Human Capital Flexibilities (09-AUG-02, GAO-02-1050R).		 
                                                                 
Human capital flexibilities relate to the specific authorities	 
granted to GAO through legislation enacted in 1980 and 2000. The 
GAO Personnel Act of 1980 implemented a broad banded		 
pay-for-performance system for GAO analysts and specialists and  
certain special Comptroller General appointment authorities that 
were granted by Congress. The October 2000 Personnel		 
Flexibilities Act gave GAO additional tools to realign its	 
workforce in light of mission needs and overall budgetary	 
constraints; correct skills imbalances; and reduce high-grade,	 
managerial, or supervisory positions without reducing the overall
number of GAO employees. GAO believes that these tools have	 
provided the agency with much needed flexibility to deliver on	 
its mission in an efficient, effective and economical manner	 
while incorporating adequate safeguards to prevent abuse of	 
employees.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-1050R					        
    ACCNO:   A04562						        
  TITLE:     Human Capital Flexibilities			      
     DATE:   08/09/2002 
  SUBJECT:   Federal legislation				 
	     Human resources utilization			 
	     Personnel management				 

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GAO-02-1050R
     
GAO- 02- 1050R Human Capital Flexibilities United States General Accounting
Office

Washington, DC 20548 Comptroller General

of the United States

August 9, 2002 The Honorable Fred Thompson Ranking Minority Member Committee
on Governmental Affairs United States Senate

Dear Senator Thompson: I am pleased to respond to your request for
information about GAO?s use of our special human capital flexibilities.
These flexibilities relate to the specific authorities granted to GAO
through legislation enacted in 1980 and 2000.

1980 PERSONNEL ACT:

As a result of the GAO Personnel Act of 1980, we implemented a broad banded
payfor- performance system for GAO analysts and specialists and certain
special Comptroller General appointment authorities that were granted to us
by the Congress. A primary goal of our broad banded pay for performance
system is to reward staff on the basis of knowledge, skills, and performance
as opposed to the passage of time. It also provides managers with additional
flexibility to assign and use staff in a manner that is more suitable to
multi- tasking and the full utilization of available staff. Our current
broad banded system for analysts and specialists places staff in three bands
rather than in Grades 7 through 15. The pay ranges for each band closely
approximate the GS- equivalents. For example, Band II ranges from about
GS13, step 1 to GS- 14, step 10. Importantly, careful design and effective
implementation is crucial to obtaining the benefits of broad- banding in an
equitable and cost effective manner.

As a result of the 1980 Act, the Comptroller General has authority to direct
hire up to 15 experts and consultants, on a non- competitive basis, at any
level including the SES, with renewable terms up to 3 years each. GAO has
used this authority in selected cases and found it to be very valuable in
filling critical time- sensitive positions within the agency.

2000 PERSONNEL FLEXIBILITIES ACT:

Our October 2000 legislation gave us additional tools to realign our
workforce in light of mission needs and overall budgetary constraints;
correct skills imbalances; and

GAO- 02- 1050R Human Capital Flexibilities Page 2

reduce high- grade, managerial, or supervisory positions without reducing
the overall number of GAO employees. This legislation allowed us to (1) make
targeted voluntary early retirement and/ or buyout offers to certain
employee groups, (2) create senior level positions at compensation levels
and benefits consistent with Senior Executive Service (SES) positions to
address our ongoing need for scientific, technical, and professional career
expertise, and (3) give much greater consideration to employee performance,
skills and knowledge in any reduction- in- force actions. The development of
the agency?s regulations involved collaboration with our Employee Advisory
Council and consideration of employee comments. Since the legislation was
enacted, we have

established agency regulations and conducted our first voluntary early
retirement offer. Once employees registered their interest in participating
in the program, we considered a number of factors including employee
knowledge, skills, performance, and competencies; the organizational unit or
subunit in which an employee worked; an employee?s occupational series,
grade, or band level, as appropriate; and the geographic location of the
employee. As authorized by the 2000 legislation, employee performance was
just one of many factors we considered when deciding which employees would
be granted early retirement. However, let me assure you, we did not use
performance as a basis to target certain individuals. Eighty- one employees
submitted applications, 57 of these applicants were approved, 6 were
disapproved, and 18 employees withdrew their applications. Most employees
left GAO between October 1, 2001 and January 3, 2002. The remaining
employees will leave GAO no later than the end of fiscal year 2002. The
positions and resources freed up from this effort are reallocated to address
more critical needs of the Congress and the agency;

not begun drafting regulations to authorize voluntary buy- outs since, due
to the high cost of retirement fund contributions, we do not have any
current plans to use this authority;

developed agency regulations and established nine senior level positions, of
which 7 have been filled; and

begun drafting our reduction- in- force regulations, which will be published
for comments shortly.

We believe the above tools have provided GAO with much needed flexibility to
deliver on our mission in an efficient, effective and economical manner
while incorporating adequate safeguards to prevent abuse of employees. For
example, our use of voluntary early retirement authority helped us realign
versus downsize GAO and to strengthen our efforts to have the right staff
with the right skills in the right locations to better meet the needs of the
Congress and the agency. These authorities benefit our employees, the
Congress, and ultimately the American people by helping us improve our
performance and ensure our accountability.

In addition to the above special legislative authorities, we, have
implemented a number of other actions to modernize our human capital
policies, procedures, and practices. While authority to take these actions
is generally available to many federal agencies, they are rarely used to any
significant extent. For example, we use

GAO- 02- 1050R Human Capital Flexibilities Page 3

recruiting, retention and other incentives to attract and retain talented
employees. We have streamlined our hiring process and used our internship
program to offer permanent employment to those interns who complete 10 weeks
of highly successful work experience. We also have implemented a number of
innovative employee empowerment and benefit programs (e. g., Employee
Advisory Council, employee surveys, transportation subsidies, child care
facilities and student loan repayment). Importantly, we have also recently
redesigned our performance appraisal system to better link it to our
strategic plan, core values and desired outcomes. This new system will be
linked to a revised pay, promotion and rewards system that is ?stateof-

the art? for a professional services organization. As we engage in these
important changes, we know that GAO is not perfect and we never will be. Our
transformation effort is a work- in- progress for us as it is for others.
Our approaches are not the only way for agencies to proceed, but they can
help others identify ways to address their individual human capital
challenges. In this regard, we have shared our lessons and experiences with
others, and are happy to do so. We have also provided a range of tools and
methodologies to ?help others help themselves? in this critically important
area. 1

We are striving to be in the vanguard of the federal government?s efforts to
modernize human capital strategies. At GAO, our people are our most valuable
asset and it is only through their combined efforts that we can effectively
serve the Congress and our country. In this regard, our human capital
flexibilities and our commitment to

?lead by example? in transforming the way that government does business are
clearly paying large dividends to the Congress and the American people as
evidenced in our recent Annual Performance and Accountability Report.

I look forward to continuing to work with you, the Congress, the Office of
Personnel Management, the Office of Management and Budget, agencies, and
other interested parties as we jointly seek to ensure that the federal
government modernizes its human capital strategies in order to maximize
performance, assure accountability, transform itself, and prepare for the
future.

Sincerely yours, David M. Walker Comptroller General of the United States

1 For examples of the tools provided to agencies, see Human Capital: A Self-
Assessment Checklist for Agency Leaders, GAO/ OGC- 00- 14G, September 2000
and A Model of Strategic Human Capital Management, GAO- 02- 373SP, March 15,
2002.
*** End of document. ***