Personnel Practices: Circumstances Surrounding U.S. Customs	 
Service's Use of Schedule A Appointment Authority (13-SEP-01,	 
GAO-01-1103).							 
								 
The Treasury Department, on behalf of the Customs Service,	 
requested Office of Personnel Management (OPM) approval for	 
Schedule A appointment authority for 10 positions for oversight  
policy and direction of sensitive law enforcement activities.	 
Treasury's request stated that "due to the sensitive nature of	 
the operations, these positions require a unique blend of special
characteristics, skills and abilities that cannot be announced to
the general public, and for which it is not practical to	 
examine." According to OPM officials, no detailed criteria are	 
applied when OPM considers such requests. OPM approved the	 
request primarily because Treasury argued that the positions were
sensitive in nature, involved law enforcement activities, and	 
were impracticable to advertise and examine for. In using the	 
Schedule A authority between September 1998 and January 2001,	 
Customs made nine appointments to various positions. The	 
circumstances surrounding five of the nine appointments can, in  
GAO's opinion, give the appearance of inconsistency in the	 
application of the Schedule A appointment authority or possible  
favoritism toward former political employees. OPM reviews	 
agencies' use of appointment authorities, including Schedule A	 
and other excepted appointments, every four to five years. The	 
most recent review of Customs was for appointments made in 1999. 
OPM also conducts occasional surveys that require agencies to	 
justify the continuing need for each of its appointment 	 
authorities.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-01-1103					        
    ACCNO:   A01759						        
  TITLE:     Personnel Practices: Circumstances Surrounding U.S.      
Customs Service's Use of Schedule A Appointment Authority	 
     DATE:   09/13/2001 
  SUBJECT:   Customs administration				 
	     Hiring policies					 
	     Personnel recruiting				 
	     Federal employees					 
	     Law enforcement personnel				 
	     Customs Senior Executive Service			 

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GAO-01-1103
     
Report to the Chairman, Committee on Ways and Means, House of
Representatives

United States General Accounting Office

GAO

September 2001 PERSONNEL PRACTICES

Circumstances Surrounding U. S. Customs Service?s Use of Schedule A
Appointment Authority

GAO- 01- 1103

Page 1 GAO- 01- 1103 Customs? Schedule A Authority

September 13, 2001 The Honorable William M. Thomas Chairman, Committee on
Ways and Means House of Representatives

Dear Mr. Chairman: The Office of Personnel Management (OPM) approved a
request of the Department of the Treasury on August 21, 1998, to amend U. S.
Customs Service?s existing Schedule A appointment authority for 300 criminal
investigator positions, to include 10 additional special law enforcement
positions. While the majority of candidates for federal employment must
compete for jobs under the merit system by applying through the competitive
civil- service examination process, Schedule A appointees do not. Schedule A
authority allows an agency to noncompetitively appoint individuals to
positions in the excepted service for which it is not practicable to apply
the qualification standards and requirements established for the competitive
service. The use of Schedule A appointments is an important tool for
agencies to use as they try to recruit and retain the best employees. While
GAO has encouraged agencies to use such tools and other flexibilities in
managing their human capital, as with any tool, agencies need to avoid
situations and appearances that could compromise the credibility and
integrity of the merit system.

On the basis of your request and discussions with your office, we agreed to
report on

 the nature of and reasons for the request for the U. S. Customs Service?s
Schedule A appointment authority and OPM?s approval of the request;

 the number, types, and circumstances of appointments made under Customs?
Schedule A authority, and any subsequent personnel actions related to the
appointments, including whether those actions complied with merit system
principles or OPM policies; and

 OPM?s oversight of Customs? Schedule A authority. The Treasury Department,
on behalf of the Customs Service, requested OPM approval for Schedule A
appointment authority on August 6, 1998, for 10 positions for oversight
policy and direction of sensitive law enforcement activities. Treasury?s
request stated that ?due to the sensitive nature of the operations, these
positions require a unique blend of special

United States General Accounting Office Washington, DC 20548

Results in Brief

Page 2 GAO- 01- 1103 Customs? Schedule A Authority

characteristics, skills and abilities that cannot be announced to the
general public, and for which it is not practicable to examine.? Treasury?s
request did not identify the specific positions the authority would be used
for. OPM approved Treasury?s request on August 21, 1998. According to OPM
officials, no detailed criteria are applied when OPM considers such
requests. Rather, OPM approved the request based primarily on Treasury?s
assertion that the positions to be filled were sensitive in nature, involved
law enforcement activities, and were impracticable to advertise and examine
for. OPM also found that the request was for positions similar to ones at
Treasury that OPM had approved previously.

In using the Schedule A authority between September 1998 and January 2001,
Customs made nine appointments to various positions- such as law enforcement
and public affairs specialists and a strategic trade adviser. The
circumstances surrounding five of the nine appointments can in our opinion,
give the appearance of inconsistency in the application of the Schedule A
appointment authority or possible favoritism toward former political
employees. The remaining four appointments did not raise any similar issues.
The following describes the circumstances surrounding the five appointments.

 While the criteria used to justify all 10 positions were that their duties
and responsibilities were impracticable to advertise and competitively
examine (applicants for their qualifications), for three of the Schedule A
appointments, identical positions were ultimately advertised and examined in
the competitive service. Two individuals, after having spent over a year in
Schedule A positions, were selected for identical competitive positions.
(The third appointee was selected for a different competitive service
position.) In discussing this issue with Customs? officials, they stated
that when it was initially decided that the subject positions were needed,
no such positions existed at Customs. Accordingly, to facilitate hiring,
given the unique combination of skills required for the positions, they used
the Schedule A authority. Officials also stated that subsequently it became
apparent that the positions would be needed permanently, and they also
concluded that such positions could be advertised and competed. While not
disagreeing that the positions could have been advertised competitively
originally, Customs? officials stated that when they initially used the
Schedule A authority, they believed it was appropriate and that they were
acting in good faith in attempting to meet their goal of hiring needed
expertise as quickly as possible. Also, while the circumstances surrounding
the appointments give the appearance of providing an unfair advantage to the
two appointees- allowing them to serve in identical Schedule A positions for
over 1 year- we could not

Page 3 GAO- 01- 1103 Customs? Schedule A Authority

determine that they would not ultimately have been selected for the
competitive service positions based on their education and work experiences
prior to coming to Customs. After the conversions, these three original
Schedule A positions were eliminated by Customs and no longer exist, and
Customs has stated that it has no plans to convert any of the remaining six
(of the nine) Schedule A positions or any future positions created under the
authority to competitive service positions.

 Two other Schedule A appointments were made to noncareer appointees in
Customs? Senior Executive Service (SES) several days before the Presidential
transition. The timing of such actions can give the appearance of political
favoritism. Treasury subsequently questioned the appearance of political
favoritism in these appointments and asked OPM whether the appointments
complied with the Schedule A authority. OPM determined that they did comply.

The conversions of the three Schedule A employees- who had been in Schedule
A positions identical to two newly created competitive service positions- to
competitive service positions complied with merit system principles and the
limited- term SES appointment of another Schedule A appointee complied with
OPM guidance.

OPM performs periodic oversight reviews of agencies? use of certain
appointment authorities, including Schedule A and other excepted
appointments, every 4 or 5 years. The most recent review of Customs was for
appointments made during 1999. However, the judgmental sample of
appointments selected and reviewed by OPM did not include the two Schedule A
appointments that had been made under this authority at that time. These
appointees were in the law enforcement and public affairs specialist
positions that were subsequently converted to competitive service positions.
OPM also conducts occasional surveys that require agencies to justify the
continuing need for each of its appointment authorities. In the case of
Customs, the most recent survey was in 1998 in which Treasury supported the
continuing need for Customs? single- agency authority for criminal
investigators, prior to OPM?s approval of Customs? authority for the 10
positions. The only OPM review of appointments made under Customs? specific
authority for the 10 policy- related positions was that made at Treasury?s
request in February 2001 concerning the 2 appointments of the noncareer SES
employees.

Page 4 GAO- 01- 1103 Customs? Schedule A Authority

A number of human capital management tools and flexibilities are available
to assist agencies in their recruitment and hiring processes. The
competitive service and excepted service hiring approaches provide different
and complementary ways to acquire employees in the general schedule (GS)
grades of GS- 15 and below. In addition, agencies may also appoint
individuals to SES positions through a competitive process or make noncareer
SES appointments without competition. While recognizing the need for
flexibility in hiring employees, the federal government also seeks to assure
that appointments are based on merit. The Civil Service Reform Act of 1978
(P. L. 95- 454) set out a number of merit system principles and required
that federal personnel management be implemented in a manner consistent with
those principles. The principle pertaining to appointments states that ?[ r]
ecruitment should be from qualified individuals from appropriate sources in
an endeavor to achieve a work force from all segments of society, and
selection and advancement should be determined solely on the basis of
relative ability, knowledge, and skills, after fair and open competition
which assures that all receive equal opportunity.? 1

OPM is responsible for implementing the Civil Service Reform Act and other
personnel- related laws and for developing regulations to ensure that the
intent of merit system principles is implemented. 2 OPM delegated examining
authority to Treasury- on behalf of Customs- on December 20, 1995. The
delegated examining authority requires Customs to conduct competitive
examinations that comply with merit system laws and regulations as
interpreted by OPM?s Delegated Examining Operations Handbook.

The majority of the federal civilian workforce obtained their positions by
competing against others through the competitive service examination
process. The examination process is one of the processes intended to assure
merit system principles are complied with and includes notifying the public
that the government will accept applications for a job, rating applications
against minimum qualification standards, and assessing

1 5 U. S. C. 2301 (b)( 1). 2 5 U. S. C. 1104. Background

Page 5 GAO- 01- 1103 Customs? Schedule A Authority

applicants? relative competencies or knowledge, skills, and abilities (KSA)
3 against job- related criteria to identify the most qualified applicants.

The law provides for necessary exceptions to the competitive service
process, however, when conditions of good administration warrant. 4 OPM has
been delegated broad authority for excepting positions from the competitive
service when it determines that competitive examination for those positions
is impracticable. ?Impracticable to examine? means that it is impractical or
unreasonable to apply the qualification standards and procedural and other
requirements established for the competitive service. If OPM decides a
position should be in the excepted service, OPM authorizes the positions to
be filled by excepted appointment under Schedules A, B, or C. The Schedule A
authority is for positions in the excepted service, other than those of a
confidential or policy- determining character, for which it is impracticable
to hold a competitive examination and the appointments are not subject to
the basic qualification standards established by OPM. 5

While there are many types of Schedule A positions excepted by OPM
governmentwide, such as chaplains, attorneys, and certain positions for
which a critical hiring need exists, agencies may also petition OPM to
establish Schedule A appointing authority specifically applicable to their
agency. OPM decides on such single- agency requests on a case- by- case
basis. Treasury?s Schedule A authority for Customs Service positions has
been approved and amended several times over a period of almost 35 years.
For example, in 1963, OPM approved Treasury?s request for singleagency
Schedule A appointing authority for 25 criminal investigator positions at
Customs. 6 In 1991 and 1997, OPM amended Customs? Schedule

3 KSAs are the knowledge, skills, and abilities required to perform the
duties and responsibilities of a specific position. 4 5 U. S. C. 3302 states
that the President may provide for the necessary exceptions of positions
from the competitive service. 5 Schedule B is also for positions other than
those of a confidential or policy- determining character for which it is
impracticable to hold a competitive examination. However, unlike Schedule A
positions, appointments under Schedule B authority are subject to the basic
qualification standards established by OPM for that occupation and grade
level. In contrast, Schedule C positions are positions that are policy
determining or which involve a close and confidential working relationship
with the head of an agency or other key appointed official.

6 Schedule A authority: 5 C. F. R. 213.3105 (b)( 6) (1964).

Page 6 GAO- 01- 1103 Customs? Schedule A Authority

A authority by increasing the number of criminal investigator positions at
Customs to 200 and 300 positions, respectively.

Individuals appointed to Schedule A positions may be converted to publicly
announced competitive service positions by competing for those positions. In
addition, employees in certain types of Schedule A positions- such as
positions filled by mentally retarded and severely physically handicapped
persons- may be converted without competition to competitive service
positions upon the completion of 2 years of satisfactory service. Employees
in Schedule A positions may also compete for career appointments to SES
positions, or be given noncareer or limited- term SES appointments
noncompetitively. Depending on the position and the status of the
individual, the noncompetitve appointments may require OPM authorization and
approval from the White House?s Office of Presidential Personnel. The agency
appointing official determines whether an individual meets the qualification
requirements of the SES position.

Treasury requested, on August 6, 1998, that OPM amend Customs? Schedule A
authority to include 10 positions for oversight policy and direction of
sensitive law enforcement activities. Treasury?s request letter- on behalf
of Customs- explained that Customs had almost reached its limit of 300
criminal investigator positions previously authorized by its Schedule A
authority. Treasury requested an amendment to the authority to authorize
Customs to fill an additional 10 positions and to broaden the authority so
that the positions included providing oversight and direction to sensitive
law enforcement projects and coordinating such initiatives with other
federal agencies at the national level, including undercover and
intelligence work. The justification for including the additional 10
positions under a Schedule A authority was that ?due to the sensitive nature
of the operations, these positions require a unique blend of special
characteristics, skills and abilities that cannot be announced to the
general public, and for which it is not practicable to examine.?

OPM approved the authority for the 10 positions on August 21, 1998. In
making the approval, OPM officials said that they had evaluated Treasury?s
request and had based their decision on (1) Treasury?s assessment of whether
the positions were impracticable to examine for and (2) prior Schedule A
approvals that OPM had granted for circumstances similar to Treasury?s newly
requested positions. Neither statute nor regulations define detailed
criteria for determining which positions are impracticable to examine for.
OPM officials told us they use their knowledge of the Treasury Requested

and OPM Approved Customs? Authority Based on Impracticability to Examine

Page 7 GAO- 01- 1103 Customs? Schedule A Authority

duties and responsibilities of the positions and the examination process to
make a judgment as to which positions are impracticable to examine for. The
OPM official who reviewed the request and recommended its approval said that
her determination that it was impracticable to examine for such positions
was based primarily on Customs? assertion that the positions were sensitive
in nature and involved law enforcement activities. In addition, an OPM
official said that the positions, as generally described in the request,
were similar to law enforcement type positions that OPM had approved in
Treasury?s Office of the Under Secretary for Enforcement.

In amending the Schedule A authority, OPM did not restrict its use to any
specific job or occupational series. OPM said that granting general
authority- without specific positions or occupational series- is a standard
OPM practice. For example, OPM approved Schedule A authority at Treasury for
no more than 20 positions supplementing permanent staff studying
international financial, economic, trade, and energy policies and programs,
with employment not to exceed 4 years. 7

Customs appointed nine individuals to Schedule A positions using the amended
authority granted by OPM between the time of OPM?s approval on August 21,
1998, and the most recent appointment on January 14, 2001. These
appointments were two identical law enforcement specialists, a public
affairs specialist, a law enforcement appropriations officer, a strategic
trade adviser, a special assistant in the Office of Internal Affairs, a
program manager for air interdiction, a deputy executive director of air/
marine interdiction, and a senior adviser on various aspects of oversight
policy and direction of law enforcement activities. Customs can currently
create 4 new Schedule A positions under the authority for the 10 positions
because 1 position was not filled and the positions- of the 3 appointees
that subsequently converted to competitive service positions- were
terminated and no longer exist.

Although the circumstances surrounding the initial appointments of six
individuals did not appear inconsistent with the authority, events
subsequent to three appointments were apparently inconsistent with the
justification Treasury used in first requesting the authority and may have
provided two of the three appointees with an unfair competitive advantage.
In addition, while the six initial Schedule A appointments did

7 Schedule A authority: 5 C. F. R. 213.3105 (c)( 1)( f) (1975).
Circumstances of

Some Appointments Give the Appearance of Inconsistent Application of the
Authority or Political Favoritism

Page 8 GAO- 01- 1103 Customs? Schedule A Authority

not appear inconsistent with the authority, the timing of two of the six
appointments could give the appearance of political favoritism.

The circumstances resulting in two Schedule A appointees eventually being
hired into identical competitive service positions appear to have been
inconsistent with the justification used in the original request for the
Schedule A authority. The appointees- a law enforcement specialist and a
public affairs specialist- were initially placed in Schedule A positions
that Treasury?s request to OPM asserted could not be announced to the public
and were not practicable to examine for. After the appointees performed the
duties and responsibilities of these positions for over a year, Customs
created identical competitive service positions, advertised the positions,
examined applicants, and filled the positions with the two Schedule A
appointees. Customs? ability to ultimately hold a competition for these
positions appears to have conflicted with Customs? original justification
when requesting the Schedule A authority. Further, the appointees may have
gained an unfair competitive advantage while serving in the Schedule A
positions.

Customs? officials stated that when it was decided that the law enforcement
and public affairs specialist positions were needed, no such positions
existed at Customs. Accordingly, to facilitate hiring, given the unique
combination of skills required for the positions, they believed that using
the Schedule A authority was appropriate and the best mechanism. About 13
months after appointing one of the law enforcement specialists and about 19
months after appointing the public affairs specialist, Customs determined
that these positions should be established as competitive service positions
identical to their former Schedule A positions. Customs officials justified
competitively recruiting for the law enforcement position because the former
Commissioner had determined that there was a permanent need for the position
to improve Customs? efforts in combating various types of crimes. Similarly,
the public affairs position was created in the competitive service because
the Assistant Commissioner for Public Affairs determined there was a
permanent need for the position (1) to establish and maintain effective
working relationships with top officials of other federal, state, and local
agencies and members of the media and (2) to oversee Customs? antidrug
enforcement public affairs program. While not disagreeing that the positions
could have been advertised competitively originally, Customs officials
stated they acted in good faith in initially making the appointments under
the Schedule A authority to meet their goal of hiring needed expertise as
quickly as possible. Two Appointments Appear

to Give Unfair Competitive Advantage

Page 9 GAO- 01- 1103 Customs? Schedule A Authority

The plans that Customs ultimately developed for examining the applicants for
each of the two competitive positions contained criteria or standards for
measuring the relative qualifications of the applicants, including the KSAs
considered essential for successful or enhanced performance of the
position?s duties and responsibilities. For example, in the law enforcement
specialist plan, one KSA on which applicants were evaluated was

?knowledge of federal laws, regulations, and procedures and, specifically,
criminal laws enforced by Customs.?

Customs advertised the law enforcement specialist and public affairs
specialist positions to the public on February 4 and August 14, 2000,
respectively. Customs officials said that both positions were announced to
the public to attract and retain the most highly qualified candidates. The
selection processes for both positions were completed in about 2 months, and
the law enforcement and public affairs incumbents- who had originally been
hired as Schedule A appointees- were appointed on April 23, 2000, and
October 8, 2000, respectively. Although the circumstances suggest that the
two appointees may have received an unfair competitive advantage by serving
in positions with the same duties for more than a year prior to the
competitive positions being announced publicly, we could not determine that
they would not ultimately have been selected for the competitive service
positions based on their education and work experiences prior to coming to
Customs.

Customs? officials acknowledged that the duties and responsibilities of the
Schedule A law enforcement and public affairs specialist positions, and the
KSAs needed to perform those positions, had not changed so as to provide a
basis for Customs to announce the positions to the public and examine the
applicants. Rather, Customs? Director of Executive Services Staffing said
that the use of the Schedule A appointment authority for the law enforcement
specialist and public affairs specialist positions originally was
appropriate because, in addition to the unique combination of KSAs required,
there was an urgent need to fill such positions in an expeditious manner.
However, neither Treasury?s request for the appointment authority nor OPM?s
approval of the authority cited urgency as a reason. Furthermore, OPM
officials stated that urgency was not a factor they had considered in
granting the approval. While the first appointment was made within 1 month
of the authority?s being granted, the next two appointments were not made
until January 1999- about 5 months after the authorization was granted.

The three original Schedule A positions no longer exist at Customs, and
Customs has stated that it has no plans to convert any of the remaining six

Page 10 GAO- 01- 1103 Customs? Schedule A Authority

positions or any future positions created under the authority to the
competitive service.

Two other Customs? appointments were questioned at the department level.
Treasury officials told us they were concerned about whether the positions
complied with Schedule A authority and whether the timing of the
appointments of two former noncareer SES appointees- just before the new
Administration took office- gave the appearance of political favoritism.
While appointments of noncareer individuals to permanent positions late in
an Administration do not violate merit system principles, they could give
the appearance of political favoritism. The effect of these appointments was
to move two employees from noncareer SES appointments- from which incumbents
are usually asked to resign upon the advent of a new Administration- to
Schedule A appointments in positions which have some similar duties and
indefinite tenure. Customs? officials stated that the two employees would
not have appeal rights until they have served 2 years under their current
Schedule A appointments, which will not occur until January 2003. 8

Treasury?s Deputy Assistant Secretary for Human Resources said that she was
contacted on two occasions in January 2001 by Customs? Assistant
Commissioner for Human Resources regarding the pending appointments of two
noncareer SES employees to the Schedule A positions of law enforcement
appropriations officer and strategic trade adviser. As a result of these
discussions, the Deputy Assistant Secretary said that she was concerned
about whether the appointments would ?withstand the scrutiny inherent in the
procedures in place for the review of conversions of political employees,?
given that the former positions were political appointments and a new
Administration would be taking office on January 20, 2001. Customs?
officials said they believed the appointments- made on January 14, 2001-
were in full conformance with civil service laws, rules, and regulations.

The newly created Schedule A positions included some similar- but not
identical- duties to those of the SES positions of the political, noncareer
appointees. For example, the law enforcement appropriations officer?s
responsibilities, which included establishing and maintaining effective
working relationships with congressional staff, were similar but not

8 5 C. F. R. 432. 102 and 432.106 (a)( 4) and 5 C. F. R. 752. 401 (c)( 5).
Two Appointments Raised

Treasury?s Concern About Appearance of Favoritism

Page 11 GAO- 01- 1103 Customs? Schedule A Authority

identical to responsibilities of the appointee?s former SES position to
maintain contact with congressional staff whose actions have a direct
bearing on Customs? programs and policies. Similarly, the responsibilities
of the strategic trade adviser?s Schedule A position included advising the
Assistant Commissioner and other Customs? executives regarding trade
enforcement strategies and programs, while the responsibilities of the
former SES position included providing executive- level advice and counsel
in planning long- range regulatory programs.

In early February 2001, the Deputy Assistant Secretary expressed her
concerns to the Associate Director of OPM?s Employment Service about whether
the appointments complied with the Schedule A authority and whether the
timing of the appointments could give the appearance of political
favoritism. Subsequently, the Deputy Assistant Secretary referred the
appointments to OPM and asked OPM to determine whether the appointments were
an appropriate use of the authority. One month later, on March 12, 2001, OPM
informed the Treasury that both appointments were within the scope of the
authority. OPM officials said they based their determination on
justifications provided by Customs that described several special skills and
abilities required for each position that were impracticable to examine and
that OPM did not consider the political nature of the employees? former
positions or the appointments.

Notwithstanding the issues discussed above, the conversions of the three
Schedule A employees- who had been in Schedule A positions identical to two
newly created competitive service positions- to competitive service
positions complied with merit system principles and the appointment of
another Schedule A appointee to a limited- term SES position complied with
OPM guidance. Two of the appointees were converted to positions- a public
affairs specialist and a law enforcement specialist- with identical duties
and responsibilities as those they had filled under the Schedule A
authority. The third appointee- who also had previously been a law
enforcement specialist- converted to a different position, chief of staff.
OPM regulations do not address the conversion of excepted service appointees
to the identical positions in the competitive service if conducted in
compliance with merit system principles.

Records in Customs? merit- staffing files and other agency documents
indicated that merit- staffing procedures had been followed and the
principal requirements had been met for each of the three competitive
selections. For example, each of the job announcements for the three
positions was open for 5 business days- meeting OPM?s minimum Conversions of

Appointees Met Merit System Principles and OPM Policies

Page 12 GAO- 01- 1103 Customs? Schedule A Authority

requirement for an open period. In addition, Customs made the competitive
area of consideration for each of the three job announcements worldwide and
open to all qualified candidates. Customs also complied with OPM regulations
for the selection of eligible applicants, including the regulation that the
selectee must be from among the three highest- rated applicants. Otherwise,
the agency must provide a justification. For all three positions, the
selectees were the top- rated applicants for those positions. As also
required by OPM regulations, the selecting officials for each position did
not participate in rating or ranking the applicants for that position.

The establishment of an SES position- senior adviser- to be filled by a
limited- term appointment and the selection of a Schedule A appointee also
complied with OPM requirements for such SES appointments. OPM regulations
require the position?s term to be limited to 3 years or less and the
position?s duties and responsibilities to be primarily for project- type
activities that will expire in 3 years or less. Customs limited the term of
the position to 3 years, and most of the position?s duties appeared likely
to be completed within 3 years or less. For example, the incumbent is
responsible for implementing programs to ensure integrity and credibility
within the Office of Internal Affairs. The performance of such activities
could be completed within a limited period of time. OPM?s guidance governing
selection of an appointee does not require competition for such
appointments, but it does require the appointee to be qualified for the
position. In compliance with these regulations, Customs? appointing official
determined that the individual?s KSAs met the qualifications necessary to
perform the duties and responsibilities of the position and made the
selection.

OPM conducts oversight of federal agencies?- including Customs?-
singleagency Schedule A appointments and determines whether those
appointments comply with Schedule A authority. However, OPM?s sampling of
Customs? appointments did not include any of the appointments made under the
Schedule A authority. The occasional OPM survey that addresses, in part, the
continuing need for Schedule A authority was last conducted at Customs in
1998, prior to OPM?s approval of Customs? authority for 10 positions. Only
the review conducted at Treasury?s request addressed any of the nine
positions. OPM found the two positions to be within the scope of Customs?
authority.

The Civil Service Reform Act of 1978 requires OPM to carry out an oversight
program to ensure that agencies exercise their personnel OPM Performs

Oversight of Customs? Schedule A Authority

Page 13 GAO- 01- 1103 Customs? Schedule A Authority

management authorities in accordance with merit system principles and with
the law and regulations that implement those principles. 9 OPM?s Office of
Merit Systems Oversight and Effectiveness (OMSOE) performs periodic
oversight reviews of each agency?s human capital practices, including the
use of excepted service appointment authorities. Each of the departmental
agencies and independent agencies with larger numbers of employees-
including the Department of the Treasury- is subject to review every 4
years, and each of the smaller independent agencies is reviewed every 5
years. However, each office within an agency- such as Customs- is not
necessarily reviewed each time the agency is reviewed. The Assistant
Director for OMSOE said that each audit team determines which offices within
an agency will be reviewed based on a pre- site assessment of prior audit
reports and other sources.

OMSOE conducted an oversight review of Customs? appointments made during
1999 and issued a report in November 2000. The overall objective of the
review was to examine how managers, supervisors, and human capital
specialists work together to make decisions that support the mission of the
agency, contribute to public policy objectives, and are consistent with
merit system principles. The review covered three broad areas- staffing,
workforce management, and human capital management accountability. As part
of the staffing review, OMSOE reviewed appointment authorities granted to
Customs by OPM. In reviewing these authorities, OMSOE performed its standard
audit procedure of selecting a judgmental sample of the appointments for
review.

The two appointments that Customs had made under its Schedule A authority at
the time of the review of 1999 appointments were not selected as part of
OPM?s sample. The Assistant Director of OMSOE stated that OMSOE uses
?problem oriented? sampling to select appointments. That means that if OMSOE
officials have identified problems with a specific type of appointment
through such sources as employee complaints and periodic employee attitude
surveys, the audit team will include some of those appointments in the
sample of appointments it reviews. For example, during the Customs review,
OMSOE officials said that they randomly selected 9 of 174 Veterans
Readjustment Act appointments for that reason. The audit team?s decision to
limit its review to nine cases, according to an OMSOE auditor, was based on
the time and resources available.

9 5 U. S. C. 1104 (a)( 2).

Page 14 GAO- 01- 1103 Customs? Schedule A Authority

During the entire review of Customs, OMSOE sampled 54 (or about 3 percent)
of approximately 2,061 appointments, including 15 Schedule A appointments,
made during 1999. The Assistant Director said that because of the limited
sample, any conclusions developed from the analysis of appointments sampled
could not be projected as being representative of all the appointments for
the organization as a whole. The Assistant Director believes the judgmental
sampling technique is adequate because OMSOE is looking for systemic
problems.

OPM?s oversight of appointment authorities also includes occasional surveys
by OPM?s Employment Service. These surveys are not conducted regularly and,
in the case of Customs, were conducted most recently in 1982 and 1998. The
surveys primarily consisted of OPM?s requesting that Treasury justify the
continuing need for each of its appointment authorities. Treasury?s response
to OPM?s survey in July 1998 addressed the continuing need for Customs?
single- agency authority for criminal investigators. The response did not
apply to the 10 positions because the authority for those positions was not
granted to Customs until August 21, 1998, after the survey.

As discussed previously, at Treasury?s request, OPM reviewed the use of
Customs? Schedule A authority for two of the nine appointments made. That
review was limited to an assessment of whether the positions? duties and
responsibilities appeared to comply with the criteria for the authority.

We obtained comments on this report from the Director, OPM, and the Deputy
Assistant Secretary for Human Resources, Treasury, responding on behalf of
the Secretary of the Treasury. The Director said that OPM agreed with the
report?s conclusions that the appointments complied with merit system
principles and OPM guidance. The Director also expressed concern about the
appearance of political favoritism that surrounded two appointments and
consequently planned to conduct a review. In addition, because our report
presented information from Customs? representatives that appeared
inconsistent with Customs? original justification for the Schedule A
authority, OPM indicated it plans to review the basic justification for that
authority.

Treasury?s Deputy Assistant Secretary for Human Resources provided technical
comments that were incorporated in the report where appropriate.

OPM?s comments are reprinted in appendix II. Agency Comments

and Our Evaluation

Page 15 GAO- 01- 1103 Customs? Schedule A Authority

We performed our work in Washington, D. C., from October 2000 through May
2001 in accordance with generally accepted government auditing standards.
Additional information on the scope and methodology of our review is
presented in appendix I.

As arranged with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days after
the date of this letter. At that time, we will send copies to the Secretary
of the Treasury and the Director, OPM. We will also make copies available to
others on request at that time.

Major contributors to this report were Richard W. Caradine, Assistant
Director; Thomas C Davies, Jr., Project Manager; and John Ripper, Senior
Analyst. If you or your staff have any questions about this report, please
contact Mr. Davies or me at (202) 512- 9490.

Sincerely yours, George H. Stalcup Director, Strategic Issues

Appendix I: Scope and Methodology Page 16 GAO- 01- 1103 Customs? Schedule A
Authority

In order to determine the nature of and reasons for Treasury?s request for
Customs? Schedule A appointment authority for 10 positions, we asked
Customs? officials to explain their justification for requesting the
authority. We also reviewed the request letters and supporting documentation
that the Treasury Department submitted to OPM on behalf of Customs. To
determine OPM?s process for reviewing Treasury?s request, we interviewed OPM
officials, obtained and reviewed documents related to OPM?s review and
justification for approving the request, and obtained and reviewed the
pertinent laws and Code of Federal Regulations (C. F. R.) governing the
granting of Schedule A authorities.

To identify the circumstances surrounding the appointments Customs made
under the Schedule A authority and whether Customs used the authority
appropriately, we obtained from OPM and Customs listings of all Schedule A
appointments made under the single- agency Schedule A authority (5 C. F. R.
213.3105 (b)( 6) (1964)) from August 21, 1998- the date the authority was
approved- until May 31, 2001, and the related personnel files. 1 Based on
our reviews of these files and interviews with Customs? officials, we
identified the dates that the positions were created and appointments were
made, the titles and grades of the positions, and the duties and
responsibilities of each position. At our request Customs provided
justifications explaining why each of these positions met the criteria for
its Schedule A authority. We also reviewed laws, regulations, and procedures
that govern the use of Schedule A authority and determined that the
regulations do not specify criteria for determining when it is impracticable
to examine for a position. We compared the general requirements to the
position?s duties and responsibilities and exercised professional judgment
in assessing whether appointments appeared to be an appropriate use of the
single- agency Schedule A authority.

In addition, we met with Treasury Department officials to discuss Customs?
appointment of two of the agency?s noncareer SES employees to the Schedule A
positions of strategic trade adviser and appropriations officer. We did this
because Treasury officials had expressed concern regarding the two
appointments and had contacted OPM regarding whether these appointments
would be appropriate under Customs? single

1 We did not evaluate Customs? approach to identifying potential appointees
or the qualifications of the appointees because it was outside the scope of
the request. Appendix I: Scope and Methodology

Appendix I: Scope and Methodology Page 17 GAO- 01- 1103 Customs? Schedule A
Authority

agency authority. We also discussed with OPM officials their decisions
regarding these two appointments.

To determine whether Customs complied with merit system principles in
converting three of its nine Schedule A appointees to competitive service
positions, we applied the merit system principles established in Title 5 of
the United States Code (5 U. S. C. 2301) and OPM?s interpretation of those
principles in its Delegated Examining Operations Handbook. The handbook
describes the procedures and requirements intended to ensure compliance with
the merit system objective of fair and open competition. We compared the
handbook?s requirements to actions taken by Customs in announcing the
positions, evaluating the applicants, and making the selections. In
addition, to assess Customs? appointment of a Schedule A appointee to an SES
limited- term appointment, we applied the SES appointment criteria in OPM?s
Guide to the Senior Executive Service to the circumstances surrounding the
appointment.

To describe OPM?s oversight process and the extent of its oversight of
Customs? Schedule A appointments, we interviewed OPM officials and obtained
copies of OPM?s Oversight Evaluation Handbook, audit reports of Customs, and
OPM?s correspondence with Customs concerning the Schedule A authority, from
the date the authority was approved through May 31, 2001.

Appendix II: Comments From the Office of Personnel Management

Page 18 GAO- 01- 1103 Customs? Schedule A Authority

Appendix II: Comments From the Office of Personnel Management

(450007)

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