[Senate Hearing 116-495]
[From the U.S. Government Publishing Office]
S. Hrg. 116-495
NOMINATIONS OF JOHN GIBBS,
HON. JOHN M. BARGER,
HON. CHRISTOPHER B. BURNHAM, AND FRANK DUNLEVY
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HEARING
BEFORE THE
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED SIXTEENTH CONGRESS
SECOND SESSION
__________
NOMINATION OF JOHN GIBBS TO BE DIRECTOR, OFFICE OF
PERSONNEL MANAGEMENT, HON. JOHN M. BARGER TO BE MEMBER,
FEDERAL RETIREMENT THRIFT INVESTMENT BOARD,
HON. CHRISTOPHER B. BURNHAM TO BE MEMBER, FEDERAL
RETIREMENT THRIFT INVESTMENT BOARD, AND FRANK DUNLEVY TO BE MEMBER,
FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
__________
SEPTEMBER 9, 2020
Available via the World Wide Web: http://www.govinfo.gov
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
U.S. GOVERNMENT PUBLISHING OFFICE
45-873 PDF WASHINGTON : 2021
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
RON JOHNSON, Wisconsin, Chairman
ROB PORTMAN, Ohio GARY C. PETERS, Michigan
RAND PAUL, Kentucky THOMAS R. CARPER, Delaware
JAMES LANKFORD, Oklahoma MAGGIE HASSAN, New Hampshire
MITT ROMNEY, Utah KAMALA D. HARRIS, California
RICK SCOTT, Florida KYRSTEN SINEMA, Arizona
MICHAEL B. ENZI, Wyoming JACKY ROSEN, Nevada
JOSH HAWLEY, Missouri
Gabrielle D'Adamo Singer, Staff Director
Patrick J. Bailey, Chief Counsel for Governmental Affairs
Clark A. Hedrick, Counsel
Andrew J. Timm, Professional Staff Member
David M. Weinberg, Minority Staff Director
Zachary I. Schram, Minority Chief Counsel
Yogin J. Kothari, Minority Professional Staff Member
Marie E. Talarico, Minority Research Assistant
Laura W. Kilbride, Chief Clerk
Thomas J. Spino, Hearing Clerk
C O N T E N T S
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Opening statements:
Page
Senator Johnson.............................................. 1
Senator Peters............................................... 2
Senator Hassan............................................... 14
Senator Rosen................................................ 16
Senator Romney............................................... 19
Senator Sinema............................................... 20
Senator Lankford............................................. 23
Senator Scott................................................ 27
Prepared statements:
Senator Johnson.............................................. 35
Senator Peters............................................... 36
WITNESSES
Wednesday, September 9, 2020
John Gibbs to be Director of the Office of Personnel Management
Testimony.................................................... 3
Prepared statement........................................... 38
Biographical and professional information.................... 41
Letter from U.S. Office of Government Ethics................. 56
Responses to pre-hearing questions........................... 59
Responses to post-hearing questions.......................... 102
Letter submitted by Senator Peters........................... 120
Hon. John M. Barger to be Member of the Federal Retirement Thrift
Investment Board
Testimony.................................................... 5
Prepared statement........................................... 121
Biographical and professional information.................... 123
Letter from U.S. Office of Government Ethics................. 140
Responses to pre-hearing questions........................... 143
Responses to post-hearing questions.......................... 160
Hon. Christopher B. Burnham to be Member of the Federal
Retirement Thrift Investment Board
Testimony.................................................... 7
Prepared statement........................................... 174
Biographical and professional information.................... 175
Letter from U.S. Office of Government Ethics................. 198
Responses to pre-hearing questions........................... 202
Responses to post-hearing questions.......................... 217
Frank Dunlevy to be Member of the Federal Retirement Thrift
Investment Board
Testimony.................................................... 8
Prepared statement........................................... 224
Biographical and professional information.................... 231
Letter from U.S. Office of Government Ethics................. 252
Responses to pre-hearing questions........................... 254
Responses to post-hearing questions.......................... 265
NOMINATIONS OF JOHN GIBBS,
HON. JOHN M. BARGER,
HON. CHRISTOPHER B. BURNHAM, AND FRANK DUNLEVY
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WEDNESDAY, SEPTEMBER 9, 2020
U.S. Senate,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 3:56 p.m., via
Webex and in room SD-342, Dirksen Senate Office Building, Hon.
Ron Johnson, Chairman of the Committee, presiding.
Present: Senators Johnson, Lankford, Romney, Scott, Hawley,
Peters, Hassan, Sinema, and Rosen.
OPENING STATEMENT OF CHAIRMAN JOHNSON\1\
Chairman Johnson. This hearing will come to order. Let me
first apologize for the tardy start. We started out with 30-
minute votes at 2:15. You would think, but it does not go that
smooth.
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\1\ The prepared statement of Senator Johnson appears in the
Appendix on page 35.
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Let me start off by first of all thanking the nominees for
your past service, because I know a number of you are currently
serving in the government but also served in the military, so
we certainly appreciate your past service to our Nation. And we
certainly appreciate and want to thank you and your families
for your willingness to serve in these capacities as well.
Today the Committee will consider four nominations. First,
John Gibbs has been nominated to be the Director of the Office
of Personnel Management (OPM). The Director of the Office of
Personnel Management serves as the chief human resources and
personnel policy manager for the Federal Government. The
Director oversees the issuance of policies and guidance for
recruiting, hiring, developing, and retaining individuals
across the Federal Government. In addition, the Director plays
a critical role in the ongoing reorganization of OPM, which
includes the transfer of human capital transactional services
and Federal Employee Benefits Programs (FEBP) through the
General Services Administration (GSA).
OPM faces many challenges in fulfilling its core mission of
managing the human capital Federal workforce. Although the
Civil Service Reform Act has governed the Federal workforce for
40 years, there are growing concerns about whether the current
personnel systems are able to meet the challenges of today's
workforce needs, especially in critical fields like information
technology (IT) and cybersecurity, and Senator Peters and I
have worked to try and address that legislatively as well.
Next, John Barger, Christopher Burnham, and Frank Dunlevy--
have been nominated to be the members of the Federal Retirement
Thrift Investment Board (FRTIB). The Federal Retirement Thrift
Investment Board is an independent agency responsible for
operating the Thrift Savings Plan (TSP) the 401(k) equivalent
program for Federal employees. Currently the TSP has
approximately 5.9 million participants--and $612 billion in
assets, which makes it the world's largest defined contribution
retirement plan.
The Board's responsibilities include the establishment of
policies for the investment and management of the various funds
within the TSP and the maintenance of all TSP participant
accounts, the review and approval of the Board's budget, and
the development of educational materials for TSP participants.
By statute, the Members of the Board are required to discharge
these responsibilities solely in the interest of participants
and beneficiaries.
So again I want to welcome all the nominees. Thank you
again, and I will turn it over to Senator Peters.
OPENING STATEMENT OF SENATOR PETERS
Senator Peters. Thank you, Mr. Chair and each of our
nominees. It is good to see you and I look forward to having a
conversation. Congratulations on your nomination.
In the interest of time, Mr. Chairman, I would like to
enter my opening statement for the record\1\, and I would also
like to enter a document from the Muslim Public Affairs Council
relating to the nomination of John Gibbs, for the record.\2\
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\1\ The prepared statement of Senator Peters appear in the Appendix
on page 36.
\2\ The document referenced by Senator Peters appear in the
Appendix on page 120.
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Chairman Johnson. Without objection. I appreciate the
brevity.
Senator Peters. Thank you.
Chairman Johnson. It is the tradition of this Committee to
swear in witnesses, so if you will all stand and raise your
right hand.
Do you swear that the testimony you will give before this
Committee will be the truth, the whole truth, and nothing but
the truth, so help you, God?
Mr. Gibbs. I do.
Mr. Barger. I do.
Mr. Burnham. I do.
Mr. Dunlevy. I do.
Chairman Johnson. Please be seated.
Our first nominee is John Gibbs. Mr. Gibbs is the Acting
Secretary for Community Development at the U.S. Department of
Housing and Urban Development (HUD), where he has led programs
to address homelessness, community development, and disaster
relief. This year he also led the deployment of more than $9
billion in Coronavirus Aid, Relief, and Economic Security
(CARES) Act funds to address the challenges posed by the
Coronavirus Disease (COVID-19) pandemic.
Before entering public service, he worked as a freelance
journalist, served as a missionary in Japan for 7 years, and
worked as a software development engineer for Palm Computing
and Apple. Mr. Gibbs.
TESTIMONY OF JOHN GIBBS,\1\ NOMINATED TO BE DIRECTOR, OFFICE OF
PERSONNEL MANAGEMENT
Mr. Gibbs. Thank you, sir. Chairman Johnson, Ranking Member
Peters, and Members of the Committee, thank you for the honor
and opportunity to appear before you today to discuss my
nomination to be the Director of the Office of Personnel
Management.
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\1\ The prepared statement of Mr. Gibbs appear in the Appendix on
page 38.
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I would like to thank my family, particularly my parents,
who have supported me throughout this process, as they have
throughout my life. I am who I am today because of their
incredible influence on me. I would also like to recognize my
grandmother, who passed away several years ago at age of 97.
She was a Deep South born and raised share cropper, lived
through the Great Depression, civil rights era, the era of
doing laundry by hand, and getting her chicken from the coop,
not the grocery store. She was a great-grandchild of slaves,
and I always wonder what it would be like for her to be sitting
here, seeing me here today, sitting before honorable U.S.
Senators.
And it just fills me with gratitude and thanks for the
opportunities this nation has offered our family and millions
of people, to move up in our great land of opportunity. She was
tough as nails, and without her grit that runs through my veins
I would not be where I am today.
My family has challenged me to dream big. I studied hard
and went to Stanford, and when I got there I majored in
computer science. My family instilled in me the importance of
service which drove me to get my master's in public
administration from the Harvard Kennedy School of Government.
My education laid the groundwork for the successes in my
career. I am also especially grateful to Secretary Ben Carson,
my boss for the past 3 years at HUD, for his support, for his
incredible example of public service, and for his candid
advice.
Last but certainly not least, thank you, Senators, for the
time to be here today and for the time to meet with you one-on-
one, for those of you who were able, prior to today's hearing.
I am also grateful to the staff who took the time to have a
great conversation with me, and I look forward to continuing
such straightforward dialogues, if confirmed.
Mr. Chairman, I am honored to have been nominated by
President Trump to serve as the Director of OPM. The past 3
years serving in this administration at the U.S. Department of
Housing and Urban Development have been deeply impactful on me.
I have been able to make a difference in the lives of many
Americans, and if confirmed I look forward to continuing to
make a difference in the lives of Americans and our dedicated
public servants as OPM director.
My professional experience includes 20 years in the public,
private, and non-profit sectors, where I engaged in work as
diverse as developing cutting-edge cybersecurity software and
working on the very first version of the iPhone at Apple.
After my time in Silicon Valley, I spent years leveraging
my complete fluency in Japanese leading international teams in
Japan as a Christian missionary. My heart just felt compelled
to make a difference in combating the high suicide rate and
other ills affecting that nation.
I then returned to the States and I was able and thankful
to be able to serve the American public as a Senior Advisor to
Secretary Carson at HUD. Currently, I serve as Acting Assistant
Secretary for Community Planning and Development at HUD, where
I oversee more than 700 employees under my charge and an annual
budget of $8 billion.
During my time in public service, I have worked through
numerous personnel management challenges, from creating hiring
plans, to making promotion decisions, coaching my teams on
performance improvements, and determining and implementing ways
to streamline and enhance the Federal time-to-hire process,
which is often far too slow.
If confirmed, I would lead OPM with the core values of
always doing what is legal, moral, and ethical; maintaining
open communication with all stakeholders, including yourselves;
and treating others with respect. During the past 3 years as a
political appointee, I have led with these principles, and will
continue to do so if confirmed as OPM director.
Our nation's workforce has become increasingly more
diverse. As a person who has spent years living overseas,
successfully worked closely with those of different religious
and cultural backgrounds, I understand and appreciate the value
of diverse viewpoints and frank and open discussion. I know
what it is like to be the only guy who looks like me in the
room, and the only guy that looks like me within miles. These
experiences have deeply informed my leadership and management
style. As a result, I always have, and always will, if
confirmed as Director, work with all people to promote
inclusiveness and further our mission of a more prosperous
government and people.
OPM and the Federal Government face many challenges today,
but I believe we can overcome these challenges together. Three
of the most pressing challenges facing OPM today are challenges
that Members of this Committee are no doubt well acquainted
with: time-to-hire, retirement processing, and IT
modernization. My experience in personnel management throughout
my career, my experience and expertise in cybersecurity, and my
success working with people from all backgrounds will greatly
come to bear as I work closely with agency staff and with
Congress to address these challenges, if confirmed as director.
Mr. Chairman, Members of the Committee, my more than 20
years of experience in the public, private, and nonprofit
sectors, working with people from all backgrounds to achieve
common goals gives me the experience necessary to lead this
agency and address the challenges facing our Federal workforce.
If confirmed, I look forward to working with you to ensure the
Federal workforce have the tools and support needed to achieve
its missions and serve the American people.
I look forward to answering your questions. Thank you very
much.
Chairman Johnson. Thank you, Mr. Gibbs.
Our next nominee is John Barger. Mr. Barger is a member of
the United States Postal Service (USPS) Board of Governors and
the Managing Director of NorthernCross Partners LLC, an
investment advisory firm based in Los Angeles, California. Mr.
Barger has over 30 years of leadership in finance,
entrepreneurship, and public administration, including as the
director and former chairman of the Los Angeles County
Employees Retirement Association (LACERA), which is responsible
for the pensions and health care benefits of approximately
160,000 active and retired employees of Los Angeles County, and
$660 billion in funds. Mr. Barger.
TESTIMONY OF THE HON. JOHN M. BARGER,\1\ NOMINATED TO BE A
MEMBER, FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
Mr. Barger. Thank you, Mr. Chairman. Chairman Johnson,
Ranking Member Peters, and Members of the Committee, I am
honored to appear before you today as a nominee to the Federal
Retirement Thrift Investment Board. I am also grateful to
President Trump for nominating me and am humbled to be
considered for this role. Thank you for considering my
nomination.
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\1\ The prepared statement of Mr. Barger appears in the Appendix on
page 121.
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The FRTIB was established to provide guidance and oversight
for the Thrift Savings Plan, the third of a three-legged stool
providing retirement security for 5.9 million Federal
employees. If confirmed, I would work with my fellow Board
members and staff to support the mission of the Thrift Savings
Plan and strengthen it for its beneficiaries. I would focus my
energies on investments, risk management, customer service,
information technology, transparency, and beneficiary
education. From an investment standpoint, I would examine the
TSP's investment beliefs. Although the present menu of
investment options is compelling, the Board and management
should remain current and review policies and beliefs so as to
provide beneficiaries with the best possible retirement options
in changing financial markets.
Fundamentally, everything I will do will be with the ``end
in mind'' of maintaining and strengthening the TSP for its
beneficiaries. I believe I was nominated for this position due
to my experience with personal and institutional investing,
governance, and oversight of large public funds. After
attending law school and becoming a practicing attorney, I
obtained my master's in finance and accounting and joined
Citibank and Bankers Trust, financing corporations and doing
complex transactions.
I left Wall Street to strike out on my own, co-founding an
emerging market reinsurance company that is now AXA/XL Group-
Latin America, with operations in Bermuda, Switzerland, Brazil,
Argentina, Mexico, and Colombia. After successfully building
the company, my partners and I sold our interest to our
strategic partner, a large public company. I have since formed
my own current firm, NorthernCross Partners, a consultant and
manager of private equity funds, also co-founding a successful
and highly regarded turnaround management and consulting firm
in Los Angeles, while investing in a number of other private
companies.
My relevant experience also includes serving 7 years on the
board of the Los Angeles County Employees Retirement
Association, also known as LACERA, which is the largest county
pension fund in the United States with $60 billion in assets,
serving 160,000 retired and active public employees. This role
required collaboration and consensus building on a non-partisan
basis and addressing the interests of labor, government, and
the private sector. I joined the LACERA board at the nadir of
the great financial crisis in 2008, and I am pleased to say
that LACERA came through the downturn and has dramatically
grown its assets while maintaining and augmenting the services
and education it provides to its beneficiaries. For 3 years I
served as LACERA's board chair, being elected to that honor by
my fellow board members.
While on the LACERA board, I also served as a director of
the Council of Institutional Investors (CII), elected to that
role by pension fund leaders from around the country. CII, as
it is known, is based in Washington, D.C., and was founded in
1985 by major corporate and public pension plans to be the
``Voice of Corporate Governance.'' I served on this board with
the Chief Investment Officer of California Public Employees'
Retirement Systems (CalPERS) and other pension fund industry
leaders.
Presently I serve as a Governor of the United States Postal
Service, which some of you know, a bipartisan Board comprised
of members nominated by the President and confirmed by the U.S.
Senate, with oversight from this Committee. In my Governor's
role I act as a fiduciary, assisting to provide Board oversight
of the Postal Service, including the retirement programs of
630,000 United States postal workers with retirement assets in
excess of $300 billion.
It is my hope that that, if confirmed, my own background in
finance, business, technology, and corporate governance will
have prepared me to contribute meaningfully to the FRTIB. I
like to think of myself as a problem solver, someone with a
sense of urgency to get things done, while also working with
those holding divergent views and perspectives to find
consensus. I have learned that corporate governance work best
when each participant contributes his or her experience and
best ideas to work constructively with other Board members. I
have been impressed with distinguished backgrounds of those
currently serving on the FRTIB and with those who sit with me
today as nominees for this Board. If confirmed, I look forward
to working with them all. I will also look forward to working
with Members of this Committee and the entire Congress to
strengthen the FRTIB and support its important mission.
Again, I thank this Committee for inviting me to this
proceeding and I will be happy to respond to any questions you
might have.
Chairman Johnson. Thank you, Mr. Barger.
Our next nominee is Chris Burnham. Mr. Burnham is the
Chairman and Chief Executive Officer (CEO) for Cambridge Global
Capital LLC and Cambridge Global Advisors LLC. He is also a
member of the U.S. Department of Defense (DOD) Business Board.
The Senate has confirmed Mr. Burnham twice, once as Assistant
Secretary of State for Resource Management and once as Chief
Financial Officer (CFO) at the U.S. Department of State, both
by voice vote.
Mr. Burnham also served in the U.S. Marine Corps (USMC)
Reserves, including active duty service during the Gulf War.
Mr. Burnham.
TESTIMONY OF THE HON. CHRISTOPHER B. BURNHAM,\1\ NOMINATED TO
BE A MEMBER, FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
Mr. Burnham. Mr. Chairman, thank you so much, Ranking
Member Peters, Senators of the Committee. Thank you for the
chance to appear before you today. It was 15 years ago I last
appeared before this Committee, when I was Under Secretary
General of the United Nations, and on my right was a dynamic
real estate developer named Donald Trump. So it is nice to be
back.
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\1\ The prepared statement of Mr. Burnham appears in the Appendix
on page 174.
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I am honored that President Trump has nominated me to be a
member of the Federal Retirement Thrift Investment Board. For
over 40 years my career has been dedicated to service to our
country, service to my State, to the international community,
and to the millions of clients and customers for whom, as an
investment banker and asset manager and sole fiduciary, I
helped lead in the management of their hard-earned savings.
I am pleased to be accompanied today by my wife of 27
years, Courtney Burnham, and I thank her for her terrific
support today, as she has also so tirelessly provided through
my five campaigns in Connecticut, service as an elected
Connecticut State Treasurer, service to the Nation as Assistant
Secretary of the U.S. Department of State and Chief Financial
Officer, and Acting Under Secretary of State for Management,
Under Secretary General of the United Nations, and as an
infantry officer in the United States Marine Corps.
Being a Board member of the Federal Retirement Thrift
Investment Board is a critical role. There are few things more
important to the men and women who labor on our behalf, across
this land and across the globe, than knowing their retirement
funds are cared for by men and women whose unwavering
commitment is to ensuring that they will enjoy a secure and
comfortable retirement.
The world of investment management and risk measurement is
changing dramatically. New systems and algorithms are emerging
every week, providing new ways to manage a portfolio, in
understanding the risks in investing, and offering new
opportunities to maximize return within a reasonable risk.
As the former Vice Chairman of Deutsche Asset Management
with over $2 trillion in assets under management, and as global
co-head of the private equity group at Deutsche, President and
CEO of Pacific Investment Management Company, LLC (PIMCO's)
largest multi-billion dollar equity manager, and as sole
fiduciary of three multi-billion dollar public pension systems,
I believe with my previous experience that I can make a
significant contribution to providing the very best choices to
the clients of the Thrift Savings Plan, the men and women who
serve our country.
Members of the Committee, if confirmed, I pledge to you
that as a Board member I will never waver from my inalienable
commitment to fiduciary duty, and to the oath of strict loyalty
and care as the essential principle in managing and guiding the
retirement assets of our fellow Americans.
Thank you, Mr. Chairman.
Chairman Johnson. Thank you, Mr. Burnham.
Our final nominee is Frank Dunlevy. Mr. Dunlevy is the
Counselor to the President and Vice President for Investment
Funds at the United States International Development Finance
Corporation (DFC). Prior to his current role, Mr. Dunlevy was
the Vice Chairman for Investment Banking at Cowen & Company. He
has more than 40 years of experience in private sector finance.
Before his career in the private sector, Mr. Dunlevy served in
the U.S. Army, which included service in Vietnam. Mr. Dunlevy.
TESTIMONY OF FRANK DUNLEVY,\1\ NOMINATED TO BE A MEMBER,
FEDERAL RETIREMENT THRIFT INVESTMENT BOARD
Mr. Dunlevy. Thank you for that introduction, Chairman
Johnson and Ranking Member Peters and Members of the Committee.
I am honored to appear before you today as the President's
nominee to serve as a member of the Federal Retirement Thrift
Investment Board. This Committee's insights will be critical as
we work together to provide a safe and secure retirement
program for the 5.9 million current and former government
employees and military service veterans.
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\1\ The prepared statement of Mr. Dunlevy appears in the Appendix
on page 224.
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I would like to take a moment to introduce two members of
my family, my wife, Susan Dunlevy, and one of my twin
daughters, Gwyneth Dunlevy, who is in graduate school at
Georgetown. They and the other members of my family who are
viewing this online are privileged to watch our great democracy
in action.
I would like to thank both Michael Kennedy, the recently
retired Chairman of the Board, and my friend, Andrew Saul, who
was Chairman of the Board from 2002 to 2011, for their advice
and suggestions of how to make the Board even better. Both are
exemplary public servants.
I grew up in West Texas, the son of an oil field roughneck
and truck driver. My father worked for Halliburton for over 45
years, and my parents instilled in all of us a strong work
ethic, backed by high integrity and respect for others. I was
lucky to attend excellent public schools such as Abilene High
School, where I was active in student government and the
captain of the swim team.
I was accepted to Southern Methodist University and I
graduated in 1971. I volunteered for Vietnam and was privileged
to serve in the United States Army as an enlisted infantryman
in both the 101st Airborne and the 82nd Airborne.
I then began my private sector career when I joined the
First Boston Corporation in New York City. Over the next 20
years, I worked around the globe, in New York, London, the
Middle East, and San Francisco. My many clients included
Fortune 500 companies, 15 foreign governments, and all of the
multi-lateral development banks. Beginning in 1988, I moved to
San Francisco where I became a partner at Montgomery Securities
until its sale to Bank of America. I then helped to found and
build Thomas Weisel Partners from the original four partners to
over 700 employees in just 24 months. In 1999, our firm was
honored as the ``Investment Bank of the Year'' by Investment
Dealers' Digest. And for the final 14 years of my private
sector career, I was Vice Chairman and Managing Director of
Cowen & Company, a 1,200-person investment bank focused on
technology, health care, and the consumer.
In May 2018, in recognition of my expertise in equity
markets and managing financial services firms and my desire to
give back to my country in the form of public service, I was
honored to be asked by Ray Washburn, the then President and CEO
of the Overseas Private Investment Corporation (OPIC), to serve
as his counselor and vice president of the agency's investment
funds team. With the passage of the Better Utilization of
Investments Leading to Development (BUILD) Act in 2018, which
secured overwhelming bipartisan support, I was privileged to
join the terrific team at OPIC as we transformed it into the
new agency, the United States International Development Finance
Corporation, which was launched at the beginning of this year.
My role is focused on creating a new business effort and
completing the initial equity offerings for the DFC. I give all
credit to the dedicated staff at the DFC and especially my
terrific investment funds team. Together, we accomplished all
of those goals, and the original six equity deals we secured
were unanimously confirmed at our agency's recent June board
meeting. This was a fascinating learning experience for me as
we maximized collaboration with all of our existing
stakeholders, and I believe we have created the finest
development finance institution on the planet.
I was further honored in late May when the President
nominated me for this position. I believe my 48 years in the
private sector career, 12 years of service on the board of my
university, including as vice chairman of the finance committee
with oversight of our $2 billion endowment, my recognized
national expertise in capital markets, and my involvement with
the 2012 passage of the bipartisan Jobs Act, which further
enhanced the regulatory environment around U.S. companies, have
prepared me well for this challenging assignment.
Thanks to my predecessors and the current Federal
Retirement staff, the TSP is in excellent shape, and with
equity prices near an all-time high, the performance and
selections have produced record results for all of our
participants, and all of you are to be congratulated for this
outcome.
Our task will be to first ``do no harm'' and then review
and, if necessary, improve the architecture of the underlying
technology; ensure best-in-class cybersecurity protection;
further improve the customer experience; and most of all,
ensure the safety of this most precious asset, the retirement
plans of our hard-working government employees, military
service members, and veterans. I would consider it my sacred
fiduciary duty to carry out this mandate if confirmed to this
Board seat.
Again, I would like to thank Chairman Johnson, Ranking
Member Peters, and the Members of the Committee for your
consideration and for allowing me to appear before you today. I
look forward to responding to any questions you may have.
Chairman Johnson. Thank you, Mr. Dunlevy.
There are three questions the Committee asks of every
nominee, for the record. I will ask the question and I want you
each to answer it individually. We will start with Mr. Gibbs,
and from my left to right go down the panel.
First, is there anything you are aware of in your
background that might present a conflict of interest of the
duties of the office to which you have been nominated?
Mr. Gibbs. No, sir.
Mr. Barger. No, sir.
Mr. Burnham. No, sir.
Mr. Dunlevy. No, sir.
Chairman Johnson. Do you know of anything, personal or
otherwise, that would in any way prevent you from fully and
honorably discharging the responsibilities of the office to
which you have been nominated?
Mr. Gibbs. No, sir.
Mr. Barger. No, sir.
Mr. Burnham. No, sir.
Mr. Dunlevy. No, sir.
Chairman Johnson. Do you agree without reservation to
comply with any request or summons to appear and testify before
any duly constituted committee of Congress if you are
confirmed?
Mr. Gibbs. I do.
Mr. Barger. A hundred percent.
Mr. Burnham. I do.
Mr. Dunlevy. I do.
Chairman Johnson. Thank you. I will defer my questioning
until the end. Senator Peters.
Senator Peters. Thank you, Mr. Chairman, for that, and
thank you to each of the nominees for your willingness to serve
the public.
I too have a question that we ask of everyone before this
Committee, and I would like to get an answer from each of you
individually. Let me start. Will you commit to fully and
promptly respond to oversight requests from this Committee,
including from the Ranking Member and other Members of the
minority party? Mr. Gibbs, we will start with you.
Mr. Gibbs. Yes, I do.
Mr. Barger. I will.
Mr. Burnham. I do.
Mr. Dunlevy. I do.
Senator Peters. Thank you.
Mr. Barger, in your testimony you talked about your
background in the financial industry as well as your service on
the Board of Governors for the Postal Service, and you cited
that as a reason for your--or I should say a qualification for
the job here. So certainly it is appropriate to evaluate your
past record of public service. So it is in that spirit that I
am going to ask you some questions related to the Postal
Service so we can have a sense of your record of public
service.
You are well aware of this Committee's concern about the
recent developments in the Postal Service--those have received
very wide attention--and what we have seen under Postmaster
General DeJoy in his actions recently. In terms of operational
decisions we want to understand whether you were involved in
any of those operational decisions, and if so, how did you
evaluate those decisions that were made.
So my first question is yes or no. Did the Governors
discuss, this is a quote, ``transportation schedule changes,''
as described by Mr. DeJoy? Did you discuss those before they
were implemented?
Mr. Barger. I am trying to think about which
transportation. The answer would be no.
Senator Peters. You had no discussions prior to the
decisions----
Mr. Barger. Not to my recollection.
Senator Peters [continuing]. Made by Mr. DeJoy.
Mr. Barger. Not to my recollection, no.
Senator Peters. Yes or no. Prior to Mr. DeJoy's changing of
the truck schedule, which it refers to, and any other
operational changes he made, did the Board receive any analysis
of how these might impact service, performance, or potentially
cause mail delays?
Mr. Barger. Not that I recall, but I do have some
statistics, sir, if you would like me to give them to you, on
mail delivery, if I may.
Senator Peters. Prior to those decisions, though, did you
receive any analysis? Do you have some after action----
Mr. Barger. There were closed-session briefings, but I do
not recall we discussed those specific schedule changes. I will
say, however, I am delighted to report that First-Class Mail
delivery, when Mr. DeJoy joined us, was at 89.24 percent. It is
now up approximately 88 percent and climbing, and we expect it
to be exceeding the levels when he came within a couple of
weeks.
The same thing for First-Class Mail. The on-time rate for
First-Class Mail when he came was 92.84 percent. It is now at
approximately 89 percent, and we expect within 2 to 3 weeks we
will exceed the levels when he came.
Senator Peters. We would like to get that information.
Mr. Barger. Absolutely.
Senator Peters. It has been a challenge for us, quite
frankly, to have the kind of transparency necessary.
Mr. Barger. I am happy to send it to you, Senator.
Senator Peters. I would appreciate it, so we will follow up
with your office related to that. In our hearing with Mr. DeJoy
I truly appreciate the difficulty of this job and the
difficulty that you have in overseeing the Postal Service. But
there has been a general lack of transparency that has made it
more difficult, and so certainly any documents you have we
would love to be able to review as we work out our oversight.
Mr. Barger. Maybe when I was here about a year ago, I know
transparency of the Postal Service has been difficult for many
years, and we are doing the best we can to get to the bottom of
that.
Senator Peters. I appreciate that. I know the Board is
working on a 10-year operations and financial plan for the
Postal Service. During our August 21st hearing, Postmaster
General DeJoy confirmed that he is--or has considered,
``dramatic changes,'' to the Postal Service, including changing
service standards to slow the mail, reducing nonprofit
discounts, increasing prices on packages and other competitive
products. These proposals could harm the quality of mail
service, and many of us believe it will hurt Americans in rural
areas, in particular.
So my question to you, yes or no, has the Postal Service
discussed any of these ideas for a 10-year plan?
Mr. Barger. Senator, right now the Postmaster General is
putting together his plan, and we did have a Board meeting
today where he was briefing us on some of the ideas he has. By
the way, I am also delighted that one of the areas that was of
concern, for example, of Senator Portman was the issue of
medical supplies and medical deliveries. I am pleased to say
that, again, when you think about how we deliver it is through
Priority Mail and through first class packages, and the
performance, actually, since he has come, has increased with
the changes he has made. The first class package rate, on-time
service, when he came was 88.47 percent----
Senator Peters. I have heard those, and we are going to get
those.
Mr. Barger [continuing]. 90.17----
Senator Peters. I do not mean to cut you off, but you will
provide that information.
Mr. Barger. I just wanted to make sure you understood that
the changes he has made are now starting to bear fruit, and it
has only been about a month and a half.
Senator Peters. I appreciate that. But please provide those
documents. We are happy to review those.
But my question is, have you discussed the 10-year plan? I
think you answered yes, you had that discussion?
Mr. Barger. It is in discussion.
Senator Peters. So that has come before the Board? Mr.
DeJoy has discussed that with you?
Mr. Barger. Not formally, no. The Board has not approved a
plan. We just had a meeting today where he was briefing us on
some of his ideas, but we do not have a 10-year plan.
Senator Peters. Is that the first time you have seen the
plan?
Mr. Barger. I have not seen the plan. I have only seen some
ideas that--he has not shown me a plan yet.
Senator Peters. OK. Obviously there are a lot of concerns
as to how some of these decisions were made, and perhaps undue
influence from the administration. So it is important that we
get these questions answered, have that kind of transparency,
so I appreciate your willingness to do that.
Mr. Barger. Absolutely, sir.
Senator Peters. Thank you.
Mr. Gibbs, as we spoke about yesterday, and I appreciated
our conversation. It is always good to see a Michigander here
before us as well. As we discussed yesterday, I am proud to
represent Michigan's large, vibrant Arab American and Muslim
American communities. And that is why I am concerned about some
of your past commentary regarding Muslim Americans, and I have
introduced into the record earlier a letter from Muslim Public
Affairs Council\1\ expressing their concerns about your
nomination as well. They expressed concern that your
appointment will, ``create a non-inclusive, biased atmosphere
in one of our most essential government agencies.''
---------------------------------------------------------------------------
\1\ The letter from Muslim Public Affairs Council appear in the
Appendix on page 120.
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Mr. Gibbs, do you believe that your past statements
regarding Muslims will impact your ability to effectively lead
a very diverse Federal workforce?
Mr. Gibbs. Senator Peters, thank you for that question, and
I do share your concern that we want to have a Federal
workforce that is welcoming to people regardless of their
backgrounds, so that those who are capable are the ones who are
able to move up and really serve. So I do share your concern
there, sir.
Let me just step back for a second and say that though I am
from Michigan and we are both Michiganders, my parents are
actually from Alabama, and they grew up under segregation. They
grew up experiencing racism directly, and I grew up hearing
those stories. And so I know what it is like, first-hand,
hearing from my parents, what it is like to be on the receiving
end of discrimination. It is something that is abhorrent to me.
I lived in Japan for 7 years. Not only was I the only
American anywhere around for miles, I was the only African
American anywhere around for miles. I have been turned away
from restaurants. I have experienced discrimination directly
during my time in Japan as well.
So as someone whose family and personally has experienced
discrimination, as someone who is a minority, any type of
discrimination is absolutely unacceptable to me. So I can
assure you that throughout my career and throughout my life I
have never tolerated, never accepted any type of
discrimination, and if confirmed as OPM director I also would
not tolerate any type of discrimination. And for the groups
that you have mentioned, sir, that have written you their
concerns, I would love to sit down and meet with them, and I
believe that if they got to know me they would realize quickly
that I am not the kind of person who would ever tolerate any
type of discrimination based on religion or any other type of
factors.
Just let me close by saying I share your concern and I
agree that we do not want discrimination. I thankfully do not
stand for discrimination. I stand on my record firmly, and if
confirmed as director of OPM, I will not allow it under my
watch.
Senator Peters. I am out of time but I just have a quick
yes-or-no question if I may, Mr. Chairman. Clearly some of the
words that you have used in the past have caused harm and fear
for some Americans, even if that was not your intent. So just
yes or no, do you regret your part in promoting anti-Muslim
sentiments? Yes or no.
Mr. Gibbs. I regret that it has unfortunately become an
issue, and let me just say that, like all Americans, I have
political opinions that I have expressed in the past, but I am
very proud to say that during my service in the government I
have always led in a nonpartisan manner. I have always treated
people fairly and I have never allowed any type of
discrimination. So if confirmed as OPM director, I would
continue that. I have looked at my 3-year track record of that,
stand on that, and build on it if confirmed as director.
Senator Peters. Very good. Thank you.
Chairman Johnson. Thank you, Senator Peters. Senator
Lankford is on the floor, so in the meantime we will proceed
with--and I will give you the order--Senators Hassan, Rosen,
Romney, Scott, and Hawley. So Senator Hassan.
OPENING STATEMENT OF SENATOR HASSAN
Senator Hassan [continuing]. Thank you for being here and
for your service, for your continued willingness to serve.
Mr. Gibbs, I have a couple of questions for you. An
important role of the Office of Personnel Management is
collecting employee input on how the Federal Government can do
its job better. As you know, the Federal Employee Viewpoint
Survey (FEVS) has been severely delayed this year. Without that
feedback, you will have a tough time knowing where and how to
apply your efforts.
Do you agree, Mr. Gibbs, that employee opinion is key to
making leadership decisions, and if so, how will you get the
survey back on track?
Mr. Gibbs. Senator, thank you very much for that question.
I absolutely do share your concern that we want to know how our
Federal employees are doing, what they are thinking, and what
their thoughts are about the direction that the Federal
workforce is going. So I just want to let you know that I
absolutely share your concern on that.
Because I am not yet at OPM, I am not privy to discussions
that have taken place as far as delays in the FEVS survey, so I
cannot really speak to that aspect of things. But what I can
absolutely assure you is that if confirmed as director, once I
get there I will take a very deep look at this, and what is the
current state of the FEVS survey, and if there are no issues
preventing it going out, making sure that that is released in a
timely manner.
So I can assure you and commit to you that if confirmed
that is something I will look at and make sure that we can get
that on track.
Senator Hassan. I appreciate that commitment. I think it
needs to be a priority, and I look forward, if you are
confirmed, to following up with you on that.
Mr. Gibbs, I have read some of the very incendiary tweets
that you have sent. Federal employees have a range of personal
and political beliefs which obviously may differ from yours.
How will you defend career Federal servants, such as postal
workers, who face political pressure or retribution in the
workplace for personal beliefs that are at odds with the
President or other political leadership?
Mr. Gibbs. Again, Senator, I do thank you for that question
and I do agree with you that we do not want to have any type of
undue influence operating. So let me just say that during my
career I have always successfully worked with people from a
variety of political backgrounds. Of course, of the current 700
employees that I oversee as Acting Assistant Secretary, I do
not by any means go around asking people what their political
beliefs are, but I have to assume that we have people all
across the spectrum. And we have a very good team. I work with
my team very successfully.
On a more personal level, I come from a family that is
entirely of the opposite political party that I belong to, and
I must say that we get along very well, because we have respect
for each other, we know how to work together toward common
goals. As a family I was raised that way and I have always been
that way.
So the issue of working together with people of different
political backgrounds, both on a personal level as well as a
leader, in my current role, in my past 3 years working in the
government, has never been an issue. I must say, not to toot my
own horn, but that is something I do think that I am pretty
effective at, and I can guarantee you that if confirmed as OPM
director I will continue this trend of leading in a nonpartisan
way and making sure that we welcome all viewpoints and focus on
the mission and focus on the objective.
Senator Hassan. I thank you for that commitment. I think it
is really important to distinguish here between working
together, which is obviously very important, and being a leader
who protects one's employees from political retribution. So can
you give an example of a time that you protected a subordinate
from undue political pressure during your Federal service?
Mr. Gibbs. Again, thank you, Senator. I do not know that I
can recall offhand a time when one of my subordinates was a
target of political retribution. However, I can assure you that
regardless of the political beliefs of my employees, I do
protect my employees. I empower my employees to do the best job
possible.
And I must say, recently we released $9 billion in funds
from the CARES Act from the department that I oversee as Acting
Assistant Secretary. My team stepped up to the job very fast
and did a tremendous work on that, so I am very proud of them.
And we have no issues with anything like political retribution
or whatnot.
So that is something I have not had to face, thankfully. If
it ever did happen, I would do what I always do. I protect my
public servants. I protect my dedicated civil servants that are
under my charge to make sure that they can do their job as
effectively as possible, and if confirmed as director I will do
the same.
Senator Hassan. Thank you. Obviously Federal public
servants deserve to be able to do their jobs without
retribution. They just need to be able to focus on serving the
American people.
Mr. Gibbs, another question. We have to keep Federal
workers safe during the COVID pandemic so that they can
continue to do the critical work that the Nation requires.
Unfortunately, even medical advice has been politicized over
the past few months. If confirmed, do you pledge to make
telework and office policy decisions based on the guidance of
our nation's top medical experts as opposed to the White House?
Yes or no.
Mr. Gibbs. Again, I thank you. You are asking very good
questions here, and I also agree and I care about this issue
quite a bit. I can confirm to you, and I pledge to you, as
director, that I would make decisions based on the best
guidance that we have from the Centers for Disease Control
(CDC). I would also work with our stakeholders, including
yourself and the Committee, Congress, and all other folks at
the table, to make sure that the decisions we are making are
legal, moral, ethical, and that protect the health and safety
of our Federal workforce.
Senator Hassan. I thank you for that. During your time at
HUD, what steps have you taken to ensure that safety and
accountability are maintained, and how would you apply those
actions in the context of governmentwide personnel management,
given our current environment?
Mr. Gibbs. Again, I think we are on a roll here with very
good questions, so I am really glad that you are bringing these
up because I think it is important to address this.
So looking at the current environment we are in, stepping
back and looking at the big picture, we see widespread use of
telework. That is no different at HUD and with the 700
employees under my charge. And so we have found that telework
has been a very effective experience. Those employees who
really are the good performers continue to do so under
telework. So that is something that I support, if the
circumstances call for it, as the circumstances do right now.
Further, we are taking a phased approach, as other Federal
agencies are doing, when it comes to reopening. And so as we
look at going from one phase to another, we are ensuring that
there is proper personal protective equipment (PPE) and social
distancing guidelines are followed. So I have directed my
employees, and they are doing social distancing signage and
making sure that there is PPE available so that when we go to
the next phase of reopening our employees are coming back to a
safe environment.
If confirmed as OPM director, I will continue the work that
OPM has done in this area, specifically making sure that
guidance that is issued to agencies is sensitive to the
circumstances facing that agencies. Some Federal agencies are
in shared buildings. Some are in dedicated buildings. So we
want to make sure that we are sensitive to those differences as
we guide agencies on safe and healthy reopening.
Senator Hassan. I appreciate that. Thank you, and I may
follow up with you as well as on some of the incendiary tweets
that you have made in the past, because I would like to
understand better from you about whether you think those tweets
demonstrated good judgment.
Thank you, Mr. Chairman.
Chairman Johnson. Thanks, Senator Hassan. Senator Rosen.
OPENING STATEMENT OF SENATOR ROSEN
Senator Rosen. Thank you, Mr. Chairman. Thank you, Ranking
Member, and of course our nominees for being here today and for
your willingness to serve.
The first question is for Mr. Gibbs, as well. If confirmed
as director of OPM, you will be charged with heading the chief
human resources agency for career Federal employees, including
more than 11,000 civilian Federal employees who work in my
State, the State of Nevada. They care for veterans in our VA
hospitals and our clinics. They respond to wildfire and other
emergencies through Federal Emergency Management Agency (FEMA).
They do that with local presence on the ground. They provide
resources and training to our small businesses through the
Small Business Administration (SBA's) regional office. They
preserve our rich heritage through their work at the Bureau of
Land Management (BLM). They manage and distribute our water and
our hydro power through the Bureau of Reclamation.
So Mr. Gibbs, If confirmed to be director of OPM it will be
your responsibility to coordinate policy, service, and
oversight amongst the various agencies to manage the Federal
civilian workforce. How will you ensure that OPM is working
with FEMA and other Federal agencies to assure that they are
following applicable public health guidelines and that they are
keeping their workers safe, especially in Nevada and out West,
we are fighting raging wildfires, all across California. The
skies are burning up, and in Nevada the sky is thick with fog
and smoke, as I was there this weekend. As Federal personnel,
you will have this responsibility to care for our State and
local firefighters, saving our lives and property. How are you
going to keep them safe?
Mr. Gibbs. Thank you, Senator, for that question. I
absolutely share your concern on this, and just let me give my
kudos and my sincere respect to the dedicated public servants
in your State and across the country who are working hard right
now on COVID-19 response and everything else, especially those
on the West Coast who are working on combating the fires that
we are seeing in California and Nevada. So first of all, my
utmost respect to the public servants and employees in your
State who are doing such a tremendous job on that.
What I would assure you is that if confirmed as director I
would do what I have always done the past 3 years, and what I
am currently doing as Acting Assistant Secretary at HUD. I
always involve stakeholders. I am on calls all the time with
different agencies, to make sure that we are getting subject
matter expertise from those who have it. We have a very good
relationship with FEMA. We talk to FEMA all the time. That is
something I already do right now, and if confirmed as director
of OPM, if it was necessary to consult with FEMA on any
guidance we are giving to Federal agencies pertaining to Nevada
or any other States, that is something I would absolutely do
and engage in communication with FEMA or any other Federal
agency as well.
And then when it comes to protecting the health and safety
of the workforce, that is, of course, something that is very
important to me. That is an issue I deal with directly with the
700-plus employees under my charge. As we look at going from
different phases of reopening, I want to make sure they are
coming back to a safe environment. And if confirmed as director
of OPM, I will do the same. I would ensure that the guidance we
are issuing to agencies takes into account those local factors.
So when we give guidance to a Federal agency that is operating
in Nevada, they are able to look at their local conditions,
look at the reopening level, look at the current strain and
burden on their dedicated public servants.
Senator Rosen. Thank you.
Mr. Gibbs. So that is something I care about deeply. Thank
you.
Senator Rosen. Yes. I appreciate that, and our firefighters
do have to--wildfire firefighters do have to live in close
quarters. It is a unique situation. So please protect them. We
are begging you for that. Thank you.
Now I would like to turn to Mr. Barger. I would like to
follow up on some postal questions. Last month I was able to
talk with Mr. DeJoy, and he testified before this Committee
about mail slowdowns that his recent operational changes have
caused. I asked Mr. DeJoy to provide the Committee with any
transcripts or minutes of all closed, non-public Board of
Governors meetings from this year, so that the American people
could better understand the rationale behind policy decisions
that have adversely impacted the mail, hurting our seniors,
hurting our veterans, hurting our rural communities, and
numerous others.
The Postmaster General has yet to comply with my request,
which Ranking Member Peters and I followed up with in writing.
This is a question for the record. So Mr. Barger, as a current
member of the USPS Board of Governors, will you provide the
Committee with transcripts or minutes of the closed, non-public
Board of Governors meetings from this past year?
Mr. Barger. Senator, thank you for the question. I am not
able to do that. That is pretty much up to our Board and up to
the general counsel. I am certainly willing to take that
request back to the Board, though, for their consideration.
Senator Rosen. Mr. Barger, I have not received any
information from the Board. I have yet to receive an update on
any of my requests from the Postmaster General. As a nominee
for the Federal Retirement Thrift Investment Board, or as a
member of the USPS Board of Governors, I expect that
transparency would be so important to you, and I would
appreciate if you would please get back to me regarding the
request that I have made.
Mr. Barger. You have my promise, Senator.
Senator Rosen. Thank you. I also want to ask you another
question. Before implementing his operational changes, did
Postmaster General DeJoy present the USPS Board of Governors
with any data or analysis that was used to develop and
understand the impact of these policies? I am not asking you to
give it to me. Was it provided to you? Yes or no, please.
Mr. Barger. Before he made the changes to the travel
schedule?
Senator Rosen. The impact that would have happened to our
seniors, to our veterans, to my rural communities, et cetera.
Were you presented with any analysis or any data in any of
these meetings before these changes were implemented?
Mr. Barger. Senator, we were not. However, he did have a
view that----
Senator Rosen. You were not presented with data----
Mr. Barger. Oh, I am sorry, Senator.
Senator Rosen [continuing]. So I am understanding you, you
were not presented with data to support his operational
changes.
Mr. Barger. I have the data right here, Senator, which
shows what the fruits of the labor have been in the past 90
days. So I think when he took those changes into account----
Senator Rosen. Were you presented data----
Mr. Barger [continuing]. He knew it would take some time.
Senator Rosen [continuing]. When you were discussing it
before they were implemented?
Mr. Barger. No, I do not believe so, Senator, no.
Senator Rosen. That is a no. Thank you. So I guess there is
nothing for you to provide to us then. I would appreciate,
though, if we would see, since you do have that right in front
of you, if you would please submit to the Committee staff the
analysis that you have, what you call the fruits of his labors
since then, so we can take a look at what you are talking
about. I appreciate that and thank you for your time. I see
that my time is up.
Mr. Barger. Thank you, Senator.
Chairman Johnson. Thank you, Senator Rosen. Senator Romney.
OPENING STATEMENT OF SENATOR ROMNEY
Senator Romney. Thank you, Mr. Chairman, and thanks to
those that are willing to participate in our government in the
way they have been nominated.
I would begin, Mr. Gibbs, with a recognition of the
conversation we had yesterday and the willingness that you have
had to respond to my questions. And I want to follow up on the
line of questioning that Senator Hassan began, and that is that
there have been things that you have written in the past which
have been disparaging of Islam, and at the same time have
fostered or promoted some relatively extreme, if not bizarre or
nonsensical conspiracy theories, including the idea that
leaders of the Democratic Party had participated in satanic
rituals of some kind.
And I wonder, do you believe those things, and if you do,
how can those possibly be separated from a responsibility, a
human resources (HR) responsibility to people who represent a
wide array of backgrounds? How do you square such unusual
personal views with a responsibility to a Federal workforce
which is highly diverse?
Mr. Gibbs. Senator, thank you for that question, and I do
understand your concern there. Let me just say that with
regards to what you mentioned, when an individual wrote a book
and invited someone to a dinner, that is what we know. As a
political commentator, I reported on that at the time.
But I would just like to point out that is something that
is behind me. That is not my current role. I can assure you
that I have led in a nonpartisan fashion over the past 3 years
during my service in the government, and if confirmed as OPM
director I would continue to lead in a nonpartisan fashion. I
am very proud that my track record in the government confirms
that and my employees, my dedicated civil servants that work
under me would confirm that.
And again, I would go back to the fact that with my
personal experience I have actually lived with diversity. It
runs in my blood. It runs through our family. I have been
overseas in environments where I am the only person of a
certain background anywhere around. So any kind of disparaging
or discriminatory treatment toward people of other backgrounds
is something that I have never tolerated in my life, and I
would absolutely never tolerate that if confirmed as director.
So that is something, Senator, that I can absolutely assure you
on.
Senator Romney. Thank you. Mr. Dunlevy, it is good to see
you and I appreciate our friendship over the years. I wanted to
ask you, as well as the other members who are being promoted to
the FRTIB--I think I have those letters right--what do you
believe should be, if you will, target investment objectives
for these funds? What would you look to achieve? What would you
consider a successful management of these retirement funds? I
am trying to get a sense of how you err on the side of looking
for high return versus risk. I mean, how do you make that
judgment, and what, based upon your experience, is the kind of
target that you think is appropriate?
Mr. Dunlevy. Sure. I believe the objective that our Board,
and through our Board, the staff, needs to shoot for is to have
maximum return with as much safety of principal and as least
amount of risk as possible. The fund currently has five very
good choices. The use of the Standard and Poor's (S&P) 500 has
produced excellent returns over time. As we both know from our
investment background, 99.7 percent of all investment managers
do not beat the S&P index, minus their fees.
Therefore, I think the core investment strategy needs to be
built around the S&P 500. And for those who have been
participating, I think that is one of the reasons the current
fund stands near an all-time high and the participants have had
excellent performance. They also have security. If they want to
invest in a fund for debt, to give them a safety of principal,
they can switch from equity to debt. They can change the
percentages as they grow older. And I am looking forward to
working with the staff to come up with different ways of
educating the folks that use this plan.
As we know, the one critical aspect of investment is to get
everyone to start early, to maximize the amount they can, not
to trade the market, and to do it with a 30-, 40-, 50-year
horizon. Folks who reach the age of 70 these days can look
forward to living to be 90. So safety of principal that can
produce income following their retirement years is what would
guide me.
Senator Romney. Thank you, Mr. Dunlevy. I yield my time.
Thank you, Mr. Chairman.
Chairman Johnson. Thank you, Senator Romney. Senator
Lankford.
Senator Lankford. I think Senator Sinema was hoping to be
able to go. I do not mind yielding to her if she wanted to be
able to go before me. I would be able to follow up. I think she
is online now.
Chairman Johnson. Senator Sinema, are you ready?
OPENING STATEMENT OF SENATOR SINEMA
Senator Sinema. I am, and thank you so much, Mr. Chairman.
Thank you especially, Senator Lankford. I really appreciate his
kindness. I also appreciate the nominees joining us today and
their willingness to serve.
While all four of our nominees, if confirmed, will have
responsibilities for the Federal workforce and obligations to
the American public, every day Arizonans count on Federal
employees to efficiently and effectively deliver important
services for them. It is critical that Federal employee leaders
are prepared to develop and execute common-sense initiatives to
make the Federal workforce more adaptable and able to provide
the services that Americans need, as well as demonstrate good
judgment that inspires confidence in the civil servants they
support.
My first question is for all the nominees for the Federal
Retirement Thrift Investment Board. If confirmed, will you
commit to upholding your fiduciary duty to all Thrift Savings
Plan participants by making all decisions in the sole interest
and best interest of plan participants and beneficiaries?
Let's start with Mr. Barger.
Mr. Barger. I will, Senator, yes.
Senator Sinema. Thank you. Mr. Burnham.
Mr. Burnham. One hundred percent, Senator. Absolutely.
Mr. Dunlevy. Absolutely, yes.
Senator Sinema. Wow. Thank you. I appreciate those answers
and I am sure that Federal employees in Arizona and across the
Nation appreciate your commitment as well.
I now turn to Mr. Gibbs. You identified modernizing the
Federal workforce as a key goal should you be confirmed.
Information technology modernization is a critical priority for
OPM and other Federal agencies. If confirmed, what is the most
important project in addressing OPM's need for IT
modernization?
Mr. Gibbs. Thank you, Senator. I am glad you asked that.
That is a very critical concern, and as someone whose major was
computer science and has spent many years working in software,
in cybersecurity, and IT, that is something that is close to my
heart.
So I would say the most pressing IT matter at OPM that I
would like to address, if confirmed, the first issue among
many, is retirement. We see retirement actions taking a very
long time to process. It is something I understand that Members
of the Committee receive lots of feedback from, from their
constituents. It is something that our dedicated public
servants that have retired, they really do not deserve to have
things take so long when they are trying to access retirement
services. So this is a really big issue.
Simply, there are a couple of things I would like to do
when it comes to retirement processing. One is to take a deep
dive into all the processes that are currently being done by
paper and seeing how many of those we can change to electronic.
That one change alone is going to speed up a lot of processes,
so that is something I want to take a deep dive into and
continue the work that is already ongoing there.
A second thing is increasing the use of self-service
options. So, for example, it used to be the case that our
retirees, if they wanted to change their password, had to
actually call in to a person and have the person change their
password for them, which is kind of unfathomable. But that has
now been changed over to an automated self-service system, so
that can be done without having to go to a person, and that
person is now freed up to do more important tasks that can
speed up other processes.
So looking at other things that can be automated and done
through self-service, instead of having to go through a person,
is a really big tasks that I would like to engage in, if
confirmed as director.
Senator Sinema. I appreciate that. I am a fan of
modernization myself. So where does improving basic IT
infrastructure fall on your priority list for modernization?
Mr. Gibbs. Senator, I would say that modernizing basic IT
infrastructure is, of course, a very high priority for
modernization. I could point to an example of my current role
as Acting Assistant Secretary. When COVID-19 hits we had a
large amount of processes that were being done by paper. So I
instructed my staff to take a deep look at what can be changed
into an electronic process instead of being done by paper. And
our dedicated public servants under my charge did a great job
on that. They just took so many processes that we had that were
being done by paper and transitioned them to electronic.
I think that was a successful effort, and I can take what I
have learned there, if confirmed as director of OPM, apply the
same thing to IT modernization, both at looking at this issue
of paper to electronic as well as looking at the existing IT
system to see what is antiquated, what is not talking, what
system is not talking to the other system, et cetera. Just
taking a deep look at those things and analyzing what kind of
basic changes we can make there.
Senator Sinema. Thank you. If you are confirmed you will
lead a Federal workforce that is both large and diverse, and as
was discussed earlier, as a commentator you posted and tweeted
about a number of controversial topics. Some of your posts did
imply support for fringe conspiracy theories and could easily
be perceived as attacks on religious freedom or individual
liberties.
So what steps will you take to build trust with employees,
many of whom will never ever meet you, so that you can
successfully lead a large and diverse workforce through this
very challenging time in our history?
Mr. Gibbs. Thank you, Senator, and I do share your concern
with that. I absolutely agree with you that any leader of OPM
must be someone who can lead all people, regardless of
background. And I am very confident that I do have that
qualification.
I would again look at my own story. I am a person who has
actually lived diversity. Everywhere I have lived my entire
life I always been the only guy that looks like me, for the
most part. Then I decided to go to Japan, which is even more so
the case. So that is something that is a part of who I am.
Being around people of different religions, cultures, and
backgrounds is part of who I am.
I would also point to my existing service in the Federal
Government, over the past 3 years at HUD. I believe I am very
proud of how I have led people from diverse backgrounds,
without regards to religion or other characteristics, to just
focus on the mission and execute. I can absolutely guarantee
you that if confirmed as OPM director I will do the same thing.
Finally I would say that if anyone out there has concerns
with what they have read about certain controversies, I would
love to sit down and meet with them. I believe that if anyone
sat down and met with me and got to know me, they would quickly
realize I am not a person who tolerates any kind of
discrimination whatsoever. I love to treat people as
individuals and treat people fairly. That is something I have
always done. If confirmed as director, that is something I
would absolutely do as director.
Senator Sinema. Thank you for your response. Thank you, Mr.
Chairman. I yield back. And again, thanks to Senator Lankford
for allowing me to go. I appreciate it.
Chairman Johnson. Senator Lankford.
OPENING STATEMENT OF SENATOR LANKFORD
Senator Lankford. Thank you, Mr. Chairman. Mr. Gibbs, you
have had a lot of folks ask you a lot of questions about
writings from years in the past. You have referenced multiple
times the 700 people that you supervise now at HUD. The 700
people that you supervise now at HUD, are all of them
conservatives that all think like you, have the same faith as
you? Is everyone identical and have the same beliefs, of all
the people you supervise now?
Mr. Gibbs. Thank you, Senator. I think that is a very good
question and I would absolutely assume not. I assume that when
you have 700 people gathered together in an organization you
have folks of various different ideologies, various different
backgrounds. But I would be very proud to say that during my
current role as Acting Assistant Secretary, not to toot my own
horn but we do a very good job of staying focused on the
mission and working as a team, regardless of someone's
political beliefs or their ideological beliefs. So I really
believe that that is a strong point of mine.
Senator Lankford. OK. That is the evidence that you have
actually carried out the last several years, and I think that
is very important in this process.
There is a company in Oklahoma called Paycom. There are
several companies that do payroll processing and all kinds of
personnel issues. Let me just pull one out. That company
started years ago, small, and they have grown large now, but
their issue is they want to be able to help another company
that uses their services, interview well, hire well, manage
their day-to-day operations, manage their vacation, and all
their personnel questions they have, all their W2s, everything
else, and then also when they leave the company and all their
supervision through that.
It is a seamless system that they have. And every time I
hear about it or I meet someone that either works there or uses
their system I think the same thing: Why can we not do that in
the Federal Government? Why are our processes so antiquated? I
have spoken with every person that leads OPM, because Senator
Sinema and I lead the Committee that has direct oversight over
that. I have spoken with every person and they have all nodded
their head and said, ``I think we could do that. It would take
some time but I think we could do that, and we should start
with a smaller agency and then try to be able to grow it.''
I say all that is great. How do we actually do it? And I am
not just saying hire Paycom. I mean, they are one example. I am
just saying find a system that works as seamless that can
actually help our Federal employees through the interview
process, help our managers of the individuals that are there,
and especially through retirement, and I am going to bring up
retirement here at the end of this.
How do we move to more of an online system? You have
mentioned that somewhat. What process would you execute to be
able to do something that makes it more efficient for Federal
employees?
Mr. Gibbs. Thank you, Senator, and I share your concern 100
percent on that. As someone who works in the government
currently I have seen, first-hand, the antiquated nature of
some of the systems that are out there. I have mentioned the
people before, that when I came in we had a lot of our systems
on paper, and I directed our staff to put a lot of those to
electronic. So like I said, we went from 1990 to 2010. So we
still have a little ways to go there, but I think we are going
in the right direction. So I would leverage my experiences with
that, if confirmed as director of OPM, to get the staff on
board.
Another aspect of this is a lot of IT issues you see in the
government are sometimes not IT problems. They are issues with
staff and personnel, making sure that you are getting people on
board and willing to modernize things so that they do not feel
that they are threatened if something becomes electronic versus
the way they have been doing it forever.
So I think having open, positive relationships of respect
with the staff under me so that I can bring them on board with
what we are trying to do, as opposed to trying to not
necessarily ram something down someone's throat, and whether
they are not OK with, they can stonewall you ten ways to
Sunday. But I think if you have an attitude of respect,
bringing people to the table, they will be more likely to come
on board and do the type of modernization that needs to be
done.
Senator Lankford. It would be helpful. I would recommend
that you meet with the Chief Human Capital Officers (CHCOs)
when you come on board. They are a very valuable resource that
I think is still underutilized. They understand the human
capital issues very well across the Federal workforce, and they
would be a good group to be able to bring in for counsel.
We also have to work to the days-to-hire. We are still at
100 days to be able to hire. That is absurd. That does not
happen in the private sector anywhere. If they do not, they do
not get enough employees. But for some reason we are still
apathetic in the process. There is a lot of innovation that
needs to be done, and where there is a need to say that we need
a legislative change, this body needs to know it. Senator
Sinema and I have worked together on these issues. We need to
know those recommendations that you would have, and we would
expect you to come back and say, ``We found one of the problems
to moving us from 100 days to 40 days to hire.'' We would
expect you to be able to bring those things to us.
Mr. Gibbs. Yes, sir. I would absolutely do that. If
confirmed I will take a deep dive at that and bring to you any
legislative changes that would be needed.
Senator Lankford. Great. One of the things that we are
going to have to talk about long term is telework. Obviously
there are a lot of agencies that used to say, ``There is no way
we can telework. We can't manage it. We can't do it,'' and so
they stalled it. Then suddenly everyone found a way to do it.
So when the moment came to be able to actually get it done,
everybody is getting it done.
But we have a lot of lessons learned on managing people in
telework. How do you hire people into an entity? It is one
thing to say we used to see each other and be around the same
cubicles together and now we are teleworking. It is another one
to join the workforce and you do not know anyone. Managers are
not equipped to be able to oversee those folks. The technology,
we are finally getting up to speed on that but there are
security issues and other things. We will need to be able to
work together to try to help resolve that. Are you committed to
not only establishing a new process for telework but working
with us to be able to do legislatively what needs to be done to
get it done?
Mr. Gibbs. Absolutely. Yes, sir.
Senator Lankford. That would be terrific.
For the three gentlemen here that are working with the
funds here, I apologize we have not been spending enough time
talking through it. I have one big question, and I would like
all three of you to address it.
There has been a lot of controversy over Chinese funds
being included in the international fund, and if we will have
Federal dollars being used to be able to support Chinese
companies in this. I understand that the three of you do not
make the final decision on some of those things, but there is
an important question that needs to be there, on an investment
strategy on how we invest Federal employees that have worked
very hard to be able to protect our free market systems into
locations and companies that work antithetical to our free
market system.
What is your opinion on including Chinese companies in
investments, and any statements that you want to make about
that, and I would like all three of you to respond to that.
Mr. Barger, I will let you go first. You get the benefit of
sitting on the far side of the table.
Mr. Barger. Senator, thank you for that question. Senator,
I have great concerns----
Senator Lankford. Can you make sure your microphone is on
as well?
Mr. Barger. I have great concerns about investing in China,
because of the reporting standards with Chinese firms, among
other things. I have spent some time in China while I was
chairing the board of LACERA and had a chance to examine first-
hand
what the standards were that they applied to the companies that
they--even the State-sponsored enterprises. And so I would have
concerns about that. I would want to look into the standards
that the Chinese are imposing on their companies and how that
stacks up with investible assets for our beneficiaries.
I also think that you have to look at diversification. You
have look at the impact of diversification and whether it is
really needed to invest in China, given the risk profile.
Fundamentally, though, I will be guided by what I consider
to be my fiduciary duty, and that is a duty of care and loyalty
to the beneficiaries of the fund. Certainly a part of that is
having a retirement plan that is investing in companies that
are safe and secure.
Mr. Burnham. Senator, thank you for the question. Of course
it is a critical question right now because of the lack of
oversight that the Public Company Accounting Oversight Board
(PCAOB) has over the accounting, to be able to review the
audits and the auditors' reports within that country. What
countries allow the PCAOB to come in? The Ukraine, Russia,
Indonesia, Malaysia, Thailand, Taiwan all allow it to come in.
So obviously in the wake of Luckin Coffee and other questions
of accounting standards, that is an important thing.
From the standpoint of the Board, though, the Board is
looking at what index funds to recommend to the employees and
retirees of the plan, which is specifically a different
question than the oversight of the PCAOB. And the question
comes to suitability of whether or not an extensive exposure in
international equities is appropriate for an American pension
system.
First of all, you get very little through the diversity,
international diversity, and out of the last 20 or 30 years you
have gotten very little back from having international
exposure, except on rare occasions. As my colleague, Frank
Dunlevy, has pointed out that, there has been no better market.
Unless you put all your money in India, there has been no
better market than the S&P 500.
And so that then falls back to the allocation funds that
the plan offers, which is that they recommend that when you
come in and you are young, you are under 30, that you have a
certain allocation of stocks and a certain allocation to bonds,
going up to age 60 or 70, where you have mostly they invest for
you. They do the asset allocation for you. And asset
allocation, it might be 100 percent of your return. It is not
the stocks you pick, unless you were smart enough to buy Amazon
in the late 1990s. It is not the mix. What it is is your asset
allocation, and that is really what the Board needs to look at.
I will also just say one other thing, Senator, and that is
the right to make policies like that resides with you, just the
way it resided with me when I was in the House of
Representatives in Connecticut, and not when I was State
treasurer. When I was State treasurer of Connecticut I had a
strict fiduciary duty to the men and women of Connecticut, and
the teachers in Connecticut, to give them the highest return at
a reasonable risk, not to play politics with their pension fund
but to help guide it. And as sole fiduciary I had extensive
sway over how that money was invested, to invest that money
prudently and wisely, and without politics.
Senator Lankford. Mr. Chairman, I apologize. I just
realized we have gone over time. Can Mr. Dunlevy still respond?
OK.
Mr. Dunlevy. Thank you for that question, Senator. I look
at it from two levels. I look at the final point that my
colleague made, which is our fiduciary duty of care, where we
must leave politics aside and allow the Congress to make those
kinds of political decisions, and then we will be guided by
that decision.
I can say that on the question of investment, though, what
you are really talking about is how far out the risk curve do
you want the investor to go? The vast majority of our investors
are middle-class investors, investing for the long term, for
that payout between their 65th birthday and their 90th
birthday.
Most people are unaware that you get a lot of international
exposure in the S&P 500. Fifty to 40 percent of the earnings of
the average S&P 500 company is from international, and
somewhere between 7 and 15 percent is from China. So you are
getting the kind of exposure to those growth markets that you
may want, but you are getting them through the accounting
standards of the United States, reviewed by the U.S. Securities
and Exchange Commission (SEC), and you are not facing the
specific risk that happens when you invest in China.
I spent 14 years working in and out of China. My wife and I
and our children actually lived in Shanghai. You have five
major things working against you in China. All the companies,
even the ones they refer to as private sector, are basically
State-owned enterprises and function at the behest of the
party. At any point in time the party could decide, ``We do not
want that company to make a profit. We want that company to go
for market share or something else,'' without regard to the
stockholders.
Second, there is opaque ownership. Beneath the cover of the
companies that are listed in the United States, there is
Chinese ownership of all kinds that is not disclosed in the
various accounting standards that my colleague referred to.
Third, these companies all have opaque debt structure. You
are not really aware of what the debt relationship is with the
various State-owned banks. As my colleague pointed out, they
are not in compliance with accounting standards that everyone
else in the world adheres to, and at the moment they are all
subject to being delisted from the New York and the National
Association of Securities Dealers Automated Quotations (NASDAQ)
stock exchange if they do not come into compliance by, I
believe, January 2021.
So, to me, you are not getting paid for that risk, and I do
not want to take risk when I am not getting paid for it, and I
would not want my investors to be in that situation.
Senator Lankford. Gentlemen, that is very helpful. Thank
you. And let me say not only thank you for your answers but
thank you for your prior public service, for all of you that
have invested a lot of your life into being able to serve our
fellow Americans. So I appreciate your previous service and
then also your commitment to continue to do that.
Mr. Chairman, thank you.
Chairman Johnson. Senator Lankford, that was a question I
was going to ask so that is why I was more than willing to
yield you more time. Senator Scott.
OPENING STATEMENT OF SENATOR SCOTT
Senator Scott. Sure. Thank you, Chairman Johnson, for
hosting this hearing today, and I want to thank Senator
Lankford. I came on at the tail end of this, but it sure sounds
like everybody is in agreement that we have to be very careful
about investing in Chinese companies and allowing a Chinese
company to have access to markets when, consistent with all
their other actions, they do not comply with American laws, and
American investors are going to be taking risks that they
should not be taking.
Is there anyone that thinks that we ought to be--that the
path we are going down, where we are going to start
significantly reducing or stopping our investment in Chinese
companies is the right thing, or preventing Chinese companies
from raising capital in this country? Does anybody think we are
heading down the wrong path? It sure looks like America--and
whether it is our underwriters or whether it is the SEC--is
making the right decisions to preserve the assets of Americans.
Mr. Barger. So your question, Senator, is do you think we
are going down the right path by not investing in Chinese
companies?
Senator Scott. Right.
Mr. Barger. Yes, until some of the issues addressed by my
colleagues are addressed, I think we have to be very careful
about it. I also think we have to be realistic about who China
is as a Nation. Again, as my colleague said, we really have to
look at the Congress also on what you think we need to be doing
when it comes to investing in these kind of companies. But I
have no quarrel at all with the path that we are taking in the
administration right now.
Senator Scott. Anybody else?
Mr. Burnham. Senator, it is Chris Burnham. The men and
women of this pension plan, as perhaps everybody in the room
who has an index fund in the S&P 500, either in Fidelity or
Schwab or somebody else, has exposure to companies like Yum!
Brands, Qualcomm, Micron, Texas Instruments. Yum! Brands gets
52 percent of their revenue from China. Qualcomm gets 48
percent of their revenue from China. Texas Instruments, 32
percent of their revenue.
So essentially they already have exposure to what is going
on in China. The question then becomes should we--is it the
right, prudent asset allocation recommendation that they be
exposed to more? And unlike the companies I just mentioned,
which obviously have complete, open transparency, independent,
outside audits that are then subject to PCAOB oversight, not
one of the companies in China is subject to PCAOB oversight.
So it comes down to risk, and it comes down to whether or
not that is an appropriate risk that the men and women of this
Nation, who are laboring hard, who are out there protecting our
liberty tonight, should be exposed to that risk. And I think
that the Nation, the country, the Congress is moving in the
right direction to address those risks as an inappropriate
opportunity for us as Americans, not just men and women of our
government, and that the Chinese government should either
accept the standards of the rest of the world--and as I
mentioned before you came on, Senator, countries from the
Ukraine and Indonesia and Malaysia and Russia and Thailand and
Taiwan all submit to PCAOB oversight, but not China, and that
is the problem.
Mr. Dunlevy. Thank you, Senator. I would echo my two
colleagues, and I would say that the Congress is proceeding in
the correct direction, and I would look to Congress for
guidance.
Senator Scott. All right. Thank you. Mr. Gibbs, and you
might have addressed this before I was able to become part of
this hearing today, but I am concerned about some of your past
social media posts, which contained offensive anti-Muslim and
anti-Semitic rhetoric, that is clearly something none of us can
condone. So can you explain some of the things you stated in
the past and how you think you can do your job if you have
those beliefs, and the impact it would have on your ability to
work with others, and do your job?
Mr. Gibbs. Yes, Senator. Thank you for that question and
let me just say that I do share your concern about this. I will
just address this by saying at the time I was a political
commentator and I commented on issues of the day. Every
American has political opinions. I certainly had my political
opinions, and do have them, so that is a fact.
But one thing I can assure you, above and beyond that, is I
have always led in a nonpartisan fashion, and I always will
lead in a nonpartisan fashion. I believe I have been very
effective at that in my career, not only in the past 3 years,
working in government service, but even before that. I have
lived in Japan where I was the only person around of my
background. I was working with people on a daily basis from
different religious and cultural and linguistic backgrounds,
and it was a great experience. I really enjoyed it and I felt
that I thrived there.
So my entire life I would say I have actually lived
diversity. I have lived getting along with people from
different backgrounds, of every type of background, whether it
is religion or whatever it might be. So that is simply not an
issue for me. I look at my track record over the past 3 years,
and I have been successful at that, and I can assure that if
confirmed as director I will continue to do what I have always
done, which is treat people fairly as individuals and never
tolerate and never allow any type of discrimination whatsoever.
Senator Scott. Thank you. Thank you, Chairman Johnson.
Chairman Johnson. Thank you, Senator Scott. As is generally
the case, when I defer questioning, I get a lot of the
questions I had already answered for me, so it can make the
wrap-up pretty quick.
Mr. Dunlevy, we spoke yesterday over the phone. I was
intrigued by your current position as a counselor on the
International Development Finance Corporation. Can you just
describe for the Committee kind of the difference between what
America is doing through that corporation versus what China is
doing in terms of their strategic acquisitions, their Belt and
Road Initiative? I mean, really describe the disadvantage with
that right now, and what we have to do to make it up.
Mr. Dunlevy. Thank you, Senator, for that question. I will
put my DFC hat back on for a moment.
Yes, we confront a formidable opponent in the People's
Republic of China. From my perspective at OPIC, which we turned
in to the DFC, they are a very formidable competitor throughout
the developing world, both in the Indo-Pacific and Africa and
in Latin America. I describe it briefly to my friends in the
investment business as they have a 15-year head start. They
have $350 billion already in the ground. They have two new $100
billion development banks at their back. They obviously have an
ambitious One Belt One Road plan, and a Made in China 2025
plan. They are highly organized. They have large Chinese
diaspora communities in many of the countries that we are
talking about.
And the DFC, while with its strong bipartisan support, the
new legislation received a vote of 435-0 in the House, and 93-6
in the Senate, so about as strong a bipartisan support as you
could get, but the DFC has a total of about 350 people and
capability of $4 to $5 billion per year, at its maximum
capability.
So this will take a whole-of-government approach, a
combination of both the DFC's capabilities, the reinvigorated
Export-Import Bank of the United States (EXIM) capabilities,
strengthened and more funding for United States Agency for
International Development (USAID), and a more targeted approach
by our leadership across the board in order to give the folks
in the developing world a fair chance and a fair competitive
bid when they are looking at their development finance.
Chairman Johnson. Mr. Burnham, in the discussion--again, I
was going to ask basically the question that both Senator Scott
and Senator Lankford talked about, in terms of what is
appropriate for the Federal Government, their Thrift Savings
Plan, in terms of investment. And again, I think great answers,
very appropriately talking about the accounting standards,
those types of things.
I think one of the unstated issues is literally America
continuing to invest in a geopolitical rival and certainly not
a benign one, one whose actions are becoming more and more
menacing. We just talked about their strategic investments
overseas. So can you speak a little bit more to that aspect of
potentially congressional action preventing dollars flowing
into China to aid a geopolitical rival?
Mr. Burnham. Thank you, Senator. It is fully appropriate
that you would enter into that debate, just the way in the
Connecticut House of Representatives we entered into a debate
of whether or not it was appropriate for the pension funds of
the State employees and teachers of the State of Connecticut
should invest in South Africa, in Iraq, in Iran, or in
companies that failed to abide by the MacBride Principles. That
was the law of the land, and when I left the legislature and
was elected treasurer of the State of Connecticut I abided by
the law of the land. I obeyed the law of the land.
One of the things that I resisted was divesting of tobacco
stocks. I said I do not make decisions, political decisions,
like that. My fiduciary duty to the men and women of
Connecticut is to make the highest return at a reasonable risk.
I continue to believe that we, as fiduciaries, need to look at
that risk. I think it is very risky to expand beyond what is
already being offered internationally by the Thrift Savings
Plan.
However, the questions of whether or not it is appropriate
to invest in China, we already have exposure to China, as I
mentioned in an earlier answer.
Chairman Johnson. Let me just stop you there, because there
is a complexity that you are raising there. Congress could go
too far and make this complex, because, as you say, U.S.-based
companies, U.S.-based accounting standards, but they have sales
in China. I mean, can you speak a little bit to a little bit of
caution in terms of what legislation might be crafted?
Mr. Burnham. It is a dynamic, Senator, that I have looked
at, from the standpoint of what were our policies leading up to
World War II. And from a national security standpoint, we all
know, and particularly we know this at the Department of
Defense, that we have to be prepared right now to modernize, to
look at how we will continue to defend the free peoples of this
nation and our allies across Asia, if it comes to that.
And so as such, Senator, I think that it is a difficult
question, but it is a question that is currently being answered
by sanctions. And this administration continues to sanction
those companies that are usurping the rights in the South China
Sea of other nations and continuing to abuse the recent ruling
by the International Court at the Hague against the annexation
of territory across the South China Sea. I think that is
absolutely appropriate for the Congress to engage in and for
us, as fiduciaries, to worry about that risk.
Chairman Johnson. Thank you. Mr. Barger, you were not given
necessarily the best opportunities to answer some of the
questions that were posed to you, based on the Postal Service.
I think maybe as a manufacturer I understand you have to have a
good process if you are going to have a good product, and I
think I really do understand what Postmaster General DeJoy is
trying to do in terms of making the trucks run on time.
I want to give you a little more opportunity to fully
explain, what has happened, but also to debunk some of these
false narrative in terms of, removing blue boxes and, reducing
sorting machines, that this is something new. This has been
going on, really in reaction to the fact that First-Class Mail
is probably about half the volume as it was a few decades ago.
But I just want to give you a little bit more time to explain
exactly what is happening, in a very short period of time, with
the new Postmaster General, and really, what level of Board
support he has.
Mr. Barger. Thank you for the question, Senator. So when
Louis DeJoy assumed the role of Postmaster General, we were
thrilled to be able to attract a person of his caliber to the
U.S. Government. This is man who was self-made. This is a man
who built a company from two trucks to 9,000 employees, a
multinational company. He served Boeing, Verizon, AT&T.
Tremendously gifted. He also had a history as being a very
successful contractor and supply chain whiz for the Postal
Service. So it was very unusual to find a man of these talents,
with this experience.
Chairman Johnson. And by the way, it was the Board that
engaged a professional search for him, to look for somebody
like Mr. DeJoy, and it was the Board that made the selection
unanimously. Correct?
Mr. Barger. Yes, sir. So I was privileged to lead the
search, and we hired two search firms, and we found what we
thought was the very best search firm for this search. That was
Russell Reynolds. We looked at 217 executives. We narrowed it
down to 53, where we vetted them very carefully. We then took
it down to 14 and had very highly technical interviews. And
then the final 4 we did deep dives. We also gave them homework
assignments, and Mr. DeJoy came out on top.
What is really uncommon about Mr. DeJoy in what he has
done, first of all is to find somebody with his gifts who is
willing to come into government and try to transition the
Postal Service, which is something this Committee had asked me
to consider doing as a Postal Board Governor a year ago. We
were thrilled. In fact, when we saw some of the controversy I
thought that the Senate and the House were catching us doing
good, because I think we found a great man.
Now as far as the changes he has made, the public seems to
have conflated the changes with the blue mailboxes and the
high-speed sorting machines, which you allude to. Those were
not changes the Postmaster General brought into effect. Those
had been going on for about 10 years. So, for example, I
believe there are 24,000 blue boxes that have been moved over
the past 10 years. Only 700 when he took office, OK, but that
was the program. And the high-speed sorting machines, as you
mentioned, First-Class Mail is down about 40 percent. You just
have over-capacity. But as we know from the COVID epidemic,
package deliveries have gone like this. We need to reallocate
our space, reallocate our logistics to accommodate the
opportunity with packages and make it more efficient.
Now the changes he did institute are very interesting,
because as I mentioned, I am pleased to say that from a
standpoint of Priority Mail, first class packages, actually the
changes he made temporarily, in the first 30 days, had their
impact. But what I try to explain to people who ask is it is
similar to somebody who goes to a gym and works out. If you
listen to your muscles while you are working out, your muscles
are going to say, ``Stop. Don't you
know you are killing me?'' But what you realize is when they
have a chance to recover, or you have a chance to see the plan
through--we had a Board meeting today, and the Board is tickled
pink, every single Board member, with the impact he is having.
He is an excellent leader. He is supply chain logistics savant,
and I am very pleased with his performances with my board.
Chairman Johnson. When I said at the hearing, rather than
be condemned he ought to be commended for the changes he is
making, eventually this will hopefully reduce the unscheduled
overtime that is costing, as mentioned, $5 billion. Forty to 50
percent of your annual loss.
Mr. Burnham. In just 70 days--I think he has been there 85
now--the changes he has made, he has improved the performance
of Priority Mail and first class packages. He has enhanced the
performance of Parcel Select, our institutional product. First-
Class Mail presorted, First-Class Mail marketing is about where
it was when he came, so it went like this but now it is like
this, and it is going like that. We are fully prepared for the
election. This man is doing a tremendous job.
Chairman Johnson. So the only thing I said in my opening
statement is the job of Postmaster General is quite thankless,
and unfortunately he has now experienced that but he has also
been experiencing character assassination as well. So I
appreciate you reviewing the search, and, quite honestly, how
pleased the Board is, the Board of Governors, who ultimately
was responsible for the performance with his changes and his
performance to date.
Mr. Barger. May I say one other thing, Senator?
Chairman Johnson. Sure.
Mr. Barger. OK. So this goes back to the whole issue of
China as well. Louis DeJoy is a patriot. The things he has done
for his community are astounding. I think when we think about
our China policy also, what we need to do, what the Congress
can do, is we need to wake the American people up to the
patriotism and to the really hidden costs of investing in
China. There are still a lot of people in this country,
particularly on Wall Street, in our industrial economy, that
think it is fine to invest in China--and maybe it is, with
certain prescriptions if they are willing to make certain
changes. But we have to realize that it really does start with
the character of our people, and that goes to people like Louis
DeJoy, who are patriots who are serving the country.
Chairman Johnson. Thank you, Mr. Barger. Mr. Gibbs, you
were pretty popular during this hearing so I only have one
question for you. First of all, I do not think we got as much
of your background in terms of your expertise in computer
science, and one of the huge challenges--James Lankford said he
was going to ask you about it but I think his questioning went
in a little bit different direction--the retirement files. I
cannot remember exactly what cave they are located in. I mean,
it is in some place in Pennsylvania, a bunch of four-drawer
files. And we are still doing this completely manually. I know
we held this hearing years ago, in this Committee, talking
about this. I doubt there has been any progress made on that.
Can you just kind of speak to whether you think that is
something you can tackle, and how you go about doing it?
Mr. Gibbs. Senator, thank you for that. I agree with 100
percent, and we are going to give it our best shot, if
confirmed. Yes, I understand there is a cave in Pennsylvania
with just tons and tons of files on paper. There has been
ongoing efforts to address that and get some of those into an
electronic format. So if confirmed that is something I
definitely want to tackle.
With my background in IT, innovation technology is part of
my Deoxyribonucleic Acid (DNA) and it always will be, so I
enjoy tackling those kind of challenges. As I kind of mentioned
before to Senator Lankford, what I have learned in my career is
that a lot of times when you are looking at an IT problem it is
sometimes not an IT problem. It is a culture or a personality
problem.
So I think being really strategic about engaging the
personalities involved, to let them know if you are making a
modernization, I am not disrespecting you or saying that I am
going to take away your responsibilities or saying that you are
incompetent. I am saying that our dedicated public servants and
retirees deserve to have the systems work faster. That is not a
slight on you whatsoever. So let's work together, let's work
collaborative. I am going to empower you, enable you as we go
forward. I am not trying to take away your dominion.
So I think dealing with the personnel and personality issue
in IT modernization, I have learned in my experience, is just
as important as haggling over the actual details about IT
itself. So that has been a priority and that is something I
plan to engage fully.
Chairman Johnson. Thank you, Mr. Gibbs.
To close out the hearing, let me thank all of you for your
past service, for your willingness to serve in this capacity. I
think this is a highly qualified slate of nominees for the
positions that you have been nominated to fill. I said,
truthfully, that I think President Trump's greatest core
competency is being able to identify smart and capable people,
and I think this is proof of that as well. So again, thank you.
I could not be more pleased.
The nominees have made financial disclosures and provided
responses\1\ to the biographical and prehearing questions
submitted by the Committee.\1\ Without objection, this
information will be made a part of the hearing record,\2\ with
the exception of the financial data, which are on file and
available for public inspection in the Committee's offices.\3\
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\1\ The information on Mr. Gibbs appear in the Appendix on page 41.
\1\ The information on Mr. Barger appears in the Appendix on page
123.
\2\ The information on Mr. Burnham appears in the Appendix on page
175.
\3\ The information on Mr. Dunlevy appears in the Appendix on page
231.
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The hearing record will remain open until 5 p.m. tomorrow,
September 10th, for the submission of statements and questions
for the record.
This hearing is adjourned.
[Whereupon, at 5:33 p.m., the hearing was adjourned.]
A P P E N D I X
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