting 
late. We just had a vote, but now we can dedicate our attention 
to a very important topic. I appreciate the ranking member and 
the Senator from Iowa joining us, and we may have other members 
join us later.
    But the Senate Armed Services Personnel Subcommittee meets 
this afternoon to discuss a very important topic in my mind, 
and it is civilian personnel reform. We are fortunate to have a 
group of former Department of Defense appointees with us, and I 
do mention ``former'' just in case people want to treat you 
like the current ones, to discuss ideas for forward-thinking 
reforms.
    The Honorable Dov Zakheim, the former Under Secretary of 
Defense Comptroller; the Honorable Peter Levine, former Deputy 
Chief Management Officer [DCMO] and official performing the 
duties of the Under Secretary of Defense for Personnel and 
Readiness. Was that your full title?
    [Laughter.]
    Mr. Levine. Senator, I was Acting Under Secretary, and then 
with the Vacancies Act, at a certain point, you are not allowed 
to be ``acting,'' and they give you a tongue-tying title to 
replace that.
    Senator Tillis. Gotcha. The Honorable Laura Junor, former 
Principal Deputy Under Secretary of Defense for Personnel and 
Readiness.
    I think most of us know, but it bears repeating that the 
Department of Defense employs close to 1 million civilian 
employees who serve in capacities supporting the warfighter, 
such as depot maintenance, facility mechanics, administrative 
support, nuclear engineers, scientists, healthcare 
professionals, lawyers, and accountants. These individuals are 
an important force multiplier for the Department of Defense 
missions worldwide. Today, we will discuss areas for improving 
the laws and regulations governing these employees.
    The management structure governing civilian employees is 
outdated, restrictive, and cumbersome. The Department of 
Defense and service branches are constantly asking for relief 
to make the system more flexible and manageable. This committee 
has spent the last few years legislating around restrictive 
civilian personnel practices, adding direct hiring authorities 
for scientists, students, acquisition personnel, and requiring 
stronger performance metrics and demanding that employees and 
supervisors be held accountable for mission accomplishment.
    However, these efforts are merely a start. Beginning in 
late 2015, the Senate Armed Services Committee held a series of 
hearings at the full committee level dedicated to the 
Department of Defense management overview and reform. At our 
November 15, 2015, hearing, ``Overcoming Obstacles to Effective 
Management,'' Mr. Richard Spencer, a former member of the 
Defense Business Board, testified to the challenges faced by an 
outdated system that prioritizes tenure above all else.
    He noted, ``On the civilian side, we need to adopt 
meaningful management performance measurement tools and educate 
managers on how to use those tools in order to craft a high-
performance Government service and Senior Executive Service 
cadre.
    ``To quote a charge-charging GS-14 [General Schedule] we 
interviewed, `How can the building compete for the best and 
brightest when the strategy for long-term success and promotion 
is just do not die?' ''
    Today, we will discuss alternative strategies for 
effectively hiring, managing, supporting, promoting, and 
divesting Department of Defense civilian personnel. I look 
forward to hearing from our distinguished panel on the 
important issue of civilian personnel reform.
    Senator Gillibrand, would you like to read an opening 
statement?

           STATEMENT OF SENATOR KIRSTEN E. GILLIBRAND

    Senator Gillibrand. Sure. Well, thank you, Senator Tillis, 
for your leadership and holding this hearing.
    I want to join you in welcoming our witnesses as we discuss 
this important topic.
    I want to start by stating for the record how essential I 
believe the civilian workforce is to the Defense Department. 
They are integral to the total force. They provide continuity 
at all levels of the force, from units deployed overseas to 
installations in the States to headquarters in Washington.
    They maintain our equipment at depots throughout the 
Nation; provide contracting and legal expertise; investigate 
misconduct, fraud, and waste and abuse; and address myriad 
issues within the services, such as investigating and 
responding to sexual assault and hazing. They are Americans who 
are committed to our national defense and may spend a lifetime 
performing vital work on behalf of the Nation in the capital 
region, across the country, and across the globe.
    In recent years, this committee and this Congress have used 
the civilian workforce as a target for cost cutting, with 
little focus on the larger strategic picture of how we recruit 
and retain the best people to support our warfighters. Congress 
reduced the civilian workforce's retirement benefits twice and 
mandated across-the-board reductions to workforce that were 
completely divorced from strategic purpose or consideration for 
health of the force.
    These measures have hurt morale, and they inhibit the 
Government's ability to properly shape this workforce. Under 
President Trump, management of civilian workforce has 
deteriorated further. Days after his election, the President 
instituted a Government-wide hiring freeze, which, though it 
has a national security exemption, has led to the confusion, 
frustration, and disarray within our civilian workforce.
    As just one example, my office has fielded calls from 
concerned military parents whose DOD [Department of Defense] 
school cannot hire teachers and whose military child care 
center cannot hire staff needed to address child care 
shortages. I know many others on both sides of the aisle are 
receiving similar complaints.
    There is a better approach to civilian personnel reform, 
which focuses on improving the Department's ability to hire 
talented individuals, sharpens the incentives to manage the 
workforce, and ensures the integrity of the workforce by 
enforcing merit principles and competitive hiring practices.
    I thank the chair, Senator Tillis, for holding this hearing 
so we can hear directly from these experts about how to more 
efficiently and effectively manage DOD's civilian workforce to 
shape the force we need today and into the future.
    Lastly, I would be remiss if I did not point out that most, 
if not all, legislation in this area is actually in the primary 
jurisdiction of the Homeland Security Committee and Government 
Affairs Committee, which Senator McCaskill is ranking on.
    Again, I thank the witnesses and look forward to your 
testimony.
    Senator Tillis. Thank you, Senator Gillibrand.
    Senator Warren, welcome to the committee.
    Senator Warren. Thank you.
    Senator Tillis. Thank you for attending.
    Senator Warren. Thank you, Mr. Chairman.
    Senator Tillis. We will start with the witness statements, 
and we will begin with Dr. Junor.

STATEMENT OF HONORABLE LAURA J. JUNOR, FORMER PRINCIPAL DEPUTY 
    UNDER SECRETARY OF DEFENSE FOR PERSONNEL AND READINESS, 
                     DEPARTMENT OF DEFENSE

    Dr. Junor. Thank you, Chairman Tillis, Ranking Member 
Gillibrand, for allowing me to come and talk about a workforce 
that I have the utmost respect for.
    I have already submitted my written testimony. So I would 
like to just briefly cover some of the observations and 
thoughts I have on reform.
    Over the course of my career, the vast majority of my 
colleagues have been high performers, if not overachievers, 
even in the midst of furloughs, pay freezes, and a constant 
rhetoric about how they more often detract from the business of 
the Government--of the Department rather than being part of the 
critical enabler.
    In fact, most of the frustration I have observed is not 
with the DOD's civilians themselves. Rather, it has been with 
the inflexible human resource system that governs them.
    For example, I have observed that it is hard to hire 
employees especially if you require particular skills for a 
position. It is also surprisingly difficult to hold employees 
accountable for poor performance or violating clearly 
established departmental or Federal policies. Finally, I found 
that it is difficult to adapt the inventory of Federal 
civilians even when the work goes away or substantively 
changes.
    For example, consider my experience on Secretary Gates' 
efficiencies task force in 2010. As I am sure you are aware, 
Secretary Gates wanted to shift the Department's resources away 
from overhead and towards activities more closely aligned with 
warfighting capabilities.
    Rather than repeating mistakes of blind percentage-based 
reductions, he preferred the painstaking approach within OSD 
[Office of the Secretary of Defense] of identifying and then 
eliminating low-priority lines of work and the staff that was 
associated with them. In the end, we found that adjusting the 
inventory of the traditional Title V workforce was much harder 
than we expected it to be.
    I believe there are some changes that could yield a more 
efficient workforce. First, publicly recognize the talent and 
significance of our civilian workforce. Again, this workforce 
has been plagued by furloughs, pay freezes, and this rhetoric 
that systemically associates them with being more of a burden 
to the Department than a critical enabler. It is hard to 
believe that we will continue to attract top talent with this 
as a background vocal.
    In addition, we should consider finding the right balance 
among Federal civilian, military, and contract labor forces. 
Each one of these labor pools has pros and cons. Imagine what 
we could do if we allocated work based on those attributes 
alone.
    We should also evolve towards flexible hiring authority, 
specifically the use of Title X, term employees, and I want to 
point out that I am currently sitting in a Title X term billet 
right now. That is how I am employed at the National Defense 
University.
    Finally, I want to consider holding supervisors more 
directly responsible for the performance of their subordinates 
and also supporting their validated employee assessments.
    In closing, I am proud to serve as a DOD civilian and 
humbled by the talent of my colleagues. This is an important 
topic. Thank you again for holding this hearing, and I look 
forward to your questions.
    [The prepared statement of Dr. Junor follows:]

               Prepared Statement by Laura J. Junor, PhD
    The views expressed in this testimony are my own and do not reflect 
those of the National Defense University or the Department of Defense.
    Chairman Tillis and Ranking Member Gillibrand, thank you for 
allowing me the opportunity to talk about a workforce for which I have 
the deepest respect. I've spent the majority of the last two decades 
analyzing military readiness, and in the course of those analyses I've 
learned that the quality of our people is the single greatest 
determinant of the readiness of our force. We know that this finding 
extends to Department of Defense (DOD) civilian personnel as well; 
these folks are the artisans at our maintenance depots, the medical 
professionals that care for the physical and mental well-being of our 9 
million beneficiaries, the intelligence analysts and cyber security 
experts that keep us safe, and the scientists and engineers that are 
solving tangible operational problems today and developing new 
capabilities for tomorrow. Attracting and maintaining a high-quality, 
high-functioning federal workforce is a critical enabler of DOD's 
mission, yet those that have worked in this personnel system are well 
acquainted with its challenges. I am honored to share with you my 
observations as a member and senior manager of this workforce. I will 
close with my thoughts on evolving the federal workforce in ways that 
benefit both the employees and their mission.
                              observations
    I've observed the typical DOD civilian to be a dedicated 
professional who takes the mission of the Department very seriously. 
Contrary to stereotypes, over the course of my career the vast majority 
of my colleagues have been high performers, if not overachievers, even 
in the midst of furloughs and perennial pay freezes. The typical 
federal civilian has marketable professional or technical skills and is 
not employed in the Washington, DC area. The average worker is about 47 
years old with 12 years of service. \1\
---------------------------------------------------------------------------
    \1\ From the Defense Civilian Personnel Advisory Service FY2017 DOD 
Appropriated Fund Population Summary.
---------------------------------------------------------------------------
    Our civil service system today is based on the same merit 
principles on which it was founded in 1883; and there's a lot of 
goodness in those principles. For example, we should:

      Recruit, select, and advance our people on the basis of 
merit, after fair and open competition
      Treat employees and applicants fairly and equitably
      Provide equal pay for work of equal value and reward 
excellent performance
      Retain or separate employees on the basis of their 
performance
      Protect employees from reprisal for lawful disclosures 
(whistleblower rights)
      Create an environment that encourages the development of 
new talent and ideas

    However the way that we have ``operationalized'' those principles 
ends up being extremely restrictive and that's detrimental to our 
mission and to our workforce. Most of the frustration I've observed is 
not with DOD employees themselves. It's been with the inflexibility of 
the human resources system that governs them. In fact, we're not 
talking about only one system; DOD has more than 66 different pay 
systems, and each has its own set of laws, regulations, and policies.
It is hard to hire employees especially if you require particular 
        skills for a position.
    According to my colleagues in the Office of the Under Secretary of 
Defense for Personnel and Readiness (OUSD P&R), it takes between 80 and 
150 days to hire someone in DOD, and that is when things go smoothly. 
In 2014, I attempted to hire an experienced, Title V General Service 
(GS)-14 readiness analyst. I was looking for an excellent writer, with 
demonstrated analytic skills and experience in some facet of readiness 
management. I gave up after nearly a year of frustration. Here's what I 
learned. First, in order to hire someone, you have to have an 
authority. We have at least 34 hiring authorities; that means a 
different set of regulations and processes for each authority. We have 
so many authorities, that in many cases, we don't know the rules for 
using them, or when we do know the rules, they are applied differently 
depending on where you work.
    For example, an excellent pathway to bring in new, skilled talent 
to the federal workforce is through the National Security Education 
Program Boren (NSEP) Scholars and Fellows program, which provides 
federal funding to bright undergraduate and graduate students to study 
the languages and cultures most critical to national security. However, 
to date, not enough federal human resources professionals know that 
Congress has provided direct hiring authority for this talented group 
of students. More simply, we give these students funding to fill a 
critical security need, require them to pay that funding back with 
federal service, and then struggle to find them positions in which to 
serve. Similarly, we typically only use a small percentage of the 
Department's authorized allotment of Highly Qualified Experts (HQEs). 
The Department has recently streamlined this process, but the true 
demand for HQEs is still likely more than the amount we are bringing on 
board. Again, many federal human resources professionals are probably 
unclear about the myriad of hiring options.
    The second thing that I learned as I attempted to hire a readiness 
analyst is that describing the required skills or performance standards 
for a job is surprisingly centralized. These standards also factor into 
how much we can pay an employee. Clearly, setting accurate and current 
performance standards is a critical element of hiring and managing 
employee performance. Under one of our pay systems, the General 
Schedule, jobs are ``classified'' based on a set of standards; in many 
cases, these standards are outdated or irrelevant. For example, the 
standard for ``computer science'' was developed in 1988. The standard 
for telecommunications was developed in 1990. It can take years to 
update or develop a new standard. Information Technology (IT) standards 
were updated in 2011 after three years of work. Given changes in IT, 
they are likely out of date again.
It is extraordinarily difficult to adapt the inventory of federal 
        civilians even when the work goes away or substantively 
        changes.
    Consider my experience on Secretary Gates's efficiency task force 
in 2010. Faced with 3 years of $1 trillion federal budget deficits, two 
demanding wars, increasing concerns about China, and a growing 
realization that the economy was disintegrating into a national 
security concern, Secretary Gates wanted to shift the Department's 
resources from overhead activities to those activities that directly 
contributed to warfighting capabilities. Rather than repeating the 
mistakes of past blind percentage-based reductions, he preferred a 
painstaking approach of identifying and then eliminating low-priority 
lines of work and the staff that was associated with them. His initial 
focus was on his own organization, the Office of the Secretary of 
Defense (OSD). His own hand-picked team worked with the OSD staff to 
identify these low-priority production lines, inventory the associated 
personnel and funding, and ultimately eliminate them in the next budget 
submission. We underestimated how difficult this was going to be. 
Without a reduction in force (RIF), the people that were associated 
with these billets remained a part of OSD, despite the fact that their 
work went away. Now the Department had the responsibility to find them 
other jobs. Many were placed in positions for which they were well 
matched. But many were placed more out of a need to find them ``any'' 
position rather than whether they were well qualified for a particular 
position. There were others that literally drifted without a billet for 
years. We had written into our procedures for addressing these 
personnel a provision that kept them from turning down more than one 
offer; we had not considered the prospect that some--many of them 
senior executives--would not receive an offer, even after repeated 
interviews. While the number of individuals in this category was very 
small, it does illustrate some of the challenges with the traditional 
title 5 system.
    There are also few options for adapting a traditional title 5 
organization to changes in the nature of work, such as those that arise 
because the work becomes more technical or requires new sets of 
advanced skills. Consider the Defense Language Institute (DLI), an 
organization primarily composed of title 10 instructors, each of whom 
is a native language speaker hired on a term basis. At DLI, the 
organization's demand signal is defined as the number of students for 
each language. As you can imagine, this demand signal changes 
significantly over time as different areas of the world become 
concerning. In the Cold War, for example, proficient Russian speakers 
were in high demand. As the wars in Iraq and Afghanistan evolved, 
different Middle Eastern languages became more critical. Now, DLI is 
likely seeing another swing in student requirements as Russia and the 
Balkans become increasingly concerning again. Because these are title 
10 instructors, DLI could always adjust the workforce accordingly, thus 
avoiding the need to figure out how to get Japanese or Spanish 
instructors to teach Farsi, or more recently, how to get Farsi 
instructors to teach Russian.
It is surprisingly difficult to hold employees accountable for poor 
        performance or violating clearly established departmental or 
        federal policies.
    Resolving cases of low performers or employees who engage in 
misconduct is a sensitive issue, and it should be. Let me begin with 
two clarifying points. First, I've only ever experienced a handful of 
these cases in all of the years that I've been employed by or 
associated with DOD. Second, although this problem is small, it matters 
a lot. The harm done by not resolving these cases is often born by 
employees across the whole of the affected organization. Again, this is 
a population that takes enormous pride in their mission and, when faced 
with a peer that is not holding up their part of the work, they often 
attempt to make up for that loss. In the case of an employee who 
engages in malfeasance, the peers often bear the brunt of the issue. 
Supervisors are duty-bound to protect their organizations from these 
effects, and most recognize that. Few follow through though. Based on 
my experiences, here's why I think that is.
    First, it takes years of copious record keeping and evidence 
gathering to even begin holding an employee accountable. In my 
experience, even documented evidence from 3rd parties (e.g., 
inappropriate activity on federal computers, time card fraud, and 
inappropriate contract management) or disconcerting results from 
repeated formal climate surveys were insufficient to overcome the 
reticence of senior leaders, labor management relations personnel, and 
attorneys, to move forward with action against an employee in excess of 
a minor counseling session. This is based on the fear of retaliatory 
complaints and law-suits from the poorly performing personnel. 
Employees must be protected from unsubstantiated or spurious 
accusations from their leaders; there is no question about that. But I 
found that even with clear and convincing evidence of misconduct or 
poor performance, there is almost no support for imposing meaningful 
penalties, much less undertaking the termination of an employee.
    Complicating matters, I've observed supervisors' tendencies to 
over-rate average or even poorly performing employees. This is likely 
true for three reasons:

      It is simply easier for supervisors to give a 
satisfactory rating. There is little justification required and it 
preserves peace in the organization.
      If it's a title 5 employee, that employee will likely 
stay in that position for many more years, even if their performance is 
rated below average. Put slightly differently, there is little short-
term gain from a low assessment, and the potential for a great deal of 
loss, especially if the employee files a formal complaint as a result 
of the appraisal.
      There is a credible fear of the employee filing a 
retaliatory formal complaint against a supervisor. It typically takes a 
year or longer for most of these complaints to resolve, leaving both 
the employee and the supervisor in a very difficult position.
                            reform thoughts
    I've argued that the civilian workforce is a critical enabler of 
DOD's mission, but there are real challenges in how we manage this 
workforce that constrain its extraordinary potential. What follows are 
my thoughts for how to address these challenges.
Publically recognize the talent and significance of our civilian 
        workforce.
    This workforce has been plagued by furloughs, pay freezes, and 
worst yet, systematic rhetoric that our civilian employees detract from 
DOD's mission, rather than serving as a critical enabler. It is hard to 
believe that we will continue to attract top talent with this as a 
background vocal. There is a body of research that suggests that 
mastering a skill and making a contribution are even more powerful 
personnel motivators than fiscal rewards. \2\ The converse is also 
true; the effects of careless disparagement of individuals that have 
mastered their craft and are contributing in meaningful ways is harmful 
and unnecessary. \3\
---------------------------------------------------------------------------
    \2\ A summary of this research is in Daniel H. Pink, Drive: The 
Surprising Truth About What Motivates Us (New York: Riverhead Books, 
2009).
    \3\ Bob Hale, the former Comptroller and Chief Financial Officer in 
DOD, made the same point in his recent publication. Robert F. Hale, 
``Business Reform in the Department of Defense: An Agenda for the Next 
Administration'' in Defense Strategies and Assessments (Washington, DC: 
Center for a New American Security, November 2016).
---------------------------------------------------------------------------
Find the right balance among the federal civilian, military and 
        contract labor forces.
    Although Secretary Gates's efforts to reduce overhead spending were 
much harder to accomplish than any of us realized, his objection to 
blind, ``salami slice'' cuts was well founded. Reducing any aspect of 
this workforce without reducing the actual work that goes with it will 
exacerbate existing inefficiencies and performance problems and 
jeopardize the mission. Such cuts are also likely to result in an 
eventual resurgence of some aspect of the workforce that has been 
``eliminated'', despite the best attempts to prohibit that. There are 
pros and cons to utilizing each of the broad labor categories: 
civilian, military, and contractor, and when the work is allocated 
based on these attributes, we can and should expect to achieve a more 
effective and efficient workforce. That said, such an outcome requires 
policy and legislative tools to adapt the federal workforce; I will 
discuss those below.
    As a means of finding real workforce efficiencies, consider the 
potential benefits from modernizing the human resources IT systems that 
we use to track and manage civilian and military personnel. Both are in 
tremendous need of updating. Upgrades offer the very real potential of 
saving significant labor while providing a significantly better 
product. For example, the military personnel management system remains 
as paper-intensive as it was in the 1950s. Even today, retiring 
personnel are told to make copies of their personnel records; typically 
hundreds of pages. We've invested in a very expensive electronic health 
record, but the very first medical form is the scan of a piece of paper 
from a Military Entrance Processing Station. On the civilian side, the 
myriad of human resources systems are equally inefficient, often 
inaccurate and incomplete, and lack the ability to ``talk to'' one 
another. Again, a modern system would certainly reduce labor and error 
costs as well as increase productivity.
Evolve toward simpler, flexible hiring authorities.
    The single biggest challenge that I've experienced in managing the 
civilian workforce is the inability to shape that workforce. That 
includes moving people with specific skills into jobs that require 
those specific skills and removing those that are either not performing 
well or those whose skills are no longer needed. I've found that title 
10 offers a great deal of flexibility, while maintaining incentives 
that will attract a quality workforce. I have managed title 10 
workforces and am currently occupying a title 10 positon.
    I've already described the critical workforce shaping advantages 
this authority provides to DLI. I am currently employed at the National 
Defense University (NDU) where 80 percent of teaching and research 
faculty are title 10. There is no evidence that this causes a problem 
attracting and retaining a talented workforce. In fact, my peers and 
I--each of whom has been hired for a particular and finite term of 
years--don't mind being held to challenging but fair performance 
standards, even at the risk of not being renewed for another term. This 
is an overachieving workforce that gains a lot of satisfaction from 
being recognized as authorities in their fields. The organizational 
risk of having such high performing employees is that they are 
extremely marketable and can be lured away at any moment. Retention has 
to be explicitly managed. At NDU, we do this with academic freedom, 
retention incentives, and publication support.
    I understand the concerns of many that moving toward a title 10 
civilian workforce would appear to forsake the tenets of a merit-based 
civil service system, potentially increasing the potential for 
unscrupulous managers to mistreat or mismanage applicants for vacant 
positions and subordinates. This risk can be minimized. NDU employs a 
governing Talent Management Review Board to ensure that our personnel 
are treated fairly and with respect. The typical term for an NDU 
employee is three years; this term can be renewed indefinitely, but 
each time, a decision to renew (or not) is made deliberately, based on 
an employee's performance and the University's requirements. NDU 
requires that every term employee be notified about whether they will 
be renewed at least a year before the end of their term. Each of these 
decisions is proposed by the employee's supervisor, but must be 
approved by the board. More specifically, an employee's supervisor, two 
years prior to the end of the term, recommends whether that employee is 
on target for renewal. If the issue is performance, the employee will 
have another year to improve before a final decision is rendered on his 
or her renewal. If the issue is a change in the University's 
requirement--meaning that the individual's skills are no longer 
needed--the employee's term is simply not renewed.
    A title 10 workforce means that there will be more employee 
turnover than we see with title 5 employees. That means new people will 
join organizations and bring with them new skills and perspectives. 
This ensures that the demand and supply for labor remains in sync. Both 
of these are great attributes that contribute to a highly effective 
organization. It also means that some people will have to leave the 
organization before they are ready to do so, and that can be hard. That 
is unavoidable, but it is a reality that millions of people in both the 
public and private sectors manage successfully throughout their 
careers. We owe employees a fair and predictable system and we can do 
that even, while at the same time affording both DOD and our employees 
greater flexibility.
    Not every organization would benefit from a title 10 workforce. But 
title 10 does seem to fit organizations with the following 
characteristics:

      The potential for the nature of the work to change 
significantly over time
      Work associated with technical/professional skills that 
require currency
    Furthermore, organizations should be delegated decisions over the 
critical elements of implementing a title 10 workforce. These include:
      Term length (e.g., 2 to 5 years)
      Establishment of clear performance metrics
      Renewability (limits on the number of terms authorized or 
indefinite)
      Competitive salaries
      Other perks, such as education and training support, 
telework agreements, sabbaticals, or IPA-type \4\ experiences within 
and outside of government to retain highly performing employees
---------------------------------------------------------------------------
    \4\ IPA stands for Intergovernmental Personnel Act. This is a 
program sponsored by the Office of Personnel Management that allows for 
the ``temporary assignment of personnel between the Federal Government 
and state and local governments, colleges and universities, Indian 
tribal governments, federally funded research and development centers, 
and other eligible organizations''. These assignments are for a finite 
term; usually one or two years with the potential to renew the term 
once. From .
---------------------------------------------------------------------------
Hold supervisors responsible for the performance of their subordinates 
        and support their validated employee assessments.
    The most basic reform must address the failure to identify current, 
job-specific performance standards and to hold employees to those 
standards. Moving to a title 10 authority will not be useful if 
supervisors don't know what good performance looks like or are 
unwilling to hold employees accountable for that performance. This 
begins with decentralizing position descriptions and performance 
standards to reflect current requirements of individual vacancies. 
Supervisors are responsible for accurately assessing each individual's 
ability to meet those requirements. Holding supervisors personally 
accountable for the work of their subordinates is essential. Each 
supervisor should have in one of his or her performance objectives an 
element that addresses how well their employees perform individually 
and as an organization. For example, if an employee fails on a project, 
the supervisor's rating should reflect whether the supervisor actively 
addressed that failure. Conversely, supervisors should be rewarded when 
individuals and the collective improve. There is no way to avoid the 
supervisor's fear of retaliatory charges associated with low 
performance ratings or holding employees accountable for major policy 
violations. Employees must have the means to signal unfair or unethical 
supervisor treatment. However, we can and should expect all charges to 
be reconciled within six months. Faster resolution would benefit 
everyone.
    In closing, I am proud to serve as a DOD civilian and humbled by 
the talent and dedication of my colleagues. We can provide a more 
rewarding work experience and a better mission outcome by simplifying 
our hiring authorities, decentralizing their implementation, tailoring 
performance standards and position descriptions to the specific 
requirements of each job, and definitively recognizing both good and 
bad performance.

    Senator Tillis. Thank you, Dr. Junor.
    Mr. Levine?

STATEMENT OF HONORABLE PETER K. LEVINE, PERFORMED THE DUTIES OF 
  THE UNDER SECRETARY OF DEFENSE FOR PERSONNEL AND READINESS, 
                     DEPARTMENT OF DEFENSE

    Mr. Levine. Thank you, Mr. Chairman, Senator Gillibrand, 
members of the subcommittee.
    Thank you for taking on this issue. I think it is a 
tremendously important issue, and I agree with--with I think 
everything that Dr. Junor just said.
    I would like to--you have my written statement. So I would 
like to just focus again on a few key points.
    First, the DOD's civilian workforce is not only incredibly 
important. It is also an incredibly diverse workforce. We have 
everything from nurses to truck drivers to people who make 
foreign policy recommendations, and I think that you need to 
understand that, and I hope that you will keep that in mind and 
avoid ``one size fits all'' solutions, thinking that the same 
solution that we need for the policy adviser is also 
appropriate for the truck driver.
    With that said, I would like to specifically address a 
number of the topics that you raised in your invitation letter. 
First, hiring. It seems to me that the single most important 
thing that you could do in hiring is the step that you took 
last year by giving DOD direct hiring authority for students 
and recent graduates.
    I know when I was in the Department, we really appreciated 
that, and if there were one thing I could urge you to do, it 
would be to make that authority permanent. If you were going to 
look for other areas to reduce red tape, I would suggest giving 
the Department its own classification authority independent of 
OPM.
    I would--you might also want to think about establishing a 
separate DOD SES [Senior Executive Service] workforce, a 
defense SES workforce so that DOD would be able to hire its own 
SES employees independent of OPM [Office of Personnel 
Management] review and approval. I cannot tell you how long and 
aggravating that OPM review and approval process is.
    Second, with regard to pay systems, DOD has long benefited 
from the flexible pay authorities that Congress has authorized 
for science and technology employees, acquisition employees, 
medical professionals, the cyber employees, and I support these 
kinds of authorities--the expansion of these kinds of 
authorities to financial managers, policy experts, and other 
knowledge workers.
    I think there are a variety of approaches you could 
consider for these kinds of knowledge workers, including the 
use of step increases based on performance rather than tenure, 
more flexible bonus authority. I think it is extraordinary 
right now, and I do not know how many people know this. But an 
SES employee can get up to 15 to 20 percent of their salary, 
their base salary in bonuses, but a GS-15 is limited to about 1 
percent. Now that is not a balance in terms of incentives that 
makes a lot of sense to me.
    The one thing I would be cautious about is an across-the-
board pay banding approach like what the Department tried with 
the NSPS [National Security Personnel System] system, and that 
is because, again, looking at the diversity of the workforce, 
the authorities that the Department needs for its high-tech 
professionals and knowledge workers may not be appropriate for 
clerical workers or truck drivers, wrench turners, warehouse 
workers, and others.
    Experience shows that it will take a lot of effort for the 
Department to establish that to try to impose that kind of 
authority. In the past, that undermined the entire effort, and 
the effort to reform DOD personnel practices were lost over 
that.
    Third, performance management. I was personally 
disappointed by the recent change in the DOD performance 
management system that makes it more--that eliminated--reduced 
the number of evaluation categories, making it more difficult 
to distinguish employees who show consistent hard work from 
those who just meet minimum requirements. This may be the right 
answer for some parts of the workforce, but I would advocate 
again, at least for the knowledge-based workforce of the 
Department, restoring a fourth evaluation category so that 
those employees who go above and beyond requirements can be 
rewarded for their effort.
    Finally, with regard to preference eligibilities, I think 
that the committee made a noble effort last year to address 
this issue, even though the language that you drafted proved 
problematic because of unintended consequences for the veterans 
preference, and I would suggest that if you choose to address 
the issue again, it would be wisest to focus specifically on 
internal promotions and to clarify that internal promotions are 
to be merit based, with preferences as a tie-breaking factor. 
That would then ensure that the role of preferences for all 
outside hires would remain unchanged.
    I appreciate your inviting me here today. I appreciate your 
taking on these difficult issues. They are very complex, and I 
look forward to your questions.
    Thank you.
    [The prepared statement of Mr. Levine follows:]

                   Prepared Statement by Peter Levine
    Chairman Tillis, Ranking Member Gillibrand, Members of the 
Subcommittee, it is a pleasure to appear before your Subcommittee this 
afternoon. The views I express are entirely my own, and should not be 
interpreted as reflecting any position of my new employer, the 
Institute for Defense Analyses.
    As you know, I worked on the staff of the Armed Services Committee 
for 18 years, and I place a tremendous value on the work that you do to 
support our men and women in uniform and their families. As the 
Subcommittee undertakes the important task of civilian personnel 
reform, I would suggest that you take into account a few 
considerations.
    First, the civilian employees of the Department of Defense are an 
essential pillar of the Department on which our military relies to 
perform its critical missions around the world every day.
    DOD civilians administer highly complex and legislatively mandated 
personnel and pay systems. They run training and education programs, 
manage travel and change of duty stations, and provide security, 
support, and facilities sustainment on military bases. They help 
address problems like sexual assault, suicides, bullying and hazing, 
and drug abuse. They provide financial advice, voting assistance, and 
family life counseling to Service members around the world. They play 
key roles in running 664 hospitals and clinics, 172 schools for 
military children, 1,880 retail stores, and 2,390 restaurants for our 
men and women in uniform.
    DOD civilians also serve as operational enablers in the 
intelligence and cyber domains, and are essential to warfighter 
training and combat system and equipment readiness. They help manage 
and oversee more than $200 billion a year in acquisition spending and 
run the largest and most sophisticated research and development 
activity in the world. They operate depots and arsenals that maintain 
and recapitalize a huge inventory of the most complex and advanced 
fighting equipment in human history. They are the life-blood of a 
logistics system that works 24 hours a day, 365 days a year to ensure 
that military equipment and supplies are ready when and where needed, 
anywhere in the world, and often with little or no notice.
    Second, the vast majority of DOD civilian employees are highly 
motivated, hard-working, and strive to perform with excellence. In my 
time at DOD, I found that the career civilians who surrounded me 
believe strongly in the importance of the Department's mission and want 
to contribute to it. New projects and new work are embraced 
enthusiastically by employees who work long hours without any reward 
beyond the challenge of the work itself and the understanding that the 
results they produce are valued by the Department's leadership.
    This, in my view, is the great competitive advantage of the 
Department of Defense in the employee marketplace. DOD will never be 
able to pay its civilian employees as much as the private sector. What 
the Department can offer instead is challenging assignments, great 
responsibility, and the pride that comes from serving a cause that is 
greater than oneself. Of course, this also means that when we treat DOD 
civilians as worthless bureaucrats who are sucking up money that could 
be better spent on more ships and planes, we risk undermining the 
competitive advantage that enables us to attract and motivate the 
capable employees we need to support the national defense mission.
    Third, the laws, rules, and practices governing the civil service 
system at DOD have become overly bureaucratic and stultified over the 
years. As a result, it is more difficult than it should be to hire the 
talent that the Department needs, to remove workers who aren't up to 
the job, and to advance capable employees into the positions in which 
they can contribute the most. Capable military and civilian leaders at 
the Department are generally able to work within the existing system to 
get the results they need, but it can be frustrating and time-consuming 
for everyone involved.
    For example, when I was serving as Acting Under Secretary for 
Personnel and Readiness, it came to my attention that when a civilian 
employee moves from one DOD component to another--for example, from the 
Army to the Navy, or from the Air Force to the Defense Logistics Agency 
[DLA]--he or she was treated as a new employee. That meant getting a 
new ID [identification] card, a new drug test, and repeating mandatory 
training events the employee had already completed in the previous 
position. By establishing reciprocity in these areas, we were able to 
save more than $25 million dollars a year--and avoid countless hours of 
aggravation for employees who no longer have to undergo these 
meaningless requirements.
    This Committee has already enacted significant new flexibilities 
that enable the Department to better manage its civilian workforce. 
These include demonstration programs providing flexibilities for 
science and technology employees, for acquisition employees, for 
intelligence employees, for medical professionals, and most recently 
for cyber employees. They include the direct hiring authority that you 
enacted last year, and the revised Reduction in Force authority that 
you enacted the year before that.
    Here's how important these reforms are: two years ago, one of my 
SES managers complained to me that her aging workforce was reluctant to 
embrace new technologies. A second manager said that she didn't have 
this problem--her workforce skewed young and adopted new technologies 
on their own without prompting. The difference was that the second 
manager was in the Acq Demo program, with direct hiring authority that 
greatly enhanced her ability to bring recent graduates into the 
workforce. The legislation you enacted last year provides this critical 
authority to the entire Department of Defense.
    So, we have a highly capable and motivated civilian workforce, 
working in a clunky personnel system that too often impedes their 
performance. This isn't a contradiction, but it does mean that while 
reform is needed to improve workforce management, the reform effort 
must be carefully targeted to ensure that it addresses what is broken 
without undermining the large and diverse civilian workforce on which 
the Department relies today.
    I would suggest that the committee consider three principles to 
ensure that your reform efforts build and improve upon DOD's civilian 
workforce and do not risk breaking it.
    First, beware of one-size-fits-all solutions. A reform that works 
for scientists and engineers in defense laboratories might not meet the 
needs of wrench-turners in the depots and arsenals.
    When I served as DCMO, I learned that the hiring process in the 
Pentagon was hamstrung, in part, because we relied on a standard 
questionnaire applied by the Defense Logistics Agency to determine who 
was ``best qualified'' for a position. Because this questionnaire 
failed to serve as an effective screen, hiring managers spent countless 
hours refining position descriptions to ensure that their new hires 
were actually qualified.
    I got around this problem by authorizing hiring managers to use 
panels of subject matter experts, in lieu of the DLA questionnaire, to 
determine who was really ``best qualified'' for a position. I did not 
make this process mandatory, however, because the Director of the 
Pentagon Force Protection Agency told me that he needed to be able to 
hire several hundred new law enforcement officers at a time, and it 
would not be practical for him to use expert panels in lieu of a 
screening test. This was an important lesson for me in the diverse 
needs of different parts of the DOD civilian workforce.
    Second, don't reinvent more than you have to. Our civil service 
system is incredibly complex. It has thousands of pages of rules--but 
that is because there are thousands of issues that human resource 
managers must address, and they cannot do so without guidance.
    Back in the 1990s, when then-Vice President Gore was leading a task 
force on ``reinventing government,'' he made a big show of throwing out 
the civil service rule book as a streamlining measure. I remember being 
told at the time that savvy human resource managers kept bootleg copies 
of the rules, because the same questions were still going to come up 
and they were still going to need to know how to answer them.
    A few years later, when Congress authorized the Department of 
Defense to establish a new ``National Security Personnel System,'' the 
Department spent countless hours writing new rules to replace the old 
ones. NSPS made changes to parts of the system that probably needed 
change, but it also changed parts of the system that were working 
perfectly well. In the end it failed because of the controversy 
generated by parts of the new system that probably weren't necessary at 
all, and this failure dragged down the prospect of constructive 
reform--in areas where it remains very much needed--for another decade.
    Finally, any reform effort should treat employees as allies, not 
enemies. I know, for example, that there is great interest in making it 
easier to remove poor performers. It is true that the Department has a 
very small number of civilian employees who simply aren't up to the job 
or refuse to carry their share of the workload. These employees can be 
a drag on the rest of the workforce, and are very difficult to remove.
    A large part of the problem is that few DOD managers believe it is 
worth the time and effort required to go through a performance 
improvement process that can take more than a year to complete. At 
least in the short run, they are probably right: the overall 
productivity of a program or office is likely to go down, not up, if 
the senior manager is required to spend huge quantities of time on an 
employee who produces a tiny amount of work. The kind of managers we 
want in the Department--the kind of people who are motivated by the 
mission--would rather spend their time on substantive work, even if it 
means leaving an unproductive employee on the payroll.
    As you consider possible measures to address this issue, however, 
you consider the impact that any proposed changes would have on the 
balance of the workforce. If legislation that is intended to address a 
problem with one percent of the workforce is perceived as threatening 
and hostile by the other 99 percent, it may undermine morale and reduce 
the Department's ability to attract and retain the capable employees 
that it needs. The civilian workforce will not become more productive 
if problem with a small number of poor performers is addressed with 
measures that are perceived as a declaration of war on all employees.
    Fortunately, I believe that there are steps that Congress and the 
Department could take to make it easier for managers to remove poor 
performers within the existing rules, without threatening the vast 
majority of the workforce whose performance and work ethic does so much 
for the Department every day.
    For example, this Committee recently enacted legislation that 
established a two-year probationary period for DOD civilian employees, 
but the Department has done little to take advantage of that 
legislation. What if DOD were to institute a routine review, before the 
expiration of the probationary period, to assess the employee's 
performance and determine deliberately whether or not he or she should 
be retained as a tenured employee?
    With regard to the existing removal process, why not offer 
assistance to managers rather than requiring them to bear the burden of 
the performance improvement process alone? Isn't it possible that by 
establishing a few dedicated performance improvement managers in an 
agency, we would change the managers' calculus, opening a route for 
them to remove unproductive employees without sacrificing countless 
hours of their own time to the effort?
    These are difficult issues, but important ones. I thank the 
Subcommittee for taking on the issue of civilian personnel reform, and 
I thank you for inviting me to participate in your review. I look 
forward to your questions.

    Senator Tillis. Thank you, Mr. Levine.
    Dr. Zakheim?

  STATEMENT OF HONORABLE DOV S. ZAKHEIM, FORMER COMPTROLLER, 
                     DEPARTMENT OF DEFENSE

    Dr. Zakheim. Well, thank you, Chairman Tillis and Ranking 
Member Gillibrand and members of the committee.
    I appreciate your giving me the chance to testify on this 
issue. I have also submitted written testimony, and I would 
request that it be included in the record, if that is okay?
    I do not disagree with much of what you just heard, but I 
would go further and wider. First of all, and maybe this is 
because I not at all that long ago was a green eyeshade, DOD 
civilian personnel account for about 36 percent of all full-
time DOD personnel, including the Guard and Reserves that serve 
full time.
    In the past 15 years, DOD has added 77,000 more civilians. 
That represents an 11.5 percent jump in the workforce since 
2002. Military end strength declined by 8 percent, or 120,000 
personnel, in the same time frame.
    Over those 15 years, civilian pay increased by a very 
healthy 31 percent, and most of that increase went to General 
Schedule white collar workers. The blue collar wage board--it 
is about one-third of the total civilian force--their pay 
actually declined in fiscal year 2017 dollars by about 5.5 
percent. So you got a real imbalance right there. At the same 
time, of course, as you know, total military pay for Actives 
and full-time Guard and Reserve barely rose at all, 0.2 
percent.
    So with civilian pay consuming a significant portion of the 
budget and in light of other needs in the defense enterprise, 
whether it is to increase Active Duty end strength or enhance 
readiness or provide more funding for acquisition, you have got 
to look at whether the productivity of the civilian workforce 
justifies the resources it has consumed over the last decade 
and a half, and I think the answer is clear. It simply has not.
    It is highly questionable whether defense civilians--not 
all of them, obviously--are making the most of information 
technology systems that are available to them, operating at the 
cutting edge of cyber technology, or acting as an educated 
consumer when procuring the vast range of high-tech systems 
that combine with our military personnel and comprise the 
lifeblood of our fighting power.
    Finally, the availability of contractors to carry out many 
of the same missions as the civilian staff, which we politely 
term ``staff augmentation,'' has often resulted in civilians 
offloading to contractors works for which they are themselves 
responsible with the result that what is produced is more 
costly and often, in my personal experience, less than adequate 
to the task.
    I am first going to talk about manpower efficiencies and 
then talk to some training and education issues and the issue 
of staff augmentation. GAO [Government Accountability Office], 
in December 2015, reporting on just the acquisition workforce, 
said that the Department had yet to identify and certainly not 
address all the gaps in civilian skills, and I am quoting here, 
``that are essential for effective human capital management.''
    At the time of the report, DOD had not an updated its 
acquisition workforce plan, and at that time, it appeared that 
DOD had not established time frames for addressing these 
concerns, all of which go to the heart of workforce efficiency. 
Not clear to me how much progress has been made in the past 
year.
    Then in October of 2016--in other words, 6 months ago--GAO 
addressed the entire workforce, and it said that DOD had ``not 
developed and implemented an efficiencies plan for reducing 
civilian and contracted services workforces.'' In fact, DOD, 
according to GAO, seemed to be circumventing the intention of 
Section 955 of the 2013 NDAA, which called for this kind of a 
plan to cover fiscal years 2012-2017.
    Section 955 allowed DOD to exclude required reductions that 
it identified as critical, and the Department--and this is not 
the first time I have seen this happen in my career--excluded 
538,000 out of the 776,000 civilians, which meant, of course, 
that you really were not going to be dealing with the entire 
civilian workforce. DOD has not really challenged GAO's 
findings or the assumption that the civilian workforce could be 
more efficient.
    In fact, in his memo of February 17th of this year, 
Secretary of Defense Mattis explicitly called for, and I am 
quoting, ``making our business operations more efficient and 
freeing up funds for higher priority programs.'' So what I am 
saying is not original at all.
    Moreover, and here he was incorporating a taxonomy that the 
Defense Business Board highlighted in its own January 2015 
examination of DOD efficiencies, the Secretary called for 
``exploring efficiencies with respect to human resource 
management.'' The board specifically identified civilian 
personnel as a major target of opportunity for efficiencies in 
the human resources realm.
    The board pointed out that annual savings from what it 
termed ``optimizing the Government labor footprint'' could 
amount to anywhere from 8 to 13 percent of total back office 
costs. Allowing for the fact that 60 percent of that force is 
civilian, we are talking about $5 billion to $8 billion in the 
fiscal 2017 budget alone.
    Part of the reason that the workforce is not as efficient 
as it could be is lack of training and education that it needs 
to keep pace with new development in technology, in cyber, and 
in human resource management itself. DOD civilians can take 
courses in everything from auditing to contracts management to 
test and evaluation and cost estimation. But many or most of 
these course are taught via distance learning, which does not 
necessarily ensure that students will absorb or retain what 
they have been taught.
    They take these courses at the Defense Acquisition 
University. All you have to do is go online and look at the 
course offerings. It does not offer courses in human resource 
management, which is key to ensuring that officials at every 
level strive for efficiency on the part of their staffs, and 
most of its courses are, in fact, distance learning courses.
    Now the various better buying power of reforms that have 
been promulgated in recent years, they have gone some distance 
to remedying the paucity of training requirements for 
acquisition officials, but there is some way to go. Human 
resource training programs for civilian managers, which you 
have just heard about, are much further behind.
    There is no advanced education requirement for members of 
the Senior Executive Service or people who want to be promoted 
to the Senior Executive Service. DAU [Defense Acquisition 
University] offers training. That is very different from 
education. To be proficient in the management of human 
resources or even to be an educated consumer of technology, you 
need more than training.
    The military has a system of professional military 
education. You cannot move up unless you have taken, been at 
staff college, been at National War College or one of the 
service war colleges. Not the case for civilians. There is no 
civilian equivalent.
    I would recommend that no civilian be promoted to the SES, 
the Senior Executive Service, without getting a year of 
appropriate education at one of the Nation's top business 
schools or at a top institute of technology. There has never 
been such a requirement imposed by the Department nor by OPM.
    It looks like legislation would be the only way to ensure 
that our top civil servants and those aspiring to make it to 
the top will both get the education and the training they need 
to carry out their tasks most efficiently.
    Now in addition to changes in the way the civil servants 
are trained and educated for their jobs, there is an urgent 
need to alter the culture that seems to govern their behavior. 
Again, I am speaking from eyewitness experience.
    Too often DOD civilians rely all too heavily on contractors 
for work that they should undertake themselves. It was for good 
reason that Secretary Gates sought to reduce the level of staff 
augmentees. The work should be done by the civil servants.
    One way to change the situation would be to prohibit 
anybody from retiring from the military, as well as any 
retiring DOD civilian, from serving in a staff augmentation 
position for 5 years after retirement. Too many folks flip 
their badges. Friday, they are a Government official or a 
military person. Monday, they are working for a contractor back 
at the same job, back with the same colleagues. Now, come on.
    Given the cost of DOD's civilian workforce and its 
acknowledged lack of efficiency--again, it is not me, Secretary 
of Defense--it might have been expected that the proposed 
fiscal 2018 budget as well as the 2017 budget amendment would 
call for a reduction in civilian end strength. But even though 
the Trump administration is proposing cuts to the Federal 
civilian workforce, it has not identified any reductions in the 
DOD workforce, not the $54 billion increase in 2018 or the $25 
billion amendment for 2017.
    It is true that there is a hiring freeze and, combined with 
anticipated retirements, there could be some reduction in 
civilian levels. But the proposed increases in 2018 could well 
result in a higher civilian force should the freeze be lifted. 
Even if the freeze is not lifted, civilian personnel levels may 
not or probably will not decline significantly.
    The only way to do it is through a targeted effort, and 
that is something that Congressman Ken Calvert has proposed in 
his REDUCE Act, which stands for--it is a heck of an acronym--
Rebalance for Effective Defense Uniformed and Civilian 
Employees Act. He has been proposing it for the last several 
years because what it would do is limit full-time positions in 
DOD in each year of fiscal years 2024 to 2028 to a number of 
not greater than 85 percent of the number of such positions as 
of September 30th of 2018.
    To begin the process, the bill would authorize the 
Secretary to offer separation incentive early retirement 
payments to civilian employees. But if he does not hit the 
right number, he can reduce force and reduce personnel 
involuntarily. The act would also cap Senior Executive Service 
at 1,000 personnel.
    Now, not surprisingly, this bill has been opposed bitterly 
by the Civil Service unions that represent DOD civilians. The 
unions have been a major stumbling block in the way of Civil 
Service reform. They want to see no changes in the 1978 Civil 
Service Reform Act, which, among other things, enabled civil 
servants to unionize.
    So when the Secretary of Defense, my former boss, Secretary 
Rumsfeld, sought to initiate a merit-based system for 
evaluating and promoting civilian personnel, which my colleague 
Peter Levine mentioned in passing reference, and that would 
have clearly led to more civilian efficiency because it was 
merit based, he was met with a boatload of criticism and 
lawsuits filed by the unions, and he had to drop the proposal.
    It should be noted, however, that the very same act allows 
the President to exempt groups in the name of national 
security. The armed services, employees of CIA, and the FBI are 
already exempted. So, in theory, the Trump administration 
could--the Secretary of Defense could exempt civil servants in 
the Department of Defense from unionizing. That would free up a 
lot of the kinds of recommendations that you have heard from my 
colleagues here on the panel and several that I have talked 
about.
    DOD relies heavily on its civilian personnel. They are 
integral to the Nation's ability to fight and win its wars. To 
that end, it is critical that we ensure that the DOD's civilian 
corps operates in the most efficient manner possible, and it is 
an urgent requirement if DOD is successfully to confront and 
overcome the challenges that are constantly emerging in today's 
international security environment.
    Thank you for your patience in listening to me. I would be 
delighted to answer your questions as best I can.
    [The prepared statement of Dr. Zakheim follows:]

                  Prepared Statement by Dov S. Zakheim
    Chairman Tillis, Ranking Member Gillibrand, Members of the 
Committee, I appreciate your giving me the opportunity to testify on 
the critical issue of DOD civilian personnel reform. DOD civilian 
personnel currently account for approximately 36 percent. of all full-
time DOD personnel, including full-time National Guard and Reserves. In 
the past fifteen years, DOD has added 77,000 more civilians, 
representing an 11.5 percent jump in the civilian workforce since 
fiscal year 2002. During the same period military end strength declined 
by 8 percent., or 120,000 personnel.
    Over that same fifteen year period, civilian pay increased by a 
very healthy 31 percent. Most of that increase went to General Schedule 
white collar workers, who account for two-thirds of all DOD civilian 
employees. On the other hand, blue-collar Wage Board pay actually 
declined by about 5.5 percent. At the same time, total military pay for 
all Active personnel, including full-time National Guard and Reserves, 
rose by a mere 0.2 percent.
    Of course, the decline in military end strength means that on a 
per-capita basis, military pay increased markedly since 2002, and 
indeed, military pay increases have either equaled or exceeded civilian 
pay increases ever since. Nevertheless, with civilian pay consuming a 
significant portion of the budget, and in light of the need to bolster 
other elements of the defense enterprise, whether to increase Active 
Duty end-strength, or to enhance readiness, or to provide more funding 
to meet acquisition needs, it is important to examine whether the 
productivity of the civilian workforce justifies the resources it has 
consumed over the last decade and a half.
    Members of the subcommittee, the answer is clear: DOD has 
benefitted from precious few gains in efficiency even as the workforce 
has grown so markedly. Moreover, it is not at all evident that the 
civilian workforce is properly trained to deal with the speed of 
changes in technology given Moore's Law, which posits that the power of 
computer central processing units, or CPUs, doubles every two years. In 
other words, it is highly questionable whether Defense civilians are 
making the most of Information Technology systems available to them, 
operating at the cutting edge of cyber technology, or acting as an 
educated consumer when procuring the vast range of high technology 
systems that combine with our military personnel to comprise the 
lifeblood of America's fighting power.
    Finally, the availability of contractors to carry out many of the 
same missions as the civilian staff--politely termed staff 
augmentation-- has often resulted in civilians offloading to 
contractors work for which they are themselves responsible, with the 
result that what is produced is more costly and often, in my 
experience, less than adequate for the task at hand. It is not without 
good reason that former Secretary of Defense Bob Gates targeted staff 
augmentation as an area that deserved both greater scrutiny and urgent 
reform.
    I will first address the question civilian manpower efficiency and 
then turn to some training and education issues and to the matter of 
staff augmentation. Numerous reports by the Government Accountability 
Office, most recently those of December 2015, \1\ which addressed the 
acquisition workforce, and of October 2016, \2\ which called for 
efficiencies in both the civilian and contractor workforces, underscore 
the judgment that the efficiency of the civilian defense workforce 
leaves much to be desired. The GAO's 2015 report on the acquisition 
workforce noted that DOD had yet to identify, much less address, all 
gaps in civilian skills that, it stated, ``are essential for effective 
human capital management.'' Nor, as of the time of the report, had DOD 
updated its acquisition workforce plan. It noted that 26 percent. of 
all acquisition-related hirings were not in line with DOD's own stated 
priority career fields. Most troubling, it appeared that DOD had not 
established time frames for addressing these concerns, all of which go 
to the heart of workforce efficiency.
---------------------------------------------------------------------------
    \1\ Government Accountability Office, Defense Acquisition 
Workforce: Actions Needs to Guide Planning efforts and Improve 
Workforce Capability (GAO-16-80: December 2015) http://www.gao.gov/
assets/680/674152.pdf
    \2\ DOD Civilian and Contractor Workforces: Additional Costs 
Savings Data and Efficiencies Plan Are Needed (GAO-17-128: October 
2106) http://www.gao.gov/assets/690/680415.pdf
---------------------------------------------------------------------------
    The October 2016 report, which, as noted, addressed the entire 
civilian DOD workforce, not just its acquisition component, pointed out 
that DOD had ``not developed and implemented an efficiencies plan for 
reducing the civilian and contracted services workforces.'' Indeed, DOD 
seemed to be circumventing the intent of Section 955 of the FY 2013 
National Defense Authorization Act, which called for such an 
efficiencies plan to cover the period fiscal years 2012-217. Section 
955 allowed DOD to exclude required reductions that it identified as 
critical, and the Department excluded 538,000 of its 776,000 personnel!
    DOD itself has not challenged GAO's findings, nor the general 
assumption that the civilian workforce could be far more efficient than 
is currently the case. Indeed, in his memo of February 17th of this 
year, Secretary of Defense Mattis explicitly called for ``making our 
business operations more efficient and freeing up funds for higher 
priority programs.'' \3\ Moreover, incorporating a taxonomy that the 
Defense Business Board highlighted in its own January 2015 examination 
of DOD efficiencies, Secretary Mattis called for ``exploring 
efficiencies [with respect to] human resource management.'' 
Significantly, the DBB identified civilian personnel as a major, if not 
the major, target of opportunity for efficiencies in the human 
resources realm. The Business Board noted that annual savings from what 
it termed ``Optimizing the Government Labor Footprint'' could amount to 
anywhere from eight to thirteen percent. of civilian personnel costs, 
or anywhere from five to eight billion dollars in the fiscal year 2017 
budget alone.
---------------------------------------------------------------------------
    \3\ James Mattis, ``Memorandum for Deputy Secretary of Defense: 
Establishment of Cross-Functional Teams to Address Improved Mission 
Effectiveness and Efficiencies in the DOD,'' (February 17, 2017), p.1.
---------------------------------------------------------------------------
    Part of the reason for the civilian workforce's inefficiency is its 
lack of the training and education required for it to keep pace with 
new developments in technology, including cyber, and indeed, in human 
resource management as well. DOD civilians can take courses in the 
Defense Acquisition University (DAU) in everything from auditing, to 
contracts management, to test and evaluation and cost estimation. \4\ 
But many, if not most, of these courses are taught via distance 
learning, which do not necessarily ensure that students will absorb or 
retain what they have been taught. Moreover, DAU does not offer courses 
in human resource management, which is the key to ensuring that 
officials at every level strive for efficiency on the part of their 
staffs. The various Better Buying Power reforms promulgated in the past 
few years have gone some way to remedying the paucity of training 
requirements for acquisition officials, but there is still some way to 
go, while human resource training programs for DOD civilian managers 
are even further behind.
---------------------------------------------------------------------------
    \4\ The DAU course catalog can be accessed at http://
icatalog.dau.mil/onlinecatalog/tabnav.aspx.
---------------------------------------------------------------------------
    Finally, there is no advanced education requirement for members of 
the Senior Executive Service, or those seeking promotion to the Senior 
Executive Service. DAU offers training, not education. Yet to be 
proficient in the management of human resources, or indeed, to be an 
educated consumer of technology, more than training is required. The 
military has its system of professional military education; there is no 
such equivalent for civilians. A civilian with a Masters' Degree can 
serve forty years in the Defense Department without ever taking another 
graduate level course throughout his or her career. Such a situation is 
unacceptable. Specifically, no civilian should be promoted to the 
Senior Executive Service without receiving a year of appropriate 
education at either one of the Nation's top business schools, such as 
Harvard, Stanford, Chicago or Rice, or at a top institute of technology 
such as MIT, RPI, Cal Tech or Georgia Tech. The Department has never 
imposed such a requirement, nor has the Office of Personnel Management. 
Officials do take a year off to attend graduate programs, such as that 
at Harvard's Kennedy School, which is tailored for senior government 
executives. Still, participation in these programs is voluntary, and 
many executives are reluctant to spend a year away from their place of 
work; or, their superiors are reluctant to lose them for a year. 
Legislation appears to be the only way to ensure that our top civil 
servants, and those aspiring to the make it to the top, will get both 
the education and the training that they need to carry out their tasks 
in a most efficient manner.
    In addition to changes in the way civil servants are trained and 
educated for their jobs, there is an urgent need to alter the culture 
that seems to govern their behavior. Too often, DOD civilians rely all 
too heavily on contractors for work that they should undertake 
themselves. For example, many reports to the Congress actually are 
prepared by contractors, often ``staff augmentees'' who retired from 
the military or the civil service only to return to virtually identical 
jobs in the same office, with the same colleagues, but now are wearing 
a contractor badge. Yet the reports these contractors produce are often 
poorly written and formulated; it is questionable whether civilian DOD 
staffs carefully review what has been produced before forwarding the 
reports up their command chain. It was for good reason, as I mentioned 
earlier, that Secretary Gates sought to reduce the level of staff 
augmentees; the work should be done by civil servants themselves. One 
way to help change what might be termed a poisonous symbiosis of DOD 
civilians and contractors would be to prohibit anyone retiring from the 
military, as well as any retiring DOD civilian, from serving in a staff 
augmentation position for five years after retirement. DOD staff would 
then either take on the work themselves, or, if they feel uneasy about 
their workload, find jobs elsewhere.
    Given the cost of DOD's civilian workforce and its acknowledged 
lack of efficiency, it might have been expected that the proposed 
fiscal year 2018 defense budget as well as the fiscal year 2017 budget 
amendment would call for a reduction in its end strength. Ironically, 
however, even as the Trump Administration is proposing cuts to the 
total Federal civilian workforce, it has not identified any such 
reductions in the Department of Defense. Neither the proposed $52 
billion increase for fiscal year 2018, as well as the $25 Billion 
budget amendment for fiscal year 2017 reveals any indication that 
Administration plans to reduce DOD civilian personnel levels. It is 
true that the current hiring freeze, combined with anticipated 
retirements, should result in some reduction in current civilian 
levels. \5\ On the other hand, the proposed increases for fiscal year 
2018, could well result in a higher civilian force level should the 
freeze be lifted.
---------------------------------------------------------------------------
    \5\ James Mattis, ``Memorandum for Secretaries of the Military 
Departments, et. al.: Implementation of Civilian Workforce Hiring 
Freeze,'' (February 1, 2017), https://www.defense.gov/Portals/1/
Documents/pubs/OSD000999-17-RES-Final.pdf.
---------------------------------------------------------------------------
    Even if the freeze remains in place, civilian personnel levels are 
unlikely to decline significantly. Only a major targeted effort will 
result in lowering those levels. Such an effort is encapsulated in the 
Rebalance for an Effective Defense Uniformed and Civilian Employees 
Act, commonly known as the R.E.D.U.C.E Act. This bill, which 
Congressman Ken Calvert first proposed in January 2015 and has 
subsequently proposed each year since, would, in its current form, 
limit full-time positions in the Department of Defense, in each year of 
fiscal years 2024 to 2028, to a number not greater than 85 percent. of 
the number of such positions at DOD as of September 30, 2018. To begin 
the process, the bill would authorize the Secretary to offer separation 
incentive early retirement payments to civilian employees. Most 
importantly, it also requires the Secretary to use involuntary 
measures, such as reductions in force, beginning on October 1, 2018, 
``to achieve required reductions in personnel levels if voluntary 
measures are inadequate.'' \6\ The Act would also cap the Senior 
Executive Service at 1000 personnel.
---------------------------------------------------------------------------
    \6\ https://www.congress.gov/bill/114th-congress/house-bill/340.
---------------------------------------------------------------------------
    Needless to say, this bill has been strenuously opposed by the 
civil service unions that represent DOD civilians. The unions have been 
a major stumbling block in the way of civil service reform; they wish 
to see no changes to the 1978 Civil Service Reform Act (CSRA), which, 
among other things, enabled civil servants to unionize. Thus, when 
Secretary of Defense Rumsfeld sought to initiate a merit-based system 
for evaluating and promoting civilian personnel, which would clearly 
have led to an improvement in civilian efficiency, he was met with a 
torrent of criticism and lawsuits filed by the unions and eventually 
dropped the proposal.
    It should be noted, however, that the CSRA also allowed the 
president to exempt groups in the name of national security. \7\ 
Indeed, the armed services, employees of the CIA and the FBI already 
are exempted. Should the Trump Administration exempt DOD civilians, it 
would clear the way for both reducing the level of DOD civilians and 
implementing reforms along the lines that Secretary Rumsfeld proposed. 
Should the Administration not act to exempt civilians from the CSRA's 
provisions regarding unionization, and even if it does act, the 
Congress should consider passing the R.E.D.U.C.E. Act. This Act not 
only would act as a catalyst for a far more efficient and effective 
civilian DOD corps, but also which result in significant savings that 
could be redirected to other urgent defense needs. that continue to 
emerge in today's increasingly uncertain international security 
environment.
---------------------------------------------------------------------------
    \7\ ``(2) The President may issue an order suspending any provision 
of this chapter with respect to any agency, installation, or activity 
located outside the 50 States and the District of Columbia, if the 
President determines that the suspension is necessary in the interest 
of national security.'' PUBLIC LAW 95-454--OCT. 13, 1978 https://
www.govtrack.us/congress/bills/95/s2640/text/en.
---------------------------------------------------------------------------
    The Department of Defense relies heavily on its civilian personnel; 
they are integral to the Nation's ability to fight and win its wars. To 
that end, ensuring that the DOD civilian corps operates in the most 
efficient manner possible is a critical and urgent requirement if DOD 
is successfully to confront and overcome the challenges that are 
continually emerging in today's increasingly uncertain international 
security environment.
    Thank you.

    Senator Tillis. Thank you.
    You know, one of the big surprises to me when I came into 
the Senate 2 years ago was how you form your office. I just 
naturally assumed there were all kinds of personnel 
requirements and structures, and they basically say your State 
is this big. You have this allocation. Best of luck.
    Which was great because we were able to treat it like a 
small business and create personnel practices. I immediately 
went back to the work that I had done when I was doing 
recruiting and retention work at Pricewaterhouse, and we 
adopted a very similar model within my office.
    Every staff has a professional development plan. Every 
staff has a knowledge and skills inventory at the beginning of 
the year. We have very specific expectations for continuing 
education. There is a place for online education, but there is 
also a place for hands-on applied education.
    We have made that every staff in our office at every level 
has these plans, and they are expected to perform and develop a 
knowledge and skills that shows growth over time. I do not 
think any employee, and I believe it may have been Mr. Levine 
that talked about how sometimes there is no, you know, direct 
obvious attainment of knowledge and skills from year to year. I 
think that that is a problem because you are not adding value.
    If you are not adding any additional value other than what 
you got paid for the year before, why should you expect to get 
anything more over the cost of living? That mentality does not 
seem to exist anywhere in the Federal Government.
    We also at Pricewaterhouse had an 18 percent attrition 
rate. A lot of people say, oh, my goodness. We thought that was 
healthy, somewhere between 15 and 18. I do not know what it is 
today. About half or two-thirds of those were people who 
consulting was not for them.
    That is when working at home happened on Saturdays and 
Sundays and when there was not such a thing as mobile 
commuting. Hopefully--or happily, we have gotten past that, but 
it was a tough job, and we expected people to move on.
    But we also counseled out 5 to 8 percent a year. They were 
brilliant people. We recruited them from the best schools, and 
they all had GPAs [Grade Point Averages] of 3.5 or higher. But 
it was a tough job, and they just did not demonstrate the value 
that made sense for the firm.
    So is there any evidence of that happening anywhere in the 
DOD? Is there any best practice or an area out there that we 
should be looking at?
    Dr. Junor. Well, I am currently at NDU [National Defense 
University], and I am--like I said, I am filling a Title X term 
position. When I was at P&R, I also oversaw, as did Peter, the 
Defense Language Institute, which is also run by--for title X. 
The advantage--so I am not a ``one size fits all'' proponent 
either. But the advantage of this authority is that you are 
hired with a--for a very specific job, and you can ask for very 
specific attributes to meet that job, which is surprisingly not 
common, and that goes to the classification authority that 
Peter was alluding to earlier.
    But when you are hired, in my case, we are hired on average 
for a 3-year term, I know every 3 years, I have got to come to 
a table, and I am going to be held accountable for whether I 
have met my performance objectives. If my term runs out, this 
is not something I can dispute. It is done. So I can be not 
renewed either because I failed to meet performance objective 
or because the needs of my employer change.
    Senator Tillis. Now let me talk about--let talk me talk 
about performance objectives, and reading the background 
material, it seems like do have the situation where you may be 
working for somebody who works for the DOD. They move to 
different assignments, and sometimes there seems to be a lack 
of real interaction between the supervisor and the employee 
with respect to the development of their knowledge and skills 
and really preparing maybe for the next opportunity.
    Do we have a problem there any of you would want to talk 
about? Mr. Levine?
    Mr. Levine. Sure, let me address that one. I think we have 
a problem with the systematic development of careers for 
civilian employees. We have a systematic focus on military 
careers, and we know what education blocks and what training 
blocks and what are expected and what those are building to.
    There is nothing comparable for civilian employees. So when 
civilian employees have the kind of training that Dov talked 
about, they have training opportunities, but those training 
opportunities may be handed out as a plum to somebody who has 
done well. They may also be handed out to somebody who is not 
very good that you just want to get out of your organization.
    Either way, there is not a whole lot of conscious thought 
what is that building to, what is the next step, and how are we 
going to utilize and take advantage of that training? So that 
kind of planning is something that the Department has been 
short on, and really, it is not easy to address, but needs to 
be addressed.
    Senator Tillis. Well, thank you.
    Consistent with my policy of rodeo rules, I do not want to 
go 8 seconds over. So I am going to go to Senator Gillibrand, 
and then after we go through a round, if you all are okay, we 
will just open it up to questions if we have them.
    Dr. Zakheim. Mr. Chairman?
    Senator Tillis. We will just do it openly.
    Dr. Zakheim. Mr. Chairman, could I just add, if I may?
    Senator Tillis. Yes.
    Dr. Zakheim. Peter actually pretty much said what I wanted 
to say, but I want to add one other thing. I am familiar with 
at least one case of somebody who was clearly looking to get 
out of--had enough years to get a pension and needed something 
more to be able to get a good job on the outside. So that 
person went to his supervisor and got to the Kennedy School. 
That is not what you want.
    It seems to me that unless----
    Senator Tillis. Dr. Zakheim, we will come back to that in 
my follow-up.
    Dr. Zakheim. Okay. Good.
    Senator Tillis. Thank you.
    Senator Gillibrand?
    Senator Gillibrand. Thank you, Mr. Chairman.
    I want to talk a little bit about cyber. Growing the cyber 
workforce has been a subject of intense interest on this 
committee, including determining the proper mix of Active Duty 
and Reserve component, including National Guard and civilian 
personnel. 2016 and 2017 defense bills included additional 
authorities for the Department to hire cyber civilian 
employees, including direct hire and special pay authorities.
    What are your views on these provisions and how the 
Department is or is not using them? What else would you 
recommend with respect to hiring and retraining--excuse me, 
hiring and retaining civilians with critical cyber and computer 
skills, including those who are members of the Reserve 
components? How best can we utilize those talents, and is there 
more we could be doing with universities to increase 
recruitment in this area?
    Dr. Junor. Mr. Chair----
    Mr. Levine. Well, the answer is----
    Senator Gillibrand. Can I ask Ms. Junor to do the first? 
Thank you.
    Mr. Levine. Oh, I am sorry.
    Dr. Junor. That is fine. Getting the right balance of the 
cyber workforce is a--it is an absolutely huge issue. Like the 
three components or four components that you just labeled, each 
has their own pros and cons. When I was--so I am a little--my 
knowledge is a little bit dated. I have been out for over a 
year now, but the Department struggled with, first, identifying 
the appropriate mix and then determining exactly how to recruit 
and retain and continue to grow those cyber professionals. That 
work is ongoing.
    Senator Gillibrand. Mr. Levine?
    Mr. Levine. So, first of all, the authorities that you have 
given the Department, I think, are very important ones. So you 
did ask about that. This is another area where you have given 
the Department flexible hiring authority and flexible pay 
authorities, which I think for a high-tech workforce, in order 
to compete with the private sector, those are very important.
    I agree with Dr. Junor that we have not done what we need 
to do yet in terms of figuring out the proper mix of the 
workforce, but I think there is an underlying problem, which is 
we have not figure out what we are doing in terms of cyber 
strategy. Until we figure out our cyber strategy it is hard to 
figure out what the workforce is you need to meet that 
strategy.
    Senator Gillibrand. Dr. Zakheim?
    Dr. Zakheim. It is Zakheim, by the way. I would only add 
that at the service level, they know they have the need and 
they are boxed in by the categories they have for taking people 
on. In particular, they could do very well hiring Reservists 
or, rather, taking in Reservists who have that background, but 
the system for taking in Reserves does not necessarily fit.
    So individual commanders decide whether they will kind of 
bend the rules a little bit. They need some more guidance and 
help because they know what they want, and as Reservists, they 
have got people to do it. But you will get people in the Navy 
who are basically working in the bilge or something and 
actually are CEOs [Chief Executive Officer] of high-tech 
companies.
    Senator Gillibrand. Separate topic. Civilian hiring 
authority for healthcare providers. The military is having 
difficulty hiring and retaining civilian healthcare workers in 
critically needed healthcare occupations, such as behavioral 
health, family medicine, pharmacy, and physical and 
occupational therapy.
    In a report issued in February of this year, DOD reported 
that despite the use of special salary rates and hiring 
flexibilities authorized by Congress, current and projected 
difficulties relate to competition from the private sector and 
supply shortages. Interestingly, the report does not recommend 
to request new and enhanced hiring authorities or additional 
compensation authorities.
    Does the Department need enhanced civilian hiring 
authorities and/or authority for additional compensation in 
order to address these shortages for healthcare providers? If 
so, what do you recommend? Dr. Junor?
    Dr. Junor. I am not exactly sure what--I would have to--I 
am an economist. I would have to look at exactly what the 
mismatch is in that labor pool. I think all the authorities 
that you could provide would be helpful. For example, the--if 
it is a pay disparity, the pay you get on the outside has a 
much higher potential than it would with our limitations within 
the Civil Service. That is clear.
    I also, though, worry, and this goes back to the how we 
cast our civilian workforce, and I have been worried writ large 
about the ability to hire especially in areas where there is a 
lot of competition from the civilian side. If the background 
vocal continues to be that the civilian workforce is more of a 
plague than an asset, then I think this is going to be an issue 
with cyber, with health, with any technical skill set.
    So, yes, increasing authorities would definitely help, but 
along with finding a way to better manage this workforce and 
talk about it.
    Senator Gillibrand. Mr. Levine?
    Mr. Levine. So, first, with regard to competing on salary, 
we cannot compete on salary with Federal employees. You will 
not give enough for some of these specialized professions. You 
will not give enough salary authority or allow us to pay high 
enough, and so we then have to look at a contract model in some 
cases.
    But I would agree with Dr. Junor that our biggest 
competitive advantage in hiring and retaining people is the 
mission and the feeling of people that they have an opportunity 
to contribute and contribute to something greater than 
themselves that they are involved in public service. When we 
undermine that by the way we talk about civil servants, we 
undermine our ability to attract and retain really highly 
qualified people that we need.
    Senator Tillis. Senator Ernst?
    Senator Ernst. Thank you, everyone, for joining us today.
    I am going to continue along those same lines and not just 
cyber or healthcare industry. Dr. Junor, you talked about a lot 
of other fields as well, but when we are looking at those that 
are in the STEM [science, technology, engineering, and 
mathematics] fields, or the science, technology, engineering, 
and math, recruiting there can be really challenging, and I 
have seen a lot of the benefits coming from STEM even in my 
home State of Iowa, who does tend to be on a leading edge with 
STEM education.
    What incentive systems exist out there, or are there any, 
where we can recruit the best and the brightest of those young 
people that are engaging in STEM fields? Is there something 
that exists out there that we are not aware of, and if it does 
not exist, is there something that we should look at?
    If we could start with you, Dr. Junor?
    Dr. Junor. Peter referenced the direct hiring authorities 
for the recent graduates. I think that is a very big deal. If 
you can--if you can get these folks in right after they have 
learned the skill set, number one, they are bringing in current 
thinking that is technologically relevant. This is an aging 
workforce. So that is helpful.
    But also if we can get them in and retain them and attract 
them and get them hooked on our mission, which is actually a 
pretty cool way to spend your career, that is an absolute plus.
    Senator Ernst. Very good. Mr. Levine?
    Mr. Levine. What I would add to that is that you need to 
think about the work that you are giving people when you are 
bringing them. So if you are going to try to attract and retain 
highly skilled workers, you bring in these young people, you do 
not want to plug them in so they are another widget in a giant 
system. You want to give them the ability to be creative and 
feel like they are really contributing.
    I think the IT [Information Technology] area is a place 
where we can do that because we are challenged in IT in every 
way, and we can use these teams that sort of stand outside the 
system and try to reinvent the way we work. But you need to 
think about that and recognize that the only way you are going 
to attract and retain young people who--with these kind of 
talents is if you challenge them and make them excited by the 
work.
    Senator Ernst. Very true. Dr. Zakheim?
    Dr. Zakheim. There is a program that is not career but is 
important called Highly Qualified Experts. We tend to think of 
highly qualified experts as people in their fifties, whatever. 
But when you are talking about IT and high tech, probably the 
highly qualified experts are 25.
    Senator Tillis. Or 19.
    [Laughter.]
    Dr. Zakheim. Well, that is true. I mean, my grandchildren 
are clearly highly qualified experts. Bringing those kinds of 
folks in under the program, expanding it, and then perhaps as 
we--creating a vehicle for those that want to stay to be able 
to stay because they are doing interesting work might be 
another way to deal with this issue.
    You find somebody who is 25, 30, whatever, who is doing 
fantastic work. You bring them in as a highly qualified expert, 
and then if they are good, it becomes a kind of, you know, 
almost probationary-type effort, and then they stay and we will 
benefit.
    Senator Ernst. Very good. I know that we have the USAJOBS 
hiring process that exists out there, and Dr. Zakheim is 
laughing. Yes, we have experienced so many difficulties with 
this system, and the length of time it takes to bring those 
applicants into the system is horrendous. I have heard story 
after story.
    So the direct hiring process is one way that we could 
mitigate that. Can you explain some of the problems that we are 
having with USAJOBS, and then what is a better alternative?
    Mr. Levine. So when you are trying to bring in a college--
somebody who is graduating from college, if you have to go 
through the USAJOBS process, then you can go to the campus, but 
you cannot offer them a job. You can say go ahead and apply. 
There is this portal, and in 6 months or a year, it will kick 
out or it will not kick out. You have got to apply job by job.
    That is not the way anybody else recruits on campus, and we 
cannot compete if we do that. We need to be able to go there 
and say you are talented, we want you. We will find a place for 
you, and here are the kinds of things we can do, and here are 
the kinds of places we can put you. Yes, we are going to tell 
you yes now, and we are going to figure out a way to make it 
work.
    Direct hiring enables us to do that. USAJOBS will never 
enable us to do that.
    Senator Ernst. Thank you.
    Dr. Zakheim. It takes about 83 days now to hire somebody, 
apparently. So it is about 3 months. But again, the manager is 
not the one that actually gets into the hiring process until 
very late in that process. That is because of HR getting into 
it and the automated stuff that Peter spoke about so that if--
again, if you are looking for a job and you are good and other 
people are offering you something, you are not going to have 
the patience to wait around and see what happens.
    Senator Ernst. They are going to snap you up before----
    Dr. Zakheim. Yes.
    Senator Ernst. Right. Certainly.
    Dr. Junor. Eighty-three days is on the short end. I have 
tried to hire and be hired on USAJOBS, and there is a lot of 
things wrong with it. But the single most frustrating part to 
me is how the work is classified.
    If you get stuck in a rigid OPM ``this is how we have to 
define the attributes for a job,'' it is lethal. I ended up--I 
worked in OSD personnel and readiness, and I wanted to hire 
somebody. I gave up. I was frustrated.
    It took--we iterated for the better part of a year, and I 
could not--I had some attributes that I wanted, and I could not 
figure out how to jam them into the rigid boxes that OPM gave 
me so that I was sure I was not going to come out with really 
odd matchings that I had to contend with. In fact, that is what 
happened, and that is why I ended up giving up.
    If you are on the--trying to be noticed, if are trying to 
get a job, these things are equally lethal. So the direct 
hiring authority, being able to actually list, if you are an 
employer, what you want in an employee and then allowing 
employees to match to that, it is much better on both sides.
    Senator Ernst. Very good. Thank you very much.
    Thanks, Mr. Chairman.
    Senator Tillis. Senator Warren?
    Senator Warren. Thank you, Mr. Chairman.
    In October, a gunman opened fire on American personnel 
visiting an Army munitions supply point outside Kabul. Two 
Americans were killed in the attack. One was Army sergeant 
Douglas Riney. The other was Michael Sauro, a civilian employee 
of the Department of the Army.
    They may not wear the uniform, but civilian workers are an 
essential part of our national defense effort. They care for 
service members in military hospitals, as we were just 
discussing. They service our most advanced aircraft. They keep 
our military bases running.
    Thousands of civilian from DOD, from State, from our 
intelligence agencies have been deployed in Iraq and 
Afghanistan over the last 15 years, serving right alongside 
uniformed personnel. Some have been wounded. Some, as this 
shows, have been killed. I mention this because I am not 
convinced that we are treating these personnel with the respect 
that they deserve.
    Our civilian workforce has become accustomed to hiring 
freezes, to furloughs, even a Government shutdown, and it is 
getting worse. The new administration has issued yet another 
hiring freeze that includes much of DOD, and the budget 
released last week would require the largest cuts to the 
Federal workforce post World War II.
    So I just want to ask, Mr. Levine, what impact do actions 
like the furloughs and the pay freezes have on the 
effectiveness of the Defense Department's civilian workforce?
    Mr. Levine. We have to worry about demoralizing the 
civilian workforce. I think that the morale is still pretty 
high because there is belief in the mission. But the more these 
attacks accumulate, the more you have a problem, and you can 
undermine the effectiveness of the workforce.
    I agree with Dr. Zakheim and Dr. Junor that we have a 
three-pillared workforce. It is not only the military, not only 
the civilians, but also the contractors. It is important to 
recognize that we rely on all of them. You start with you have 
a job that gets done. Who is the right person to perform that?
    One of the reasons that we have more civilians and fewer 
military now, and it is you do these trade-offs. But we had an 
effort over the years to say let us get our military more to 
the pointy end of the spear. Let us get them out of doing the 
back office stuff that they used to do, and as you do that, 
somebody still has to do the work.
    So you are relying on civilians to do all kinds of things 
that the military cannot do their job without, but it is all 
one workforce, and we need to--we need to treat them as one 
workforce and respect them as one workforce.
    Senator Warren. So let me go back to this point in terms 
then of professional development that you raised earlier and 
that we have talked some about here, and talk about the 
disparity. We assume with contractors that they work on 
professional development. That is part of their job.
    Obviously, with the military, we have been very strong on 
professional development. But on civilian employees of the 
Government, we have not done the same, even though they have 
positions of great responsibility.
    So, for example, we will let people pause their military 
career so they can go back to school and acquire more skills 
that they will bring back to the jobs. We send them to schools. 
We send them to professional development. We do not do the same 
with civilian managers.
    So let me ask you the question. Now I am going to assume 
that we would benefit from a robust institutional process that 
assures that civilians get more access. Why has it not 
happened? Anyone want to weigh in on that?
    Dr. Zakheim. I think--yes.
    Senator Warren. I want to be careful about my time.
    Dr. Zakheim. Sure. I think it has not happened in part 
because, in that respect, civilians are taken for granted. In 
part because the system is so rigid that you move up the scale 
almost no matter what, as long as you have been around. If you 
are alive, you are going to move up.
    I think it is unfair to the civilians. It is not just 
unfair to the Department or the taxpayer. It is unfair to them 
because they need to get out there. I mean, look, if you get a 
physics degree, say, a master's at the age of 23, and you do 
not take another course for 40 years, I mean, how really can 
you understand what the latest developments are when Moore's 
law tells you every couple of years, you know, the computing 
capability doubles?
    Senator Warren. I hear----
    Dr. Zakheim. We are doing them a disservice. I think this 
needs to become, and that is why I have said, it needs to 
become a requirement, particularly if you are joining the 
Senior Executive Service. You want to be a top manager, you 
better spend a year at Harvard or MIT or whatever.
    Senator Warren. I hear your point. I just have a little bit 
of time left.
    Dr. Junor, could you just weigh in on this, please?
    Dr. Junor. Yes, I think Dr. Zakheim nailed it. We have a 
current system--sorry. We have a current system right now that 
is completely focused on longevity. Everything is about 
longevity, and so that is not going to breed the best 
productivity out of our people when it comes to, you know, 
hiring the young, eager, technically savvy workforce. If they 
come into this kind of--that is lethal if they come into this 
kind of environment.
    So, in a sense, we are not even promoting mediocrity. We 
are promoting sitting in a seat. People do not want that. Most 
people love their job, and they want to be good at it. That is 
one of the attributes of feeling good and having self-
confidence.
    So if we built a system that rewarded and encouraged that 
through things like learning, I think the civilians would be 
better off, the Government would be better off. Turns out that 
is a little bit hard, although there are tools out there where 
we have seen this work.
    Senator Warren. Thank you.
    I appreciate this because it just seems to me we have got 
to have both compensation structures and opportunity structures 
that really help our civilian employees that recognize all they 
have done, but also help them develop and be all they can be.
    Thank you. Thank you, Mr. Chairman.
    Senator Tillis. Thank you, Senator Warren.
    You know, Senator Warren made some points that I think bear 
repeating, and I--because my time was limited, I did not get to 
it in the first discussion. But we do need to make it very 
clear that they are a very important part of what we do.
    I have been to several military installations. I have seen 
helicopter maintainers, aircraft maintainers. They are in 
there. They believe in the mission as much as anybody else in 
the military. So they need to understand we understand the role 
that they play, the force multiplier. If there is any doubt, at 
least on my part, and I think I speak for the members here, 
that they are important to us.
    But what this is about is enriching their opportunity, 
enriching them professionally, building their knowledge and 
skills, and recognizing that in any group of employees, some 
are higher performers than others. Do they satisfy minimum 
requirements to keep them employed, or is there some point 
where you need to counsel them out?
    That is very difficult. We called it counseling out. 
Divesting is an interesting one. I have used it more in my 
financial business than I have with a human being. But I mean, 
it is more a matter of creating a high-performing environment.
    But you cannot create a high-performing environment--and to 
Senator Ernst's point, STEM, I mean, we are all fighting for 
STEM resources--public sector, private sector. The difference 
is when I would go and recruit at Penn State or Cornell or 
somebody, I saw somebody who was extraordinary, they could get 
an offer right there. I had the authority to do it.
    Bring them into training and get them deployed to an 
engagement 6, 8 months, 9 months later after an extensive 
training program. It is 120 days. I believe my staff in the 
staff memo said the average is 120 days, and it can extend up 
to 180 days.
    You are not going to get a kid that graduated with a 
physics degree or, you know, pick--an economics degree, 
something like that from a top school with a high GPA [Grade 
Point Average] and say we just need you to wait around 4 to 6 
months, and maybe these five different jobs that you apply for, 
one of them will pop up. So that is clearly an area that I 
think that we need to drill down on.
    The other thing I just wanted to ask, and Senator 
Gillibrand, just jump in if you have any other questions. But I 
know we have an internship program, and I was asking about that 
at about the same time that Senator Ernst asked about the 
USAJOBS system. But it seems like you could come in and have an 
intern do great work, and you want to hire them. But there is 
such a lapse between having that promising person who really 
wants to go work and actually transition to a job.
    That seems to be another area that we need to focus on. 
Would you agree with that, Dr. Zakheim?
    Dr. Zakheim. Absolutely. I had interns that were what in 
those days called ``presidential management interns.'' I think 
there is a slightly different name now. But you are hired as a 
civil servant. So you come in.
    By the way, the only reason I used 83 days is because that 
is the lowest number I could find.
    [Laughter.]
    Dr. Zakheim. I do not disagree with you at all. But getting 
an intern in the sense that you did or I did in the private 
world just does not happen. So an internship program that then 
allows you, as in the private sector, to move into the 
Government, as opposed to being hired as a Government official 
who is then an intern, I think that would be a tremendous step 
forward.
    Senator Tillis. Dr. Zakheim, you said something that I do 
not think I really take exception to it, but--but as we are 
looking at policies that once we pass something, it becomes 
this rigid thing that people follow or have to follow. I am 
thinking more in the cyber space or the technology space.
    I understand at certain levels, there are requisite 
requirements, particularly within the Comptroller's office. 
Financial, education, those sorts of things are important. But 
it also goes back to treating different jobs and different 
skill sets differently. I could think about cyber as one 
example.
    I was actually recruited to Pricewaterhouse without a 
college degree. When I started there in 1990 at 30 years old, I 
did not have a college degree, and I was continuing my 
education, but I happened to work in a technologies field that 
was imaging and kind of artificial intelligence field that 
there was not a lot of people doing that back then.
    So we have got to make sure that when we look at getting 
these top skills where clearly credentialed skills are 
necessary for certain jobs that you would have performed, that 
we have the flexibility to bring in top talent and not take a 
Bill Gates, who did not get a college degree and not have him 
come work in software development.
    Dr. Zakheim. Well, let me----
    Senator Tillis. Would you not agree?
    Dr. Zakheim. Let me make myself clear. I am not--was not 
talking about how we take them in. I think you are absolutely 
right. I would have hired Bill Gates, and so you would, I 
think, Senator.
    But once they are in, you do not want them to just live off 
their intellectual capital forever.
    Senator Tillis. That is right.
    Dr. Zakheim. That is really what I was focusing on.
    Senator Tillis. Okay, very good. Mr. Levine?
    Mr. Levine. Mr. Chairman, I think you are onto a point 
there because as--as somebody who was a senior manager, I 
wanted to be able to get the most talented, most capable person 
for a position, and I resented where there was an artificial 
constraint so I could only look at this subcategory.
    So I would be careful. I think that authorizing somebody to 
establish requirements, and a few years ago, we authorized the 
Comptroller, for example, to require CPAs [Certified Public 
Accountants] for certain positions. Authorizing that is a good 
thing. Requiring it is another matter. Because if you require 
it, then you say you are not allowed to have the choice to get 
the person you think is best suited.
    Senator Tillis. Thank you.
    Senator Gillibrand?
    Senator Gillibrand. No, I have no further questions. Thank 
you so much for your testimony. It was excellent.
    Senator Tillis. Well, I have got one or two others then.
    Senator Gillibrand. Go ahead.
    Senator Tillis. Then I can crawl off to Judiciary. But, 
Senator Gillibrand, I know if you have other commitments, 
certainly feel free to leave when you need to.
    This needs to be a dialogue. There is a lot of things that 
we will follow up, based on your statements.
    But you know, I remember working for a Marine. He was an 
Annapolis graduate. By the way, I did get my degree after I was 
admitted to the partnership. But I did finish it off because I 
told everybody I love public education so much I went to it for 
17 years after graduating from high school.
    But this partner, he was a Marine, and he had this way 
about him that was truly what you would expect out of a Marine 
coming out of the Naval Academy. He said I am going to treat 
you all fairly, but I am not going to treat you equally.
    There are certain things that we have to accomplish for our 
clients, and there are certain skills that we need to bring, 
which means that I necessarily have to differentiate based on 
your knowledge, your skills, and the value that you are 
producing.
    We went to a point in the 1990s where we had what we called 
``hot skills bonuses.'' That when there was a specific task 
that required a unique skill. May not be something, 
particularly in today's world because of the changing of 
technology, last year's hot skill may or may not be next year's 
hot skill.
    What flexibility do we have or do we need to allow that 
same sort of capability among our employee base?
    Dr. Junor. I think this is the area that we need the most 
work, frankly, and it is not a simple thing to fix. The flip 
side of being part of a critical workforce like we have is 
being accountable for your performance in that critical 
workforce, and that is hard for a variety of reasons.
    When you hold--and this is--accountability is part of this 
issue. But focusing just on accountability, it is very 
difficult to hold--and as I said in my testimony, to hold an 
employee accountable for poor performance, for example. The 
process is long and drawn out. Most supervisors just do not do 
it for a variety of reasons.
    A low performer is most likely to be given a middle grade 
because it is easier. The--being rewarded--so the poor 
performers gravitate toward some kind of middle score. We do 
not have a lot of flexibility to reward the high performers. In 
the Title V system, you cannot--you cannot promote them really 
early.
    Senator Tillis. Do we have any system of creating--it would 
seem to me we have a large enough population to create cohorts 
that we can force into a bell curve on performance. I mean, if 
you look out at a lot of HR best practices, there is this 
theory that any cohort will fit into one of three or four 
categories--the top 15 percent performers, the 25 percent 
exceeds expectations, 35 percent expectations, 15 percent need 
to bump up or get out.
    Do we have any examples of where we--where either the 
organization has adopted these practices or been allowed to 
adopt these sorts of practices among the civilian employees?
    Mr. Levine. I would say that the entire culture of the 
Department of Defense is contrary to that, and not only-- not 
only with regard to civilians, but with regard to contractors. 
It used to frustrate me no end that you would see contractors 
who were clearly failing in their performance who would get 98 
percent ratings on their past performance ratings.
    It is the same thing on civilians. It is a--it is a 
management culture which generally tries to avoid 
confrontation, and avoiding confrontation means you do not 
grade somebody at the bottom level.
    Senator Tillis. What is the potential--what is the 
potential risk of forcing a bell curve? In other words, you do 
your individual evaluations, but they have to be--if I have a 
supervisor of a group of people they have got to be forced into 
a bell curve where you are having to do a comparative 
assessment within a cohort, what are the potential challenges 
for doing something like that?
    Dr. Zakheim. Well, Secretary Rumsfeld actually tried that, 
and he ran into, like I said, a buzz saw of union opposition. 
Because what he tried to do is take the various GS [General 
Schedule] levels and create much wider bans, which would then 
allow for exactly what you are talking about. But he just could 
not pull it off.
    You also have another issue here that OPM is a major player 
in this, and OPM's whole approach is kind of different. I 
remember I was on one commission or another, I cannot remember 
which, where we talked to OPM folks and discovered that I think 
it was 90 percent of SESers were above average. Now that is 
straight out of Lake Wobegon.
    So you have got a fundamental problem with how people are 
evaluated.
    Senator Tillis. Yes. That is--Dr. Junor?
    Dr. Junor. Yes, there is certainly nothing easy about this. 
But I go back, if you have a small organization, then the bell 
curve is really not going to work. Because if you have three 
people, it is entirely possible that they are all superstars 
based on the criteria that you used to pull them in.
    Let me give you a counter thought. A counter thought would 
be what if we could get rid of the incentives or the 
restrictions that prevent managers from honestly assessing 
their employees? What if we--what if we could find a way to 
reduce the friction or compel managers to be held responsible 
for the performance of their employees?
    In other words, if your employees mess up a project, that 
is now on your performance statement, right? You cannot do any 
better than your worst employee kind of thinking. On the other 
end, I mean, what if we could give GSers more of a bonus, spot 
bonuses that reward? From what I have read about improving 
employee performance, spot bonuses, rewards, especially 
recognition for things well done right when it happens is 
probably more impactful than waiting to the end of the year for 
a bureaucratic assessment of what they have done.
    Senator Tillis. Well, I could go on forever about this, and 
actually, I want to. But I think that Senator Gillibrand and I 
both intend to work on language that will move forward to the 
full committee, and we would like your continued feedback. 
Because, again, an environment where we really recognize role 
model behavior and we put on performance plans those who need 
to add value or counsel them, respectfully, into other careers 
are things that we want to talk about.
    I would also like to follow up on a comment, Dr. Zakheim, 
that you made about somebody that rebadges. One day, they have 
got one badge. The next day, they have got another badge. 
Because I think that that is another area.
    We saw that in the private sector. A lot of times we go in 
and we would see problems with an IT shop. It is because they 
were not really changing the mix, and they were just broadening 
the base of problems, to be honest. Not in every case. Some 
cases you want to retain those people, and it may be the only 
way you can.
    But you all have given us a lot of feedback in this brief 
committee, and I hope that we can continue the dialogue with 
myself, the ranking member, and our staff as we move forward 
marking up language for consideration for the full committee.
    Thank you all for being here.
    I also want to move, without objection, that we include any 
outside statements received in the official record for the 
hearing. Without objection, so moved.
    [The information referred to can be found in Appendix A.]
    Senator Tillis. Thank you for being here this afternoon.
    This meeting is adjourned.
    [Whereupon, at 3:38 p.m., the hearing was adjourned.]

    [Questions for the record with answers supplied follow:]
            Questions Submitted by Senator Elizabeth Warren
                        professional development
    1. Senator Warren. Dr. Junor, in the hearing you said ``We have a 
current system right now that's completely focused on longevity. 
Everything is about longevity. And so that is not going to breed the 
best productivity out of our people. . . . Most people love their job, 
and they want to be good at it. That's one of the attributes of feeling 
good and having self-confidence. So if we build a system that rewarded 
and encouraged that through things like learning, I think we--the 
civilians would be better off. The government would be better off. 
Turns out that's a little bit hard, although there are tools out there 
where we've seen this work.'' Please provide additional detail on the 
types of tools available and where you believe they have been used 
successfully.
    Dr. Junor. The most significant tool is the use of Title 10 hiring 
authority for a defined term with organizational renewal authority and 
specific performance objectives. Here's why that works:

      It creates a clear understanding of what the organization 
needs out of each employee
      It creates an incentive to perform (or risk non-renewal)
      It maintains quality peers (low-performers are less 
likely to be renewed)

    In summary, this type of hiring authority maintains a culture that 
motivates individual and organizational improvement. This authority 
works even better when an organization uses an annual oversight process 
to review renewal decisions. Such a process would ensure that employees 
are treated fairly and are given at least one year's notice in the 
event they will not be renewed.
    I believe professional development offered in this environment is 
much more likely to be effective than in an environment that emphasizes 
longevity. I have seen this authority work well at National Defense 
University (where I am currently employed) and at the Defense Language 
Institute.





                               APPENDIX A

 Prepared Statement by J. David Cox, Sr., National President, American 
              Federation of Government Employees, AFL-CIO
    On behalf of the almost 700,000 federal and District of Columbia 
employees, including 270,000 in the Department of Defense (DOD), who 
are represented by the American Federation of Government Employees, 
AFL-CIO (AFGE), thank you for the opportunity to submit this Statement 
for the Record on DOD Civilian Personnel Reform. Our members' 
experience and dedication ensures reliable and cost-efficient support 
for our nation's war-fighters--from maintaining weapons to overseeing 
contractors to guarding installations.
    AFGE has had numerous occasions to study and testify on proposed 
changes to the DOD civilian personnel system. We are all too familiar 
with various efforts within the Defense establishment to further the 
agenda of placing all DOD civilian personnel within a title 10 
framework, and removing the Office of Personnel Management (OPM) from 
any meaningful role with respect to DOD civilian personnel. AFGE 
opposes these efforts. Neither DOD nor any defense ``studies'' have 
made a coherent case for shifting civilian employees from civil service 
coverage under the well-developed framework of title 5 to a DOD driven 
title 10 system that shortchanges the pay and rights of federal 
workers.
the threat to revive the discredited nsps: performance pay and force of 
                               the future
    The Federal Government's disastrous experience with the National 
Security Personnel System (NSPS) in the Department of Defense during 
the George W. Bush administration is a cautionary tale on the dangers 
of abandoning an objective ``rank-inposition'' system like the General 
Schedule for federal agencies. From 2006 to 2009, 225,000 civilian 
workers in DOD were subject to a system that based salaries and annual 
salary adjustments on supervisors' assessments of employee performance. 
NSPS also granted managers tremendous ``flexibility'' on classification 
of jobs, hiring, assignments, promotion, tenure, and ``performance 
management.'' The system's only additional funding relative to the 
General Schedule payroll base was for outside consultants who had a 
large role in designing, implementing, and training DOD managers in 
their new system.
    It was not surprising that even in its brief three-year reign, NSPS 
damaged the Federal Government's excellent record of internal equity on 
race and gender. Data on salaries, performance ratings, and bonuses 
showed marked advantages to being white and male, and working in close 
geographic proximity to the Pentagon. Those in the Office of the 
Secretary of Defense, the Defense Finance and Accounting Service and 
Tricare were found to be higher performers, on average, than civilian 
employees in the Departments of the Army, Navy or Air Force.
    NSPS was a system conceived in a highly politicized context. The 
Department of Homeland Security (DHS) had been established two years 
earlier, in 2002, and its secretary was granted broad personnel 
authorities, construed by the agency to include the right to 
unilaterally abrogate provisions of collective bargaining agreements 
and replace them with agency directives. The rationale for DHS' grant 
of authority to create a new pay and personnel system was the war on 
terror and the administration's belief that union rights and national 
security were mutually exclusive. So in 2003, Defense Secretary 
Rumsfeld used the same rationale to seek personnel authorities similar 
to those granted to the Secretary of the Department of Homeland 
Security.
    In early 2016, the Defense Department began exploring NSPS 2.0 
under the rubric of ``Force of the Future.'' Early drafts of the Force 
of the Future proposals for civilians included the notion of moving 
virtually all DOD civilians from title 5 to title 10. This was the 
original plan for NSPS. Title 10 governs the Department's uniformed 
personnel, but includes a few provisions for civilians in intelligence 
and Defense universities. A move from title 5 to title 10 would 
eliminate most civil service protections, and give the hiring authority 
complete discretion to set and adjust pay. AFGE strongly opposes any 
and all efforts to restore NSPS, whether under the guise of Force of 
the Future or by any other name, including the just released report of 
Bipartisan Policy Center. The flaws of that system were well-documented 
and there is certainty that a revival would reproduce all the 
discriminatory effects of its earlier incarnation.
    DOD has often argued that it needs a more ``flexible'' personnel 
system in order to manage its workforce than is contemplated or 
permitted under title 5. However, if experience is any guide, DOD 
rarely, if ever, simplifies much of anything, even when given broad 
latitude by Congress. More recent examples include DOD's implementation 
of the broad-banded Senior Executive Service pay system, or 
implementation of the Defense Acquisition Workforce Improvement Act. In 
each case, the Department developed and grew its own dedicated systems 
that blunted any alleged flexibilities that were sought. The net effect 
is an even more bureaucratic and internally rule driven process than 
the old system that the putative ``flexibilities'' were designed to 
replace.
    At the Department of Homeland Security, AFGE preventing that 
agency's proposed new personnel system, called MaxHR, from ever getting 
off the ground, thanks to a lawsuit that successfully argued that its 
undermining of collective bargaining rights violated the law. But at 
DOD, NSPS did move forward in part because its focus was not on 
eliminating the union per se, but rather on creating a pay system that 
allowed managers to reward themselves and their cronies, and punish 
others. NSPS could only have continued if Congress had been indifferent 
to its discriminatory outcomes. Fortunately, when faced with data that 
showed NSPS gave systemic advantages to white employees and other 
relatively powerful groups at the direct expense of other DOD 
civilians, and that the venerated Merit System Principles had been 
undermined, Congress voted to repeal the system in 2009.
    But the architects of NSPS never gave up on the dream of a 
subjective pay system for the Federal Government, one in which managers 
can decide each employee's salary and whether and by how much that 
salary will be adjusted each year. Prior to the 2016 iteration of Force 
of the Future, the contractor Booz Allen Hamilton ($5.41 billion in 
revenue in FY 2016, 98 percent of which is from the Federal Government) 
endowed the publication of a report under the imprimatur of the 
Partnership for Public Service.
    The report trod the well-worn path of those seeking lucrative 
contracts to revamp the federal personnel system. It employs many of 
the hackneyed tropes that have become all too familiar among the 
enemies of fair pay for federal employees: the General Schedule is 
``stuck in the past,'' ``broken,'' ``rigid,'' and ``fragmented.'' It 
conveniently neglects to acknowledge the fact that numerous 
flexibilities and modernizations have been enacted over the past few 
decades. In the 1990's, the General Schedule went from having one 
nationwide annual cost-of-living adjustment to a city-by-city, labor 
market-by-labor market cost-of-labor salary adjustment system. Special 
rates were authorized as well. In the 2000's, Congress passed 
legislation that introduced broad new hiring authorities, managerial 
flexibilities in salary-setting, and a program for substantial bonuses 
for recruitment, relocation, and retention. Congress enacted 
legislation to allow student-loan repayment, new personnel system 
demonstration projects, and phased retirement. The list of new 
flexibilities is long, and in many cases, these new authorities have 
improved the General Schedule. In any case, the list stands as a 
refutation of the myth that the General Schedule is a relic, untouched 
by modernity or that Congress has failed to address needed changes in 
the civil service system for decades on end.
    Congress has been careful, however, not to go so far as to 
undermine the Merit System. Unlike a private firm, the Federal 
Government is spending the public's money in ways that are meant to 
promote the public interest. NSPS was an object lesson in what happens 
when a Booz Allen Hamilton plan is implemented in a federal agency. 
Despite good intentions, the Merit System Principles are undermined, 
particularly the principles that promise ``equal pay for work of 
substantially equal value,'' and that ``employees be protected against 
arbitrary action, personal favoritism, or coercion for partisan 
political purposes.'' Veterans Preference in hiring, retention and 
promotions is also inevitably undermined. These are the lessons of 
NSPS.
    Now we see that what is old is new again under the title ``Building 
a F.A.S.T. Force: A Flexible Personnel System for a Modern Military'' 
(hereinafter the ``FAST Report'') issued by the Bipartisan Policy 
Center. While most of the FAST Report deals with military personnel 
policy on which AFGE does not take a position, the sections addressing 
civilian personnel policy look like they were cribbed from previous 
reports and proposals, including last year's Force of the Future 
proposal.
    AFGE does not suggest that either the Partnership, the architects 
of Force of the Future, or the FAST Report, advocate discrimination in 
pay. They likely have good intentions. But we also know that the road 
to hell is paved with good intentions, and federal employees have no 
desire to revisit the hell of NSPS. To be clear: Force of the Future 
and/or the FAST Report blueprint are not just cut from the same cloth 
as NSPS, they are NSPS redux.
    While NSPS and its would-be successors fail the internal equity 
test, there is no question that when it comes to external equity, 
Congress and the Clinton, Bush, and Obama administrations all failed to 
perform their role. It is preposterous to blame the current system for 
failing to produce external equity. External equity is a funding issue, 
and the General Schedule cannot fund itself. It relies on budget 
authority and appropriations. To pretend that Congress would magically 
provide billions more each year to fund a new civil service system 
identical to one it repealed in 2009 on the grounds that it was 
discriminatory is folly.
    The cost of living has risen 10 percent from 2010 to the present. 
So even before the salary reductions for new employees of 2.3 percent 
and 3.6 percent (i.e., the increase in employee contributions to FERS), 
the purchasing power of federal salaries had declined by 4.6 percent. 
The degree to which they lag the market varies by city, but the 
nationwide average is 34.92 percent according to the most recent 
estimates from OPM, using data from BLS. That number includes current 
locality payments which were frozen for five long years. https://
www.opm.qov/policy-data-oversiqht/payleave/pay-systems/qeneral-
schedule/pay-aqent-reports/2015report. pdf
  inequality, the decline of the american middle class, and wages and 
                     salaries of federal employees
    The decline in living standards for America's middle class and the 
ongoing misery of the poor have been much in the news recently. Even as 
the rate of unemployment has dropped, wages continue to stagnate as do 
household incomes. On one side are those who deny the numbers, 
attribute changes in the distribution of income and wealth to changes 
in educational attainment or willingness to exert effort. On another 
side are those who recognize that the decline of unions, the rise of 
outsourcing and global free trade agreements, and the deregulation of 
the 1990s and other factors are better explanations. Median incomes for 
middle class American families, adjusted for inflation, are lower than 
they were in the 1970s and the very rich have benefited so 
disproportionately from economic growth over the decades that America 
is now more unequal than it was in the 1920s. Both middle incomes and 
the incomes of the poor are now higher in several European countries 
and Canada than they are in the U.S. After adjusting for inflation, 
median per capita income in the U.S. has not improved at all since 
2000.
    Federal employees are typical middle class Americans. They work 
hard and have historically received modest, but fair pay from their 
employer. It has been recognized that the nation benefited from having 
an apolitical civil service governed by the merit system principles. 
The pay and benefits that derived from those principles were supposed 
to be adequate to recruit and retain a high-quality workforce, capable 
of carrying out important public sector functions, from law enforcement 
to guaranteeing care for wounded warriors to protecting public health.
    The government would not be a bottom-of-the-barrel employer, paying 
the lowest possible wages and forgoing health care and retirement 
benefits, like so many of today's most profitable corporations. 
Likewise, the government would not be a place where anybody went to get 
rich at taxpayer's expense (that role is assumed by government 
contractors like Booz Allen Hamilton). The government as an employer 
would be a model when it came to ideals of internal equity and non-
discrimination, promoting both fairness and seeking employees devoted 
to the public interest. On pay and benefits, it would aim at 
``comparability,'' defined in the pay law as no less than 95 percent of 
what private and state and local government pays on a locality basis.
    While some brave politicians have held fast to these principles 
over the past several years when there has been immense political 
pressure to reduce government spending no matter what, many more have 
succumbed to the notion that America should reconcile itself to 
declining living standards for all but the very rich. As such, they 
supported the pay freeze, the 1 percent pay adjustments, the federal 
retirement benefit cuts, which have cut purchasing power of some 
federal paychecks by an additional 2.3 or 3.6 percent; and they have 
supported the Budget Control Act's discretionary spending caps, which 
have meant temporary layoffs and could mean permanent job loss for 
thousands.
    We recognize the politics behind the pressure to constantly reduce 
federal spending. We understand the vast power of those who would 
protect the low tax rates of the wealthy at any cost. Regardless of 
one's position on austerity and sequestration, both Force of the Future 
and FAST Report proposals deserve strong opposition because they 
introduce subjectivity and politicization into federal pay, undermine 
veterans' preference and violate the merit system principles. These 
plans are also objectionable because they would reallocate salary 
dollars away from the lower grades toward the top, increasing 
inequality and decreasing opportunity for advancement. Even if the 
direct attacks on federal employees' pensions were to stop and funding 
for salaries were enhanced, it would be important to reject Force of 
the Future and the FAST Report approach, because they quite explicitly 
advocate greater inequality between the top and the bottom of the 
federal pay scale.
    The elitism of Force of the Future and the FAST Report is striking. 
They ignore the Federal Government's hourly workforce altogether. 
Apparently blue collar workers are so bereft of the qualities DOD and 
its contractors want to reward in their pay schemes that they are not 
worth notice. The implied segmentation of the General Schedule or 
salaried workforce is also highly elitist. Employees in the lower 
grades, like hourly workers, are excluded entirely, again because, 
presumably, trying to measure their contribution to excellence would be 
a pointless exercise. But excluding the lowest paid federal workers is 
only one part of the inequality enhancement exercise that Force of the 
Future and the FAST Report propose for DOD. Like their NSPS forbearer, 
the plans would divide the workforce by occupational category, 
reserving the highest raises for the highest earners. Those in the 
midlevel occupations would stagnate or decline, while their betters 
would be provided with both higher salary increases and a larger pool 
of funds from which to draw performance-based adjustments.
    Force of the Future and its government-wide twin from the 
Bipartisan Center should also be opposed because they both would undo 
the tremendous achievement of the current system with respect to 
eliminating discrimination in pay. AFGE urges Congress to treat the 
findings of the OPM study on pay equity as important accomplishments 
worth protecting. We should be celebrating this success, not 
considering replacing the system that produced it. That celebration 
must include full funding, so that federal employees can restore their 
status in the middle class.
     maintaining a merit-based civil service and due process rights
    A ``merit-based'' civil service system forms the cornerstone of all 
modern Western democracies. It ensures that technical expertise is 
brought to bear on performing agency missions, without the threat of 
overt partisan agendas driving day-to-day operations.
    When the FAST Report at recommendation A-5 states: ``Create a 
separate and unique personnel system for all Defense Department 
civilian employees,'' we at AFGE ask, will due process rights be 
maintained? The FAST Report further comments on page 27: ``Another 
issue with the civilian personnel system is the lack of flexibility to 
hire and fire employees in a timely manner. Since the system's primary 
rationale is fairness and impartiality, it is exceedingly difficult to 
remove low performers.''
    These code words and the outright contempt for civil service due 
process rights they express should be opposed by all those who care 
about maintaining a nonpartisan career civil service. The notion that 
poor performers and those who commit acts of misconduct cannot be 
disciplined or removed are myths that have been perpetuated by 
advocates for an ``at will'' civil service.
    The FAST Report ignores that the Civil Service Reform Act (CSRA) 
provides that all title 5 employees, including DOD employees, may be 
removed for either misconduct or poor performance. The employee merely 
needs to be informed of his or her alleged deficiency and the reason 
that management proposes to take an action against him or her (removal, 
demotion, suspension, etc.).
    An employee is subject to a final adverse action by an agency 30 
days after receiving an adverse proposal. An employee may file an 
appeal to an adverse action to the Merit System Protection Board 
(MSPB), a third-party agency that hears and adjudicates civil service 
appeals. MSPB administrative judges (AJs) hear the matter in an 
adversarial setting and decide the case in accordance with established 
legal precedents. If dissatisfied with the AJ's decision, either the 
agency or the employee may appeal the decision to the full three Member 
MSPB.
    The MSPB appeal process is highly efficient and expeditious. Most 
AJ decisions are rendered within 70 days of the filing of an appeal. On 
appeal to the full MSPB from an AJ decision, agencies win 80-90 percent 
of the time. Meanwhile, the agency's decision, e.g., removal of the 
employee from the payroll, remains in effect during the entire appeals 
process.
    The importance of maintaining a nonpartisan, apolitical civil 
service in an increasingly partisan environment cannot be overstated. 
First, most federal jobs require technical skills that agencies simply 
would not obtain through non-merit based appointment. Second, career 
employees must be free to perform their work in accordance with 
objective professional standards. Those standards must remain the only 
basis for evaluating employee performance or misconduct.
    Calls to make it easier to fire a federal employee by decreasing 
due process rights or speeding up the removal process are ``dog 
whistles'' for making the career service subject to the partisan or 
personal whims of a few supervisors or political appointees.
    The drafters of the FAST Report may find it politically unpopular 
to admit this, but federal managers are already fully empowered under 
existing law to take appropriate action when employees are 
underperforming or engaged in misconduct. There is no group of people 
who object more to the continuing presence in the workplace of those 
who are not performing well or who may engage in misconduct than fellow 
federal employees. When someone doesn't perform up to speed, it simply 
means more work for the rest of the people who do perform well. 
Similarly, an individual's misconduct hurts all employees in the 
workplace, and it is usually fellow employees who are the first to 
shine light on misconduct.
    A premise of both DOD's ``Force of the Future'' proposal and the 
FAST Report seems to be that federal managers lack adequate authority 
and tools to discipline those who engage in misconduct or who are poor 
performers. Thus, they argue, shifting employees from existing title 5 
processes and protections to a new title 10 system for all DOD civilian 
employees is warranted. Despite the various protestations of some 
managers, management-associated think tanks, and so-called bipartisan 
groups, the Government Accountability Office (GAO), the Merit Systems 
Protection Board (MSPB) and the Office of Personnel Management (OPM) 
have all issued reports and analyses that have come to pretty much the 
same conclusion: When poor performers are not dealt with it is never 
because the civil service laws or procedures are too difficult to 
navigate, but rather because some managers (or their managers) either 
do not want to take the time and effort to properly document poor 
performance and remove or demote poor performers, or because they lack 
the knowledge, skills, and ability to do this.
    A recent GAO report, ``Improved Supervision and Better Use of 
Probationary Periods Are Needed to Address Substandard Employee 
Performance,'' (GAO-151-191), February 6, 2015, found four principal 
reasons why agencies do not use the already substantial tools they have 
available to them to remove the relatively few poor performers. All 
four reasons related to management failures and/or unwillingness to 
properly identify and document poor performance. AFGE would urge this 
Subcommittee to review GAO's well thought-out recommendations and its 
careful analysis of relevant statutes and regulations.
    The premise that the procedural hurdles for removing poorly 
performing employees are too high is simply not borne out by the facts. 
When an employee invokes his/her rights to a formal adjudicatory 
hearing before the MSPB, the agency almost always prevails. For 
example, in 2013, only 3 percent of employees appealing their dismissal 
to the MSPB prevailed on the merits. In contrast, agencies were favored 
at a rate five times that of employees when formal appeals were 
pursued. The notion that the MSPB makes it impossible to fire a federal 
employee is simply not true. Perhaps we should call it an ``alternative 
fact.''
    There are well-established and fully adequate processes and 
procedures for removing problem federal employees. This is true for 
performance or conduct reasons. In fact, the standards for removing 
underperformers were specifically developed so that poorly performing 
employees may be more easily dismissed than employees committing 
conduct-related offenses. Even more important, the burden of proof is 
lower for removing a poor performer--it is only the ``substantial 
evidence'' test, so that reasonable supervisors are given leeway to 
determine what constitutes unacceptable or poor performance.
                          a better way forward
    Already federal workers, including DOD civilian employees, have 
contributed over $182 billion to deficit reduction during the past 8 
years. Employee pay adjustments during this period have been very small 
(and in quite a few years there were no adjustments at all), and 
inflation-adjusted federal employee compensation has actually 
decreased. Rather than continuing to punish and vilify DOD civilian 
workers, Congress should consider giving DOD supervisors appropriate 
tools to reward high performers. Freezes in pay, promotions and awards, 
and decreases in benefits whether directly or through more employee 
cost-sharing, do nothing to improve quality.
    History is replete with examples of public service corrupted by 
unfettered, politically-based employment decisions. That's why we 
continue to support a meritbased civil service system with appropriate 
due process, and checks and balances to ensure that both hiring and 
firing decisions be merit-based, and subject to meaningful review.
    AFGE strongly supports improvements in agency performance 
management systems, such as the Defense Department's New Beginnings 
approach. We look forward to working with lawmakers and others to see 
this carried-out. AFGE also supports better training of both 
supervisors and employees so that clear expectations are established, 
performance is measurable, and appropriate steps are taken to either 
remedy performance problems, or to remove the small number of poor 
performers from the workplace. AFGE also recommends that Congress focus 
more on empowering and improving the quality of the workplace for the 
99 percent of DOD employees who perform well. While we understand the 
need to deal with the 1 percent who may be problem performers, we must 
not allow the other 99 percent to be tarred and feathered with the same 
brush. Improving the lot of the 99 percent will further reduce the 
influence and tolerance for the 1 percent to remain employees. This 
starts with more proactive management.
    AFGE opposes virtually all of the proposals set forth in the FAST 
Report as they may affect civilian DOD workers. They are simply a 
replay of NSPS, and its destructive tone. AFGE does support the call in 
the FAST Report for improving educational opportunities for civilian 
DOD employees. However, these authorities already exist. It is a lack 
of funding that is responsible for the dearth of career development of 
civilians at DOD.
             impact of hiring freeze on military readiness
    As many of you are aware, the current freeze on hiring and 
promotion of federal employees has had and is continuing to have a 
negative impact on operations at DOD. While wide swaths of employees 
have received permission for exemptions on an individual basis, such as 
depot maintenance employees, others, who have a direct impact on the 
ability of the ``unfrozen'' employees to conduct their jobs, are still 
caught in the freeze even though their jobs have a direct impact on 
national security. For example, many of the engineers and systems 
integrators that plan and direct workload at depots across the country 
remain firmly caught in the freeze. Additionally, other key and equally 
important areas of the organic industrial base, such as arsenals, 
supply depots, and DLA are still caught in the freeze even though their 
workload and workforce have a direct impact on military readiness. 
Further, working capital fund employees, who work on funded orders from 
customers, are still caught in the freeze, which is simply unreasonable 
and makes no sense when current statute clearly states that their work 
and manning should be tied to workload. AFGE believes that the Armed 
Services Committee, the Senate and all of Congress should act to ensure 
that the freeze on civilian employees at DOD--and across government--
are removed from the freeze on hiring and promotions. The current 
freeze is the most inefficient method of managing employees and has a 
tremendously negative impact on morale.
    As you will recall, a recent GAO study identified that the military 
services are failing to meet core requirements under 10 U.S.C. 2464 at 
several locations across the organic industrial base. These gaps in 
core requirements were identified at the lower tier levels and create 
skill gaps that are critical to maintaining weapons systems that are 
necessary for war fighting. Increased funding is needed in some cases 
to ensure that backlogs are covered. In other cases, there is a need to 
transfer workload to the organic depots. Regardless, these core skills 
must be preserved to ensure military readiness. Failure to enforce the 
law is not a good option. This is an area that must be addressed by 
this Committee. GAO made recommendations that we hope the Committee 
will enact.
    AFGE would like to bring to the attention of this Committee an 
issue that has an impact on retention and hiring at some facilities, 
particularly DOD organic industrial facilities. Ata limited number of 
facilities across the country, there is a great unfair disparity 
between the wages of the GS employees and wage grade employees based on 
illogical decisions that were made in the past or failure to make 
logical decisions. For example, the salaried employees at Tobyhanna 
Army Depot in Pennsylvania are in the New York locality pay area, while 
the hourly employees are in the Scranton, Pennsylvania area for 
purposes of locality-based pay. This differential treatment of salaried 
and hourly employees results in enormous disparities in pay. Both 
hourly and salaried workers at the Tobyhanna Army Depot should be in 
the New York locality pay area, as commuting patterns for both 
workforces show that the relevant labor market for all occupations 
employed at the Depot is most closely aligned with New York. The 
Federal Prevailing Rate Advisory Committee has recommended this 
unification, but OPM has not implemented the change. We urge the 
Committee to enact legislation to correct this unjustifiable inequity.
    At some of our depots, AFGE Locals and management have worked 
together on innovative ideas and programs to improve workload leveling 
and to implement skills enhancement programs that will also increase 
pay for employees. One such example is the Multi-Trades Demonstration 
Pilot Program that Congress has authorized and reauthorized to allow 
all of the military services to enter into agreements where certain 
skilled journeymen level artisans could be trained in another skill and 
work in both skills for a higher grade and higher pay. The Air Force 
Materiel Command (AFMC) has worked diligently on a program at Ogden Air 
Logistics Complex to implement a pilot program. This pilot 
demonstration project has been years in planning. It has been approved 
and promoted through the 4-Star Commanding General at AFMC multiple 
times and forwarded to the Air Force, DOD and OPM. Yet, in spite of the 
coordination and agreement between labor and management and despite the 
solid business case analysis, the plan is caught in a bureaucratic 
nightmare at DOD and OPM. AFGE needs your help to get this pilot 
program moving and approved so we can implement the demonstration 
program to determine whether it is a good model for the future.
                               conclusion
    We would urge this Subcommittee to reject any movement of DOD's 
civilian workforce from coverage under title 5 to a system run by the 
Department under the authorities of title 10. This was tried under NSPS 
only a few years ago, and was rightly abandoned when the gross 
inequities of the system became apparent.
    Although it is easy to focus on the small number of employees in 
any organization who create problems, it is important to remember that 
the vast majority of federal employees perform very well, and that 
agency systems and the laws and regulations governing employee 
performance serve the public interest in an apolitical, transparent, 
and accountable civil service. We do not need new laws or authorities 
regarding public administration. We need to make sure that agency 
managers and supervisors (and the supervisors of supervisors) have the 
training and will to implement current rules effectively. In this, we 
share the concern of this Subcommittee, and we will work with you as we 
strive to ensure that our civil service system motivates and maintains 
high quality employee performance at DOD. Due process rights, including 
union rights, for civil servants at DOD or other agencies provides 
accountability to the public for both managers and political appointees 
and is a cornerstone of our system of democracy and should not be 
treated as expendable.

  Prepared Statement by Max Stier, President and CEO Partnership for 
                             Public Service
    Chairman Tillis, Ranking Member Gillibrand, Members of the 
Subcommittee on Personnel, thank you for the opportunity to submit a 
statement for the record regarding the state of the Department of 
Defense's civilian workforce and the need for meaningful personnel 
reform.
    I am Max Stier, President and CEO of the Partnership for Public 
Service, a nonpartisan, nonprofit organization committed to inspiring a 
new generation to enter public service and transforming the way 
government works.
    This Committee deserves credit for its leadership in taking steps 
to reform the decades-old federal civil service system. The Committee 
recognizes the stark reality that, as it exists today, the federal 
personnel system is no longer a good fit for the dedicated civilian 
employees of the Department of Defense and, more importantly, 
undermines our government's ability to keep us safe. The personnel 
system governing the Department, and our Federal Government more 
generally, is a relic of a departed era and reflects a time when many 
federal jobs were clerical in nature and did not require the 
specialized knowledge and skills that they do today. America's 
warfighters deserve and depend on a civilian workforce comprised of top 
talent, which will not happen unless the personnel system promotes 
effective recruitment, hiring, and compensation processes. Achieving 
the best possible mission outcomes requires that the Department recruit 
and hire the best and brightest civilian talent, compensate that talent 
fairly, engage and develop employees' skills, and, when necessary, 
discipline employees to achieve the best possible mission outcomes. The 
Senate Armed Services Committee has led the way on reform, and the 
Partnership believes that the time is right for Congress to do more to 
overhaul the civil service system so that the Department can better 
utilize its most important resource--its people.
     the federal civil service system is in crisis and needs reform
    The current civilian personnel system dates back to 1949 and serves 
only to disconnect the federal workforce from the larger talent market 
for knowledge-based professional jobs. To help agencies meet their 
talent needs and accomplish their missions, Congress and OPM have, over 
the years, authorized numerous agency-specific systems and 
flexibilities. The result has been balkanization and fracturing of the 
civil service. Agencies compete not only with the private sector for 
talent but with other federal agencies as well.
    Americans who want to serve our country and enter public service 
confront a disjointed, unresponsive hiring process that is difficult to 
understand, frustrating to navigate, and fails to meet the needs of 
agencies or applicants alike. Individuals hired confront a job 
classification and pay system which treats all occupations the same and 
sets pay and grade level based on an arcane and arbitrary formula, 
bearing little relationship to private sector compensation. Former 
Secretary of Defense Robert Gates noted in his memoir, A Passion for 
Leadership, that, ``Most of the sclerosis that impedes change in terms 
of hiring, firing, work rules, pay, and personnel is generally 
hardwired into law or regulations'' which, when combined with attacks 
on public service more broadly, ``discourage young citizens with 
desirable and needed talents from entering public service.'' \1\
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    \1\ ABC News. `` `Book excerpt: Robert Gates' `A Passion for 
Leadership' '' ABC News. ABC News Network, 29 Jan. 2017. Web. 20 Mar. 
2017.
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    The need for a modern, streamlined personnel system is particularly 
acute at the Department of Defense, which employees nearly 700,000 
civilian employees and currently operates under 66 unique civilian 
personnel systems. \2\ According to the Partnership's analysis of the 
most recent Office of Personnel Management (OPM) Federal Employee 
Viewpoint Survey (FEVS), percent positive responses to the statement, 
``My work unit is able to recruit people with the right skills'' ranged 
between 39 percent at the Department of the Army to 42 percent at the 
Department of the Air Force. \3\ These responses indicate that 
employees see clearly an inability to hire and retain needed talent in 
DOD. To its credit, Pentagon leaders recognize the need for meaningful 
reform. Secretary Mattis, in his confirmation hearing, stated that he 
would ``pursue reforms to the civilian personnel system.'' \4\ There 
have been many attempts to modernize the Department over the years, 
from the China Lake Demonstration Projects to AcqDemo and more recent 
reforms that have sought to implement new approaches to compensation, 
classification and performance management. However, these reforms have 
not had a fundamentally transformative impact on the Department's 
talent management approach, and it continues to struggle to recruit, 
hire, retain, and engage the talent it needs. According to the 
Partnership for Public Service's Best Places to Work in the Federal 
Government Rankings, the most comprehensive measure of employee 
engagement available, neither the DOD's Fourth Estate nor any of the 
services ranked higher than 12th of 18 large agencies in overall 
employee engagement. \5\
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    \2\ United States of America. Department of Defense. Under 
Secretary of Defense for Personnel and Readiness. Force of the Future: 
Final Report: Reform Proposals. Washington, DC: Department of Defense, 
2015. 64.
    \3\ ``2016 Federal Employee Viewpoint Survey EMPLOYEES INFLUENCING 
CHANGE.'' U.S. Office of Personnel Management. N.p., n.d. Web. 20 Mar. 
2017.
    \4\ Katz, Eric. ``Trump's Defense Secretary Pick Promises 
Efficiencies Among Civilian Workforce.'' GovernmentExecutive. N.p., 12 
Jan. 2017. Web. 20 Mar. 2017.
    \5\ 5 The Department of the Navy ranked 12 of 18, the DOD Fourth 
Estate ranked 13 of 18, the Department of the AirForce ranked 14 of 18, 
and the Department of the Army ranked 16 of 18.
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    True reform will require a thoughtful framework, strong leadership, 
and employee buy-in. The Partnership offered just such a blueprint in 
our 2014 report, Building the Enterprise: A New Civil Service 
Framework. \6\ In that report, we proposed a comprehensive, fundamental 
overhaul which offered ideas on how to speed hiring, modernize 
compensation, simplify job classification, strengthen employee 
accountability, and develop effective leaders. Our overarching goal was 
to create a unified federal enterprise that balances merit principles 
and common policies across government with agency flexibility to tailor 
personnel systems to their unique missions. Agencies like DOD 
ultimately know best how to hire, support and engage the people they 
need, and the civil service system should help them do so rather than 
stand in their way.
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    \6\ Building the Enterprise: A New Civil Service Framework. Rep. 
Washington, DC: Partnership for Public Service, 2014.
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congress should view dod as a test-bed for comprehensive civil  service 
                                 reform
    The current political moment represents a valuable opportunity for 
major reform. Leaders in the public and private sector, in academia and 
the good government stakeholder community all agree that the Federal 
Government's personnel system is in desperate need of reform. The 
Senate Armed Services Committee has led the way. Reforms enacted over 
the last few years--creation of a public-private talent exchange to 
facilitate sharing of best practices with the private sector, expanding 
merit promotion privileges to employees on time-limited appointments 
new authority to hire students and recent graduates quickly, among many 
others--represent an important starting point for the Department and 
the government as a whole. While the full impact of these recent 
reforms is not yet known, there is no doubt that the Committee's 
efforts have set the tone and direction for the rest of government. As 
the Boston Consulting Group points out, ``Given that almost one-third 
of all federal employees work in the DOD, its views are extraordinarily 
influential, and there is a growing realization that the civil service 
system is inadequate for effective government. It is opaque, 
inefficient, and inflexible.'' \7\ The Committee should use its 
influence to reimagine the Defense Department's personnel system as a 
modern, agile, unified system that attracts and retains the best and 
brightest and serves as a model for the rest of government. Below, I 
outline several recommendations for doing so, focusing on both long-
term ideas for broader civil service reform beginning at DOD and 
spreading throughout government, and actionable, short-term legislative 
ideas that can have an immediate impact on the Department's ability to 
manage its talent.
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    \7\ Brad Carson, Greg Mallory, and Mel Wolfgang. ``The Pentagon's 
`Force of the Future' Reinvents Hiring'' www.bcgperspectives.com. 
Boston Consulting Group, 15 Sept. 2016. Web. 20 Mar. 2017.
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                       long-term recommendations
Pursue comprehensive civil service system reform at the Department of 
        Defense
    The size and influence of the Department of Defense over the rest 
of government mean that it can, should, and likely will serve as the 
leader in personnel reform. With this in mind, the Committee should 
pursue broad reform at the Department that can serve as a model for 
other agencies. This reform should create a Defense Department that has 
the flexibility to hire, pay, and hold accountable its workforce in an 
equitable manner consistent with merit principles, veterans' 
preference, and the foundational ideas of a professional civil service. 
The Secretary should have broad authorities to recruit, hire and 
compensate mission-critical talent in a way that best meets the needs 
of the organization and should be able to manage performance and deal 
with poor performers through a fair but reasonable process that serves 
both managers and employees. The Armed Services Committee has already 
laid the groundwork, and we strongly urge you to continue down the path 
of reform.
Benchmark the Department's Hiring Process and Other Aspects of Talent 
        Management
    For the Department of Defense to become an employer of choice for 
the best and brightest, it must first be able to make meaningful 
comparisons to the organizations with which it competes in critical 
hiring and other talent management metrics. A human capital 
benchmarking initiative would allow the Department to understand its 
talent challenges better and lay out a path towards resolving them. Key 
metrics might include time-to-hire; quality of hire; manager, 
applicant, and new hire satisfaction with the hiring process; ability 
to reach and recruit talent from diverse talent pools; and the use and 
impact of special hiring authorities and flexibilities. This last 
metric is particularly important in light of recent GAO findings that 
government as a whole does a poor job of understanding and utilizing 
the dozens of hiring authorities and flexibilities currently in law. 
\8\ Congress could require the Department to collect this information 
and use it to improve its internal talent management practices 
continuously.
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    \8\ United States of America. Government Accountability Office. 
Federal Hiring: OPM Needs to Improve Management and Oversight of Hiring 
Authorities. Washington, DC: GAO, 2016.
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Provide Regular, Meaningful Oversight of the Department's Performance 
        Management Processes
    As DOD finally begins rolling out the ``New Beginnings'' 
performance management process, this Subcommittee should commit to 
performing regular oversight to ensure that the initiative is meeting 
its goals. The data shows that, as of now, performance management is a 
problem. Across the Department, just a third of employees respond 
positively to the statement that ``Promotions in my work unit are based 
on merit,'' while even fewer agree that ``steps are taken to deal with 
a poor performer who cannot or will not improve.'' \9\ Ensuring that 
wider civil service reforms, including the new requirement that 
reductionsin-force (RIFs) be based primarily on performance, truly take 
hold will depend on an effective performance management process which 
employees believe is both fair and equitable. Ultimately, holding 
employees accountable for their performance is core to mission 
accomplishment. This Subcommittee will be essential to holding DOD 
itself accountable and making sure that the Department is adjusting 
course as necessary.
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    \9\ 9 ``2016 Federal Employee Viewpoint Survey EMPLOYEES 
INFLUENCING CHANGE.'' U.S. Office of Personnel Management. N.p., n.d. 
Web. 20 Mar. 2017.
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    The topic of RIFs deserves special focus. Congress took a step in 
the right direction by weighting performance more heavily in executing 
reductions-in-force. However, given that there has not been a large-
scale RIF in over 20 years, there is reason to believe that the process 
may have unanticipated and unintended negative consequences on the 
Department's overall talent posture--e.g., upending succession planning 
by pushing out or discouraging younger talent and making it harder to 
bring in new talent because of the re-employment rights of employees 
released as part of a RIF. It will be essential for the Committee to 
understand how the Department would execute a RIF and how a RIF would 
affect the ability of the Department to recruit, deploy, develop and 
discipline its civilian talent.
                       short-term recommendations
Change the Standard for Using Direct Hire Authority from a Shortage of 
        ``Minimally-Qualified'' Candidates to a Shortage of ``Highly-
        Qualified'' Candidates and Grant DOD the Authority to Make 
        Direct Hire Determinations
    In filling the ranks of the civilian workforce, government as a 
whole and DOD, in particular, should only hire people who are highly 
qualified for their jobs--settling for candidates who are minimally 
qualified is simply the wrong bar. Currently, however, agencies must 
demonstrate to OPM that they face a shortage of candidates who are 
minimally qualified before requesting direct hire authority for that 
position or group of positions. Further, to show a lack of minimally 
qualified candidates, an agency must go through the full hiring process 
before applying to OPM for such authority, adding a minimum of six 
months to the process. Therefore, we propose that Congress change the 
standard that the Department of Defense must meet to use direct hire 
authority for any position to a demonstration of a shortage of highly-
qualified talent. Also, the Secretary of Defense should have the 
authority to grant direct hire authority to components or for positions 
where it is needed, with proper OPM oversight. The Department knows 
best what its talent needs are and where the roadblocks to reaching 
that talent lie, and it should have the power to act to address them.
Allow the Secretary to Offer Market-Based Pay for Mission-Critical 
        Positions
    The General Schedule is more than six decades old and no longer 
serves to effectively and rationally compensate the talent that the 
Department needs. While there are certainly some employees who may be 
overcompensated by the current system, relative to the labor market, 
there are other vital positions for which federal pay is simply not 
competitive. The Partnership's report, Building the Enterprise: A New 
Civil Service Framework, laid out a new pay-setting process for the 
federal workforce. The modernized pay system would establish broad pay 
bands for employees rather than rigid grades, better align salaries and 
benefits on an occupation-by-occupation basis, set salaries based on 
those comparisons and give agencies the flexibility to bring talent in 
at the appropriate salary level. While the Committee need not pursue 
this detailed of an approach in the short term, the Department would 
greatly benefit from having the authority to set market-based pay 
levels for specific mission-critical occupations as a way to better 
attract and retain badly-needed talent.
Authorize DOD to Noncompetitively Rehire Former Department Employees to 
        Any Position for Which They Qualify
    Currently, former federal employees who have held a career or 
career-conditional position can be reinstated non-competitively within 
the Federal Government, but only to a job that is at or below the grade 
level they last held in the Federal Government. The individual applying 
may be qualified for a more senior position due to several years of 
valuable higher-level experience outside the government, but that 
experience does not matter for the purpose of their non-competitive 
eligibility. The result is that government unnecessarily 
disincentivizes talented former federal employees from returning to 
public service. This proposal would create better flow between DOD and 
the private sector and encourage talented individuals to return to 
government service.
Require DOD to Accept Resumes for SES Positions in the Initial Stage of 
        the Hiring Process
    In many cases, applicants for SES positions must apply for these 
jobs by writing lengthy essays addressing their qualifications for the 
position. This process is time-consuming and greatly deters external 
candidates from applying. A report by the Partnership, A Pivotal Moment 
for the Senior Executive Service: Measures, Aspirational Practices and 
Stories of Success, pointed out that the application process 
``discourages many potential candidates from applying, particularly if 
they come from the private sector.'' \10\ By allowing all applicants 
for SES positions to apply with a simple resume at the initial stages 
of the hiring process, agencies can ensure they are receiving a diverse 
pool of candidates from both within and outside government. As part of 
this recommendation, it may also be useful to require agencies to 
survey candidates, new hires and hiring managers to ensure the hiring 
and selection process brings the best possible talent to the 
Department.
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    \10\ A Pivotal Moment for the Senior Executive Service: Measures, 
Aspirational Practices and Stories of Success. Rep. Washington, DC: 
Partnership for Public Service, 2016. 15.
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Authorize DOD, rather than OPM, to certify that their selected SES 
        candidates possess the Executive Core Qualifications
    Rather than relying on the current OPM Qualifications Review Board 
(QRB) that is required to approve applicants for executive positions, 
DOD should be able to certify its executive talent on the basis that 
the Department itself knows best what type of executive it needs. The 
QRB serves as the last step in the SES selection process, and its 
purpose is to certify that an SES candidate possesses broad leadership 
skills. \11\ However, the QRB process extends the length of the hiring 
process even while it approves nearly all candidates. Delegating this 
authority to DOD has the potential to speed up the hiring and 
certification process for new executives and allow the Department to 
manage its executive talent better. To protect against abuse and ensure 
quality candidates, OPM could review and certify a sample of hiring 
decisions annually to ensure the Department is acting appropriately.
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    \11\ ``Selection Process.'' U.S. Office of Personnel Management. 
OPM, n.d. Web. 20 Mar. 2017.
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Establish a Dual-Track Promotional System to Enable Both Managers and 
        Technical Experts to Advance Their Careers
    The rigid structure of the General Schedule typically requires 
employees to move into supervisory and management roles to advance 
their careers, even in cases where the employee may not be an effective 
manager. For employees who possess valuable technical expertise but are 
not suited for supervisory duties, this is especially challenging. A 
dual promotional track that allows employees to become either managers 
or technical experts would give both agencies and employees more 
choices. Individuals with superior technical qualifications could 
advance in their careers without being forced to become a manager, 
while those who have demonstrated an aptitude for leadership would be 
allowed to take on those responsibilities. The outcome is not just more 
satisfied employees, but more effective managers throughout the 
organization.
Require Performance Plans for Political Appointees Which Recognize 
        Critical Management and Leadership Goals
    As the highest level of leadership in the Department of Defense, 
political appointees play a crucial role in providing leadership and 
setting priorities for the organization. Appointees should be held 
accountable for their performance and contributions like every other 
employee. Unfortunately, DOD does not perform particularly well 
regarding the effectiveness of its leadership--with rankings among its 
major components in the Partnership's measure of ``Effective 
Leadership'' ranging from seventh to 15th out of 18 large agencies. 
\12\ Scores in the subcategory specifically measuring satisfaction with 
senior leaders are only marginally better, with the major DOD 
components ranging from between sixth and 12th among 18 large agencies. 
\13\ Across the Department, between 39 percent and 45 percent of 
employees respond positively to the statement, ``In my organization, 
leaders generate high levels of motivation and commitment in the 
workforce.'' \14\ Performance plans should address the accountability 
of leaders for managing well, supporting efforts to recruit, hire and 
retain highly-qualified talent, training and developing future leaders, 
engaging employees, and holding subordinate managers accountable for 
addressing employee performance issues. Each of these criteria plays a 
role in building a high-performing workforce and will drive leadership 
attention to the pressing workforce and management issues within the 
Department.
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    \12\ Partnership for Public Service. ``Best Places to Work in the 
Federal Government.'' Best Places to Work in the Federal Government. 
Partnership for Public Service, n.d. Web. 20 Mar. 2017.
    \13\ In the Best Places to Work subcategory of ``Effective 
Leadership--Senior Leaders'', the rankings were as follows: Department 
of the Air Force (6 of 18), DOD Fourth Estate (9 of 18), Department of 
the Navy (11 of 18), Department of the Army (12 of 18)
    \14\ ``2016 Federal Employee Viewpoint Survey EMPLOYEES INFLUENCING 
CHANGE.'' U.S. Office of Personnel Management. N.p., n.d. Web. 20 Mar. 
2017.
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Expand the Pathways Programs to Allow for the Conversion of Third-Party 
        Interns and Volunteers
    Student interns and recent graduates provide a critical pipeline of 
entry-level talent into any organization. Increasing the number of 
young people in an organization provides new ideas, reinvigorates the 
workforce, and creates a pool of future leaders. At the Department of 
Defense, where just seven percent of the workforce is under the age of 
30--a number well below the comparable level in the private sector--
this is especially true. \15\ Further, internships give agencies the 
opportunity to evaluate potential employees on the job, where they can 
most effectively assess their work product and their fit within the 
organization. The Pathways Programs serve as the best means of bringing 
younger talent into government; codifying conversion authority while 
simultaneously expanding it to allow for excepted service appointments 
of student interns, volunteers who perform substantive work functions, 
and interns hired through third-party organizations would increase the 
pool of proven, high-quality entry-level talent available to DOD.
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    \15\ ``U.S. Office of Personnel Management.'' FedScope. N.p., n.d. 
Web. 20 Mar. 2017.
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Require Aspiring DOD Executives to Demonstrate Experience in Another 
        Sector, Level of Government, or Agency Before Being Selected 
        for the SES
    The Senior Executive Service, established by the Civil Service 
Reform Act of 1978, was originally conceived as a mobile corps of 
federal leaders. This Committee recognized the importance of mobility 
and diversity of experience for the civilian workforce last year when 
it included a provision authorizing a DOD public-private talent 
exchange in the National Defense Authorization Act for Fiscal Year 2017 
(P.L. 114-328). The Armed Services Committee could build upon this new 
authority by requiring DOD to give added weight during the SES 
selection process to candidates who would bring a diversity of 
experience to the role. Rotations offer a rich professional development 
opportunity in management and policy for current and aspiring leaders 
and allow agencies to build managerial skills, strategically fill 
vacancies, and infuse new thinking into their organizations. However, 
barriers to greater mobility among executives and aspiring executives 
have built up over time. These include agencies' hoarding of talent and 
reluctance to accept short-term transition costs of losing a top 
performer, and organizations doing a poor job of onboarding new 
executives. Overcoming these roadblocks, at least initially, will 
require a push from Congress, and the Partnership firmly believes that 
the benefits far outweigh the costs.
Move to a Shared Services Model for DOD Human Resources
    In a constrained fiscal environment, the Department of Defense must 
look for new ways to seek efficiencies and reduce spending. Shared 
services offer the ability to use resources more efficiently while 
enabling more effective delivery of mission through efficient 
administrative services. For an organization the size of DOD, the 
savings potential of a move to an HR shared services model is well into 
the billions of dollars; the Federal CIO Council has estimated that the 
savings generated by shared services can be estimated somewhere between 
$21 billion and $47 billion per year. \16\ The need for such 
efficiencies at DOD is great: the Department operates hundreds of 
separate HR IT systems and employs 22,000 civilian employees in HR. 
\17\ Further, DOD has found that ``due to the lack of modern automated 
workflows, gaps in functionality are bridged by human intervention.'' 
\18\ Shared services can bring about this system modernization at a 
lower cost to the Department than if it were to develop such systems 
in-house. Whether the move to a shared service model results in a 
centralized DOD HR function or one where a single component acts as an 
executive agent for all DOD is a tactical decision--the demands on the 
Department's resources are too pressing not to move down this path. 
Creating the right environment for shared services entails committing 
to the goal, altering spending expectations and incentives, and 
rethinking how government makes investments in its administrative 
services and infrastructure. The Committee can and should play a 
leading role in driving that commitment and investment forward. \19\
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    \16\ United States of America. U.S. Chief Information Officers 
Council. Office of Management and Budget. Federal Shared Services. 
Washington, DC: U.S. CIO Council, n.d.
    \17\ United States of America. Department of Defense. Under 
Secretary of Defense for Personnel and Readiness. Force of the Future: 
Final Report: Reform Proposals. Washington, DC: Department of Defense, 
2015. 105.
    \18\ 18 Ibid. 105.
    \19\ 19 ``Human Resources Shared Services: Progress, Lessons and 
Opportunities .'' Ourpublicservice.org. Partnership for Public 
Services, Dec. 2015. Web. 20 Mar. 2017. 8.
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The Committee Should Pay Close Attention to the Management 
        Qualifications of Nominees to Critical Positions Within the 
        Department
    As the single largest federal Department, with hundreds of 
thousands of employees in offices and installations across the country, 
the Pentagon represents a challenging management environment for even 
the most effective leaders. Each service, even taken individually, is 
comparable in size, budget, and complexity to a Fortune 100 company. 
The Armed Services Committee plays a crucial role in ensuring that 
nominees for key executive positions in the Department bring management 
skills to their new jobs along with subject matter expertise--a role 
that is especially important because successfully managing in the 
Federal Government is much different than managing in other sectors. As 
this Subcommittee, as well as the full Committee, begin to consider the 
President's nominees for important DOD posts, the Partnership urges you 
to review, and question, each nominee's management qualifications to 
ensure that potential Defense Department leaders understand the 
challenges they are taking on and are capable of successfully leading 
their organizations.
Conclusion
    Chairman Tillis and Ranking Member Gillibrand, thank you for the 
opportunity to share my views on the need for civilian personnel reform 
at the Department of Defense. I am pleased to see this Subcommittee 
maintain its commitment to modernizing and strengthening the civil 
service system so that it can meet the needs of the Department's 
hundreds of thousands of civilian employees, as well as our men and 
women in uniform. I look forward to working with the Subcommittee on 
these important issues moving forward.

  Prepared Statement by Sarah Maples, Director National Security and 
     Foreign Affairs Veterans of Foreign Wars of the United States
    Chairman Tillis, Ranking Member Gillibrand, and distinguished 
members of the Personnel Subcommittee, on behalf of the men and women 
of the Veterans of Foreign Wars of the United States (VFW) and its 
Auxiliary, I thank you for the opportunity to provide the VFW's views 
on the Department of Defense (DOD) civilian personnel reforms. We 
appreciate the work this subcommittee has done in the past to improve 
programs and policies for our service members and their families.
    Section 1101 of the National Defense Authorization Act (NDAA) for 
Fiscal Year 2016 required DOD to develop a new Reduction in Force (RIF) 
policy wherein, should civilian employees be required to be let go from 
service, determination of who will be released from employment ``shall 
be made primarily on the basis of performance.'' In January 2017, DOD 
released its new policy, which it claims meets this requirement. Upon 
review, however, the VFW believes the new policy not only fails to meet 
the NDAA requirement, but it also disadvantages veterans by reducing 
the value of veterans preference, particularly for transitioning 
service members who gave years of honorable service to our country but 
lack enough tenure in post-military federal service to have received a 
performance rating.
    Under DOD's previous RIF policy which continues to apply to the 
rest of the Federal Government, the order of retention was: 1) tenure 
of employment; 2) veterans preference; 3) length of service; and 4) 
performance. DOD's new policy claims to adhere to the following order 
of precedence: 1) performance; 2) tenure; 3) average score; 4) veterans 
preference; and 5) service computation date. However, this is 
inaccurate, as the new policy requires DOD to divide employees by 
tenure group and number of months of assessed performance before 
performance is even considered.
    Therefore, the true order of precedence is as follows: 1) tenure 
group; 2) months of assessed performance; 3) performance rating of 
record; 4) tenure group; 5) average score; 6) veterans preference; and 
7) service computation date. This means civilian employees are 
protected by two rounds of tenure before their performance is even 
considered which is counter to the intent of the NDAA mandate and more 
tenure-centered than the previous policy. Not only does this new order 
unfairly weight the system towards tenure, as opposed to the stated 
performance, it also undervalues the service veterans performed for 
their country.
    Under the previous system, if two individuals were hired on the 
same day--one a civilian who had worked six months for another federal 
agency before transferring to DOD, and the other a veteran with ten 
years of honorable military service--and a RIF was then implemented, 
the veteran would be retained above the civilian. The previous policy 
recognized that veterans, while absent from the civilian workforce, 
have valuable experience worth considering. Therefore, in situations 
where individuals were in the same tenure group, the veteran's service 
was the deciding factor in who was retained.
    According to the new policy, if DOD has not yet rated either 
employee, the transferred civilian will be retained before the veteran, 
simply because that individual would have a rating of record, whereas 
the veteran would not, despite the veteran's ten years of honorable 
military service. This is true even if the civilian's rating of record 
reflected below average performance.
    This is because DOD's performance management system does not 
provide appraisals until after an employee has served more than 90 
days. In instances where DOD has not yet evaluated an individual's 
performance, they will accept a rating from another federal agency. 
They will not, however, accept a military performance rating in a 
similar circumstance. Therefore, a recently transitioned veteran with 
ten years of honorable military service will be given no performance 
value and, instead, will be cut based on lack of tenure. Meanwhile, a 
non-veteran with a poor performance rating from another federal agency 
and as little as three months of service to DOD is retained.
    Additionally, when asked why it cannot include a performance factor 
for veterans that recognizes their honorable service, DOD responded in 
a letter to the VFW that it has ``remained consistent with the 
government-wide regulations, which do not allow consideration of 
performance assessed using military . . . ratings of record.'' The VFW 
finds this statement to be disingenuous, as the rest of the government 
is providing a value for military performance by using veterans 
preference as the second highest factor in RIF proceedings. However, 
DOD has reduced veterans preference while providing no comparable 
evaluation of military performance.
    DOD has repeatedly stated that they believe their new system will 
better benefit ``high performing veterans.'' However, it is clear that 
many veterans may never make it to the ``high performing'' category, as 
they will be eliminated before their performance can ever be evaluated. 
Meanwhile, underperforming civil servants will be retained at the 
expense of veterans who honorably served the very department that now 
casts them out. This is particularly concerning for veterans who 
received high performance marks during military service and are now on 
a RIF short list simply because they have less than 90 days of civilian 
work experience.
    Congress has continually tried to ensure that time spent serving 
our Nation in the Armed Services is valued when veterans move into the 
civilian workforce. When passing the Jobs for Veterans Act (Public Law 
107-288) in 2002, which revised and improved employment, training and 
placement services furnished to veterans, Senator Rockefeller said, 
``As we ask the young men and women of this Nation to prepare 
themselves to take up arms in its defense, we must ensure that we will 
be able to help them find productive careers upon their return as we 
did for the previous generations that defended our freedoms.''
    This protection for those who have returned from the battlefield is 
no less needed now, after fifteen years of war and its associated 
demands, than it was at the beginning of the war. As such, the VFW 
calls on Congress and the Department of Defense to recognize the 
service and sacrifice of this Nation's veterans by correcting the 
injustice done by DOD's new RIF policy. Specifically, we call on the 
Department of Defense to meet the true intent of the 2016 NDAA by 
limiting tenure consideration to a single instance, as opposed to the 
multiple considerations it is currently being given, and restoring 
veterans preference to its proper place in the RIF factors in order 
that the performance of veterans be properly reflected.


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