GAO: Additional Human Capital Flexibilities Are Needed
(16-JUL-03, GAO-03-1024T).
The Subcommittee on Civil Service and Agency Organization, House
Committee on Government Reform seeks GAO's views on its latest
human capital proposal that is slated to be introduced as a bill
entitled the GAO Human Capital Reform Act of 2003.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-03-1024T
ACCNO: A07553
TITLE: GAO: Additional Human Capital Flexibilities Are Needed
DATE: 07/16/2003
SUBJECT: Congressional powers
Federal agency reorganization
Federal legislation
Government employees
Personnel management
Proposed legislation
Agency missions
Congressional oversight
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GAO-03-1024T
A
Test i mony Before the Subcommittee on Civil Service and Agency
Organization, Committee on Government Reform, House of Representatives
For Release on Delivery Expected at 2: 00 p. m. EDT GAO Wednesday, July
16, 2003 Additional Human Capital
Flexibilities Are Needed Statement of David M. Walker Comptroller General
of the United States
GAO- 03- 1024T
Madam Chairwoman and Members of the Subcommittee: I am pleased to be here
today to discuss GAO*s latest human capital proposal. Chairwoman Davis, we
at GAO appreciate your support of our proposal and your leadership in
seeking additional sponsors for the bill you plan to introduce, the GAO
Human Capital Reform Act of 2003.
As I have testified on many occasions, strategic human capital management
must be the centerpiece of any serious government transformation effort. A
key component of this is modern, effective, and credible human capital
policies, which are critical to the successful functioning of any
enterprise,
both public and private. As the Chief Executive Officer and primary
steward of GAO, I am not just responsible for GAO*s current economy,
efficiency, and effectiveness, I am also responsible for ensuring that we
are
well positioned to serve our congressional clients, maximize our
performance, and assure our accountability in the future. With this
important responsibility in mind, I asked this committee and
others over 3 years ago to grant GAO certain additional narrowly tailored
human capital authorities. In enacting Public Law 106- 303, known as the
GAO Personnel Flexibilities Act, the Congress granted GAO certain
flexibilities, which we have used responsibly to help strategically
reshape the organization in order to better support the Congress and the
American people. After reviewing the range and limits of our existing
administrative and legal authorities, I have concluded that we now need to
seek from the Congress additional human capital flexibilities in order for
GAO to: ensure quality service to the Congress; continue leading by
example in the government transformation, in general, and human capital
reform areas in particular; and continue to attract, retain, motivate, and
reward a quality
and high- performing workforce, both currently and in future years. We
believe that our proposal is well reasoned and reasonable, especially if
viewed in the light of authorities already granted and requested by other
agencies and the extensive external and internal outreach efforts we have
conducted. We also respectfully request your support and prompt passage
by the Congress. GAO: A Unique Agency As an arm of the legislative branch,
GAO exists to support the Congress in with a Hybrid System meeting its
constitutional responsibilities and to help improve the performance and
ensure the accountability of the federal government for the benefit of the
American people. Today, GAO is a multidisciplinary professional services
organization, comprised of about 3,250 employees,
that conducts a wide range of financial and performance audits, program
evaluations, management reviews, investigations, and legal services
spanning a broad range of government programs and functions. GAO*s work
covers everything from the challenges of securing our homeland, to the
demands of an information age, to emerging national security threats, and
the complexities of globalization. We are committed to transforming how
the federal government does business and to helping government
agencies become organizations that are more results oriented and
accountable to the public. We are also committed to leading by example in
all major management areas.
Given GAO*s role as a key provider of information and analyses to the
Congress, maintaining the right mix of technical knowledge and subject
matter expertise as well as general analytical skills is vital to
achieving the agency*s mission. Carrying out GAO*s mission today is a
multidisciplinary staff reflecting the diversity of knowledge and
competencies needed to deliver a wide array of products and services to
support the Congress. Our mission staff* at least 67 percent of whom have
graduate degrees* hold degrees in a variety of academic disciplines, such
as accounting, law, engineering, public administration, economics, and
social and physical sciences. I am extremely proud of our GAO employees
and the difference
that they make for the Congress and the nation. They make GAO the world-
class organization that it is, and I think it is fair to say that while
they account for about 80 percent of our costs, they constitute 100
percent of our real assets. Because of our unique role as an independent
overseer of federal
expenditures, fact finder, and honest broker, GAO has evolved into an
agency with hybrid systems. This is particularly evident in GAO*s
personnel and performance management systems. Unlike many executive branch
agencies, which have either recently received or are just requesting new
broad- based human capital tools and flexibilities, GAO has had certain
human capital tools and flexibilities for over two decades. As a result,
we have been able to some extent to operate our personnel system with a
degree of independence that most agencies in the executive branch do not
have. For example, we are excepted from certain provisions of Title 5,
which governs the competitive service, and we are not subject to Office of
Personnel Management (OPM) oversight.
Until 1980, our personnel system was indistinguishable from those of
executive branch agencies* that is, GAO was subject to the same laws,
regulations, and policies as they were. However, with the expansion of
GAO*s role in congressional oversight of federal agencies and programs,
concerns grew about the potential for conflicts of interest. Could GAO
conduct independent and objective reviews of executive branch agencies,
such as OPM, when these agencies had the authority to review GAO*s
internal personnel activities? As a result, GAO worked with the Congress
to pass the GAO Personnel Act of 1980, the principal goal of which was to
avoid potential conflicts by making GAO*s personnel system more
independent of the executive branch. Along with this independence, the act
gave GAO greater flexibility in hiring
and managing its workforce. Among other things, it granted the Comptroller
General authority to
appoint, promote, and assign employees without regard to Title 5
requirements in these areas;
set employees* pay without regard to the federal government*s General
Schedule (GS) pay system*s classification standards and requirements; and
establish a merit pay system for appropriate officers and employees. By
excepting our agency from the above requirements, the GAO Personnel Act of
1980 allowed us to pursue some significant innovations in managing our
people. One key innovation was the establishment of a *broad banding,* or
*pay banding,* approach for classifying and paying our Analyst
and Attorney workforce in 1989. This was coupled with the adoption of a
pay for performance system for this portion of our workforce. Therefore,
while other agencies are only now requesting the authority to establish
broad banding and pay for performance systems, GAO has had almost 15 years
of experience with such systems. Although GAO*s personnel and pay systems
are not similar to those of many executive branch agencies, I must
emphasize that in important ways,
our human capital policies and programs are very much and will continue to
remain similar to those of the larger federal community. GAO*s current
human capital proposal will not change our continued support for certain
national goals (e. g., commitment to federal merit principles, protection
from prohibited personnel practices, employee due process through a
specially created entity* the Personnel Appeals Board (PAB), and
application of veterans* preference consistent with its application in the
executive branch for appointments and all appropriate reductions- in-
force). Furthermore, our pay system is and will continue to be consistent
with the statutory principle of equal pay for equal work while making pay
distinctions on the basis of an individual*s responsibilities and
performance. In addition, we are covered and will remain covered by Title
VII of the Civil Rights Act, which forbids employment discrimination. At
GAO, we also emphasize opportunity and inclusiveness for a diverse
workforce and have zero tolerance for discrimination of any kind. We have
taken and will continue to take disciplinary action when it *will promote
the efficiency of the service** which for us includes such things as GAO*s
ability to do its work and accomplish its mission.
Although we are not subject to OPM oversight, we are nevertheless subject
to the oversight of the Congress including our appropriations committees*
the Senate Committee on Appropriations* Subcommittee on the Legislative
Branch and the House Committee on Appropriations* Subcommittee on
Legislative* and our oversight committees* the Senate Committee on
Governmental Affairs and the House Committee on Government Reform. In
addition, GAO*s management actions are subject
to the review of an independent five member board, the Personnel Appeals
Board, which performs functions similar to those provided by the Merit
Systems Protection Board for federal executive branch employees* personnel
grievances. The Congress authorized the establishment of the
PAB specifically for GAO in order to protect GAO*s independence as an
agency. As with other federal executive branch employees, our employees
have the right to appeal certain kinds of management actions including
removal, suspension for more than 14 days, reductions in pay or grade,
furloughs of not more than 30 days, a prohibited personnel practice, an
action involving prohibited discrimination, a prohibited political
activity, a within- grade denial, unfair labor practices or other labor
relations issue. However, they do so to the PAB rather than the MSPB.
While we currently do not have any bargaining units at GAO, our employees
are free to join employee organizations, including unions. In addition, we
engage in a range of ongoing communication and coordination efforts to
empower our employees while tapping their ideas. For example, we regularly
discuss a range of issues of mutual interest and concern with
our democratically elected Employee Advisory Council (EAC). Chris
Keisling, who is a Band III field office representative of the EAC, is
testifying with me today. In addition, I consult regularly with our
managing directors on issues of mutual interest and concern. In that
spirit, I will consult with the managing directors and the EAC before
implementing the
provisions related to our human capital proposal. As we did with the
flexibilities granted it under Public Law 106- 303, the GAO Personnel
Flexibilities Act, we will implement the authorities granted under this
provision of our proposal only after issuing draft regulations and
providing all employees notice and an opportunity for comment.
Specifically, for the authorities granted to us under Public Law 106- 303,
we posted the draft regulations on our internal Web site and sent a notice
to all GAO staff advising them of the draft regulations and seeking their
comments. Key Elements of GAO*s
GAO*s proposal combines diverse initiatives that, collectively, should
Proposal
further GAO*s ability to enhance our performance, assure our
accountability, and help ensure that we can attract, retain, motivate, and
reward a top quality and high- performing workforce currently and in
future years. These initiatives should also have the benefit of helping
guide other
agencies in their human capital transformation efforts. Specifically, we
are requesting that the Congress provide us the following additional human
capital tools and flexibilities:
make permanent GAO*s 3- year authority to offer voluntary early
retirement and voluntary separation payments; allow the Comptroller
General to adjust the rates of basic pay of GAO on
a separate basis than the annual adjustments authorized for employees of
the executive branch;
permit GAO to set the pay of an employee demoted as a result of
workforce restructuring or reclassification at his or her current rate
with no automatic annual increase to basic pay until his or her salary is
less than the maximum rate of their new position;
provide authority in appropriate circumstances to reimburse employees
for some relocation expenses when that transfer does not meet current
legal requirements for entitlement to reimbursement but still benefits
GAO;
provide authority to put upper- level hires with less than 3 years of
federal experience in the 6- hour leave category; authorize an executive
exchange program with private sector organizations working in areas of
mutual concern and involving areas in which GAO has a supply- demand
imbalance; and
change GAO*s legal name from the *General Accounting Office* to the
*Government Accountability Office.* I will go into more detail later in my
testimony on the details and rationale for each of these proposals.
Process for Developing In developing our proposal, we used a phased
approach that involved the Proposal
(1) developing a straw proposal, (2) vetting the straw proposal broadly
both externally and internally, and (3) making appropriate adjustments
based on comments and concerns raised during the vetting process. As we
have previously testified, many of the management tools and flexibilities
we needed to pursue modern human capital management approaches are already
available to us and we have used them. We have chosen to come to the
Congress for legislation only where the tools and flexibilities we have
were inadequate for addressing the challenges we faced. For example, the
Congress enacted Public Law 106- 303 to provide us with certain narrowly
tailored flexibilities we needed to reshape our workforce and establish
senior- level technical positions in critical areas. These flexibilities
were needed to help GAO address the past decade*s dramatic downsizing
(approximately 40 percent from 1992 through 1997) combined with a
significant increase in the retirement- eligible workforce that
jeopardized our ability to perform our mission in the years ahead.
In developing our preliminary proposal, we gathered suggestions for
addressing GAO*s human capital challenges as well as challenges faced by
the rest of the federal government, discussed and debated them internally,
and compiled a preliminary list of proposals. We received a number of
viable proposals that we separated into two groups: (1) proposals that
would be more applicable government- wide and (2) proposals GAO should
undertake. I had our Office of General Counsel review the proposals GAO
should undertake to determine whether we needed to seek legislative
authority to implement them or whether I could implement them under the
Comptroller General*s existing authority. Mindful of the need to keep the
Congress appropriately informed, my staff
and I began our outreach to GAO*s appropriations and oversight committees
on the need for additional human capital flexibilities beginning late last
year. In early spring of this year, we shared with these committees a
confidential draft of a preliminary draft proposal. We also advised them
that we planned to conduct a broad range of outreach and consultation on
the proposal with our employees and other interested parties and that we
would send them our revised legislative proposal at a later date. We
conducted an extensive outreach and consultation effort with members of
the Congress, including chairmen and ranking minority members of our
appropriations and oversight committees and a number of local delegation
members; congressional staff; the Director of OPM; the Deputy Director for
Management of the Office of Management and Budget; public sector employee
associations and unions; and various *good government* organizations.
Within GAO, members of the Executive Committee (EC), which includes our
Chief Operating Officer, our General Counsel, our Chief Mission Support
Officer and me, engaged in an extensive and unprecedented range
of outreach and consultation with GAO employees. This outreach included
numerous discussions with our managing directors, who manage most of GAO*s
workforce, and members of the EAC.
The EAC is an important source of input and a key communications link
between executive management and the constituent groups its members
represent. Comprising employees who represent a cross- section of the
agency, the EAC meets at least quarterly with me and members of our
senior executive team. The EAC*s participation is an important source of
front- end input and feedback on our human capital and other major
management initiatives. Specifically, EAC members convey the views and
concerns of the groups they represent, while remaining sensitive to the
collective best interest of all GAO employees; propose solutions to
concerns raised by employees; provide input to and comment on GAO
policies, procedures, plans, and practices; and help to communicate
management*s issues and concerns to employees.
I have also used my periodic *CG chats,* closed circuit televised
broadcasts to all GAO employees, as a means of explaining our proposal and
responding to staff concerns and questions. Specifically, I have held two
televised chats to inform GAO staff about the proposal. One of these chats
was conducted in the form of a general listening session, open to all
headquarters and field office staff, featuring questions from members of
the EAC and field office employees. I have also discussed the proposal
with the Band IIs (GS- 13- 14 equivalents) in sessions held in April 2003,
and
with our Senior Executive Service (SES) and Senior Level members at our
May off- site meeting. In addition to my CG chats, I have personally held
a number of listening sessions, including a session with members of our
Office of General Counsel, two sessions with our administrative support
staff, and sessions with staff in several field offices. Furthermore, the
Chief
Operating Officer represented me in a listening session with Band I field
office personnel. Finally, I have also personally received and considered
a number of E- mails, notes, and verbal comments on the human capital
proposal. I would like to point out to others seeking human capital
flexibilities that
the outreach process, while necessary, is indeed time- consuming and
requires real and persistent commitment on the part of an agency*s top
management team. In order for the process to work effectively, it also
requires an ongoing education and dialogue process that will, at times,
involve candid, yet constructive, discussion between management and
employees. This is, however, both necessary and appropriate as part of the
overall change management process. To facilitate the education process on
the proposal, we posted materials on GAO*s internal website, including
Questions and Answers developed in response to employees* questions and
concerns, for all employees to review. Unfortunately, others who have
sought and are seeking additional human capital flexibilities have not
employed such an extensive outreach process.
Nature of GAO Based on feedback from GAO employees, there is little or no
concern
Employee Concerns relating to most of the provisions in our proposal.
There has been
significant concern expressed over GAO*s proposal to decouple GAO*s pay
system from that of the executive branch. Some concerns have also been
expressed regarding the pay retention provision and the proposed name
change. As addressed below, we do believe, however, that these employee
concerns, have been reduced considerably due to the clarifications,
changes, and commitments resulting from our extensive outreach and
consultation effort.
On the basis of various forms of GAO employee feedback, it is not
surprising, since pay is important to all employees, that the provision
that has caused the most stir within GAO has been the pay adjustment
provision. Fundamentally, some of our employees would prefer to remain
with the executive branch*s GS system for various types of pay increases.
There are others close to retirement who are concerned with their *high
three* and how the modified pay system, when fully implemented, might
affect permanent base pay, which is the key component of their retirement
annuity computation. Overall, there is a great desire on the part of GAO
employees to know specifically how this authority would be implemented.
It is important to note that, even in the best of circumstances, it is
difficult to garner a broad- based consensus of employee support for any
major pay system changes. While it is my impression, based on employee
feedback, that we have made significant strides in allaying the
significant initial concerns expressed by employees regarding the pay
adjustment provision, I believe that some of these concerns will remain
throughout implementation. In addition, some can never be resolved because
they involve philosophical differences or personal interest considerations
on behalf of individual GAO employees.
GAO*s history with pay banding certainly is illustrative of how difficult
it is for an organization to allay employee fears even in the face of
obvious benefits. While history has proven that an overwhelming majority
of GAO employees have benefited from GAO*s decision to migrate our
Analysts and Attorneys into pay banding and pay for performance systems,
there was significant opposition by GAO employees regarding the decision
to move into these systems. The experience of the executive branch*s pay
demonstration projects involving federal science and technology
laboratories shows that employee support at the beginning of the pay
demonstration projects ranged from 34 percent to 63 percent. In fact, OPM
reports that it takes about 5 years to get support from two- thirds of
employees with managers generally supporting demonstrations at a higher
rate than employees. Following the pay adjustment provision but a distant
second in terms of employee concern, has been the pay reclassification
provision, which would allow GAO employees demoted as a result of
workforce restructuring or reclassification to keep their basic pay rates;
however, future pay increases would be set consistent with the new
positions* pay parameters. Currently, employees subject to a reduction-
in- force or reclassification can be paid at a rate that exceeds the value
of their duties
for an extended period. A distant third in terms of employee concern is
the proposed name change from the *General Accounting Office* to the
*Government Accountability Office,* which would allow the agency*s title
to more accurately reflect its mission, core values, and work. My sense is
that some GAO employees who have been with GAO for many years have grown
comfortable with the name and may prefer to keep it. At the same time, I
believe that a significant majority of our employees support the proposed
name change. Importantly, all of our external advisory groups, including
the Comptroller General*s Advisory Council, consisting of distinguished
individuals from
the public and private sectors, and the Comptroller General*s Educators
Advisory Council, consisting of distinguished individuals from the
academic community, and a variety of *good government* groups strongly
support the proposed name change. Changes Made in
The members of the EC and I took our employees* feedback seriously and
Response to Employee
have seriously considered their concerns. Key considerations in our
decision making were our institutional responsibility as leaders and
Feedback
stewards of GAO and the overwhelming support expressed through anonymous
balloting by our senior executives, who also serve as leaders and stewards
for GAO, for proceeding with all of the provisions of our human capital
proposal, including the pay adjustment provision. Specifically, in a
recent confidential electronic balloting of our senior
executives, support for each element of our proposal ranged from over 2 to
1 to unanimous, depending on the provision. Support for the proposed pay
adjustment provision was over 3 to 1, and support for the proposed pay
protection provision was over 4 to 1. Given this and other considerations,
ultimately, we decided to proceed with the proposal but adopted a number
of the suggestions made by employees in these sessions, including several
relating to the proposal to decouple GAO annual pay adjustments from those
applicable to many executive branch agencies. A key suggestion adopted
include a minimum 2- year transition period for
ensuring the smooth implementation of the pay provisions which would also
allow time for developing appropriate methodologies and issuing
regulations for notice and comment by all employees. Another key
suggestion adopted was the commitment to guarantee annual across the board
purchase power protection and to address locality pay considerations to
all employees rated as performing at a satisfactory level or above (i. e.,
meeting expectations or above) absent extraordinary
economic circumstances or severe budgetary constraints. We have chosen to
implement this guarantee through a future GAO Order rather than through
legislative language because prior *pay protection* guarantees relating to
pay banding made by my predecessor, Comptroller General Charles A.
Bowsher, used this means effectively to document and operationalize that
guarantee. I have committed to our employees that I
would include this guarantee in my statement here today so that it could
be included as part of the legislative record. Additional safeguards
relating to our pay proposal are set forth below.
The following represents additional information regarding our specific
proposal.
Voluntary Early Section 2 of our proposal would make permanent the
authority of GAO
Retirement and under section 1 and 2 of Public Law 106- 303, the GAO
Personnel
Flexibilities Act of 2000, to offer voluntary early retirements (commonly
Separation Incentive
termed *early outs*) and voluntary separation payments (commonly Payment
Authorities
termed *buyouts*) to certain GAO employees when necessary to realign GAO*s
workforce in order to meet budgetary or mission needs, correct skill
imbalances, or reduce high- grade positions. We believe that we have
behaved responsibly in exercising the flexibilities that the Congress
granted us and deserve a permanent continuation of these authorities. In
addition, the two flexibilities which we would like to be made permanent
are narrowly drawn and voluntary in nature, since the employees have the
right to decide if they are interested in being considered for the
benefits. Further, the provisions also have built in limits: no more than
10 percent of the workforce in any one year can be given early outs and no
more than 5 percent can be given buyouts.
GAO*s transformation effort is a work in progress, and for that reason,
the agency is seeking legislation to make the voluntary early retirement
provision in section 1 of the law permanent. While the overall number of
employees electing early retirement has been relatively small, GAO
believes that careful use of voluntary early retirement has been an
important tool in incrementally improving the agency*s overall human
capital profile. Each separation has freed resources for other uses,
enabling GAO to fill an entry- level position or to fill a position that
will reduce a skill gap or address other succession concerns. Similarly,
we are seeking legislation to make section 2* authorizing the payment of
voluntary separation incentives* permanent. Although GAO has not yet used
its buyout authority and has no plans to do so in the foreseeable future,
we are seeking to retain this flexibility. The continuation of this
provision maximizes the options available to the agency to deal with
future circumstances, which cannot be reasonably anticipated at this time.
Importantly, this provision seems fully appropriate since the Homeland
Security Act of 2002 provides most federal agencies with permanent early
out and buyout authority.
Public Law 106- 303 required that GAO perform an assessment of the
exercise of the authorities provided under that law, which included the
authority for the Comptroller General to provide voluntary early
retirement
and voluntary separation incentive payments. With your permission, I would
like to submit the assessment entitled Assessment of Public Law 106- 303:
The Role of Personnel Flexibilities in Strengthening GAO*s Human Capital,
issued on June 27, 2003, for the record. I will now highlight for you our
observations from that assessment on voluntary early retirement and
buyouts.
Voluntary Early Retirement Public Law 106- 303 also allows the Comptroller
General to offer voluntary early retirement to up to 10 percent of the
workforce when necessary or appropriate to realign the workforce to
address budgetary or mission constraints; correct skill imbalances; or
reduce high- grade, supervisory, or managerial positions. This flexibility
represents a proactive use of early
retirement to shape the workforce to prevent or ameliorate future
problems. GAO Order 2931.1, Voluntary Early Retirement, containing the
agency*s final regulations, was issued in April 2001. Under the
regulations, each time the Comptroller General approves a voluntary early
retirement opportunity, he establishes the categories of employees who are
eligible to apply. These categories are based on the need to ensure that
those employees who are eligible to request voluntary early retirement are
those whose separations are consistent with one or more of the three
reasons for which the Comptroller General may authorize early retirements.
Pursuant to GAO*s regulations, these categories are defined in terms of
one or more of the following criteria:
organizational unit or subunits, occupational series, grade or band
level, skill or knowledge requirements, performance appraisal average,
geographic location, or other similar factors that the Comptroller
General deems necessary and
appropriate. Since it is essential that GAO retain employees with critical
skills as well as its highest performers, certain categories of employees
have been ineligible
under the criteria. Some examples of ineligible categories are employees
receiving retention allowances because of their unusually high or unique
qualifications; economists, because of the difficulty that the agency has
experienced in recruiting them; and staff in the information technology
area. In addition, employees with performance appraisal averages above a
specified level have not been eligible under the criteria.
To give the fullest consideration to all interested employees, however,
any employee may apply for consideration when an early retirement
opportunity is announced, even if he or she does not meet the stated
criteria. Furthermore, under our order, the Comptroller General may
authorize early retirements for these applicants on the basis of the facts
and circumstances of each case. The Comptroller General or his EC designee
considers each applicant and makes final decisions based on GAO*s
institutional needs. Only employees whose release is consistent
with the law and GAO*s objective in allowing early retirement are
authorized to retire early. In some cases, this has meant that an
employee*s request must be denied. GAO held its first voluntary early
retirement opportunity in July 2001.
Employees who were approved for early retirement were required to separate
in the first quarter of fiscal 2002. As required by the act, information
on the fiscal 2002 early retirements was reported in an appendix to our
2002 Performance and Accountability Report. Another voluntary early
retirement opportunity was authorized in fiscal 2003, and employees were
required to separate by March 14, 2003. In anticipation of the 3- year
sunset on our authority to provide voluntary early retirements, I have
recently announced a final voluntary early retirement opportunity under
our current authority. Table 1 provides the data on the number of
employees separated by voluntary early retirement as of May 30, 2003.
Table 1: Summary Data on Voluntary Early Retirements Fiscal 2002 Fiscal
2003 Totals Applications/ Status
Percentage Percentage Percentage of applications Number of total Number of
total Number of total
Total applications submitted 78 100. 0 39 100. 0 117 100.0 Approved
applications 72 92. 3 37 94. 8 109 93.1 Disapproved applications 6 7.7 2
5.1 8 6.8 Approved applications withdrawn by employees 18 23. 0 12 30. 7
30 25.6
Applicants separated by voluntary early retirement 54 69. 3 25 64. 1 79
67.5 Source: GAO.
As you can see from the table, of the 79 employees who separated from GAO
through voluntary early retirement, 66, or 83.5 percent, were highgrade,
supervisory, or managerial employees. High- grade, supervisory, or
managerial employees are those who are GS- 13s or above, if covered by
GAO*s GS system; Band IIs or above, if covered by GAO*s banded systems
for Analysts and Attorneys; or in any position in GAO*s SES or Senior-
Level system.
In recommending that GAO*s voluntary early out authority be made
permanent, I would like to point to our progress in changing the overall
shape of the organization. The 1990s were a difficult period for ensuring
that GAO*s workforce would remain appropriately sized, shaped, and skilled
to meet client demands and agency needs. Severe downsizing of the
workforce, including a suspension of most hiring from 1992 through 1997,
and constrained investments in such areas as training, performance
incentives, rewards, and enabling technology left GAO with a range of
human capital and operational challenges to address. Over 3 years ago,
when GAO sought additional human capital flexibilities, our workforce was
sparse at the entry level and plentiful at the midlevel. We were concerned
about our ability to support the Congress with experienced and
knowledgeable staff over time, given the significant percentage of the
agency*s senior managers and analysts reaching retirement eligibility and
the small number of entry- level employees who were training to replace
more senior staff.
As illustrated in figure 1, by the end of fiscal year 2002, GAO had almost
a 74 percent increase in the proportion of staff at the entry level (Band
I)
compared with fiscal year 1998. Also, the proportion of the agency*s
workforce at the midlevel (Band II) decreased by 16 percent. Figure 1:
GAO*s Human Capital Profile FY 1998 FY 2002 Mission
SES/ SL 3.4
3.5 Band III 12.2
12.0 Band II
45.6 38.1
Band I 13.1
22.8 Other a
4.2 4.1 Mission Support b
21.5 19.5
Figures in percentages
Source: GAO.
Voluntary Separation In addition to authorizing voluntary early retirement
for GAO employees,
Payments Public Law 106- 303 permits the Comptroller General to offer
voluntary
separation incentive payments* buyouts* when necessary or appropriate to
realign the workforce to meet budgetary constraints or mission needs;
correct skill imbalances; or reduce high- grade, supervisory, or
managerial positions. Under the act, up to 5 percent of employees could be
offered such an incentive, subject to criteria established by the
Comptroller General. The act requires GAO to deposit into the U. S.
Treasury an amount
equivalent to 45 percent of the final annual basic salary of each employee
to whom a buyout is paid. The deposit is in addition to the actual buyout
amount, which can be up to $25,000 for an approved individual. Given the
many demands on agency resources, these costs present a strong financial
disincentive to use the provision if at all. GAO anticipates little, if
any, use of this authority because of the associated costs. For this
reason, as well as to avoid creating unrealistic employee expectations,
GAO has not developed and issued agency regulations to implement this
section of the act. Nevertheless, as stated earlier, it is prudent for us
to seek the continuation of this provision because it maximizes the
options available to the agency to deal with future circumstances. Since
GAO is also eligible to request buyouts under the provisions of the
Homeland Security Act, the
agency will consider its options under this provision as well. However,
under the Homeland Security Act, GAO would have to seek OPM approval of
any buyouts, which raises serious independence concerns.
Annual Pay Setting Section 3 and 4 of our proposal would provide GAO
greater discretion in
Policy and determining the annual across the board and locality pay
increases for our
employees. Under our proposal, GAO would have the discretion to set
Adjustments
annual pay increases by taking into account alternative methodologies from
those used by the executive branch and various other factors, such as
extraordinary economic conditions or serious budgetary constraints. While
the authority requested may initially appear to be broad based, there
are compelling reasons why GAO ought to be given such authority. First, as
I discussed at the beginning of my testimony, GAO is an agency within the
legislative branch and already has a hybrid pay system established under
the authority the Congress granted over two decades ago. Therefore, our
proposal represents a natural evolution in GAO*s pay for performance
system. Second, GAO*s proposal is not radical if viewed from the vantage
point of the broad- based authority that has been granted the Department
of Homeland Security (DHS) under the Homeland Security Act of 2002;
agencies that the Congress has already granted the authority to develop
their own pay systems; the authorities granted to various demonstration
projects over the past two decades; and the authority Congress is
currently
contemplating providing the Department of Defense (DOD). Third, GAO
already has a number of key safeguards and has plans to build additional
safeguards into our modified pay system if granted this authority. Our
proposal seeks to take a constructive step in addressing what has been
widely recognized as fundamental flaws in the federal government*s
approach to white- collar pay. These flaws and the need for reform have
been addressed in more detail in OPM*s April 2002 White Paper, A Fresh
Start For Federal Pay: A Case for Modernization, and more recently the
National Commission on the Public Service*s January 2003 report on
revitalizing the public service. The current federal pay and
classification system was established over 60 years ago for a federal
workforce that was made up largely of clerks performing routine tasks
which were relatively simple to assess and measure. Today*s federal
workforce is composed of much higher graded and knowledge- based workers.
Although there have been attempts over the years to refine the system by
enacting such legislation as the Federal Employees Pay Comparability Act
(FEPCA) which sought to address, among other things, the issue of pay
comparability with the nonfederal sector, the system still contains
certain fundamental flaws. The current system emphasizes placing employees
in a relative hierarchy of positions based on grade; is a *one size fits
all
approach* since it does not recognize changes in local market rates for
different occupations; and is performance insensitive in that all
employees are eligible for the automatic across the board pay increases
regardless of their performance. Specifically, the annual across the board
base pay increase, also commonly referred to as the cost of living
adjustment (COLA) or the January Pay Increase which the President
recommends and
the Congress approves, provides a time driven annual raise keyed to the
Employment Cost Index (ECI) to all employees regardless of performance. In
certain geographic areas, employees receive a locality adjustment tied to
the local labor markets. However, in calculating the locality adjustment,
for example, it is my understanding that FEPCA requires the calculation of
a single average, based on the dominant federal employer in an area, which
does not sufficiently recognize the differences in pay rates for different
occupations and skills. In view of the fact that today we are in a
knowledgebased economy competing for the best knowledge workers in the job
market, I believe that new approaches and methodologies are warranted.
This is especially appropriate for GAO*s highly educated and skilled
workforce. Our proposed pay adjustment provision along with the other
provisions of GAO*s human capital proposal are collectively designed to
help GAO maintain a competitive advantage in attracting, motivating,
retaining, and rewarding a high performing and top- quality workforce both
currently and in future years. First, under our proposal, GAO would no
longer be required to provide automatic pay increases to employees who are
rated as performing at a below satisfactory level. Second, when the
proposal is fully implemented, GAO would be able to allocate more of the
funding* currently allocated for automatic across- the- board pay
adjustments to all employees* to permanent base pay adjustments that would
vary based on performance. In addition, our proposal would affect all GAO,
non- wage grade employees, including the SES and Senior Level staff.
Ultimately, if GAO is granted this authority, all GAO employees who
perform at a satisfactory level will receive an annual base pay adjustment
composed of purchase power protection and locality based pay increases
absent extraordinary economic circumstances or severe budgetary
constraints. GAO will be able to develop and apply its own methodology for
annual cost- of- living and locality pay adjustments. The locality pay
increase would be based on compensation surveys conducted by GAO and
which would be tailored to the nature, skills, and composition of GAO*s
workforce. The performance part of an employee*s annual raise would depend
on the level of the employee*s performance and that employee*s pay band.
We estimate that at least 95 percent of the workforce will qualify for an
additional performance- based increase. However, under this provision,
employees who perform below a satisfactory level will not receive an
annual increase of either type. How GAO Plans to Use This GAO*s major non-
SES pay groups include (1) Analysts and Attorneys which Authority
comprises the majority of our workforce and is our mission group, (2) the
Professional Development Program staff (PDP) which is our entry level
mission group, (3) the Administrative Professional Support Staff (APSS),
which is our mission support group for the most part, and (4) Wage Grade
employees who primarily operate our print plant. Each of these groups
currently operate in a different pay system. Generally, our mission staff
are all in pay bands whereby they currently receive the annual across-
theboard base pay increase and locality pay increase similar to the GS pay
system, along with performance- based annual increases that are based on
merit. Generally, our mission support staff, with some exceptions, remain
in a system similar to the GS pay system with its annual across- the-
board pay increases, locality pay, quality step increases, and within
grade increases. We are currently in the process of migrating the mission
support staff into pay bands and a pay for performance system. Our Wage
Grade staff will continue to be covered by the federal compensation system
for trade, craft, and laboring employees. Because of the small number of
employees and the nature of their work, we have no plans to apply the pay
adjustment provision authority to this group. I would like to point out
the tables in appendices I through IV, which
succinctly describe how GAO plans to operationalize our authority under
our proposed annual pay adjustment provision over time.
GAO*s Proposed Pay GAO*s proposal for additional pay flexibility is
reasonable in view of the
Authority Is Reasonable authority the Congress has already granted DHS
through the Homeland
Security Act of 2002; the other agencies for whom the Congress has granted
the authority to develop their own pay systems; the demonstration projects
that OPM has authorized; and the authorities that other agencies in the
executive branch are currently seeking (e. g., DOD).
While we are aware that the passage of the Homeland Security Act of 2002
was not without its difficult moments, particularly with respect to the
broad- based authorities granted the department, we are also aware that
the process employed by DOD and certain of its human capital proposals are
highly controversial. It is important to point out that GAO*s proposal and
proposed pay flexibilities pale in respect to those granted to the DHS and
to those requested by the DOD in the Defense Transformation for the 21 st
Century Act of 2003. Collectively, these two agencies represent almost 45
percent of the non- postal federal civilian workforce. Specifically, in
November 2002, the Congress passed the Homeland Security Act of 2002,
which created DHS and provided the department with significant
flexibilities to design a modern human capital management system, which
could have the potential, if properly developed, for application
governmentwide. DOD*s proposed National Security Personnel System (NSPS)
would provide wide- ranging changes to its civilian personnel pay and
performance management systems, collective bargaining, rightsizing, and a
variety of other human capital areas. NSPS would enable DOD to develop and
implement a consistent, DOD- wide civilian personnel system. In addition
to DHS, there are a number of federal agencies with authority
for their own pay systems. Some of these agencies are, for example, the
Congressional Budget Office, which is one of our sister agencies in the
legislative branch; the Federal Aviation Administration (FAA); the
Securities and Exchange Commission (SEC) ; and the Office of the
Comptroller of the Currency (OCC) within the Department of the Treasury.
When the Congress created the CBO in 1974, it granted that legislative
branch agency significant flexibilities in the human capital area. For
example, CBO has *at will* employment. In addition, CBO is not subject to
the annual executive branch pay adjustments. Further, CBO has extensive
flexibility regarding its pay system subject only to certain statutory
annual compensation limits.
Furthermore, there are twelve executive branch demonstration projects
involving pay for performance. These projects have taken different
approaches to the sources of funding for salary increases that are tied to
performance and not provided as entitlements. Many of the demonstration
projects reduce or deny the annual across the board base pay increase for
employees with unacceptable ratings (e. g., the Department of Navy*s China
Lake demonstration, DOD*s Civil Acquisition Workforce demonstration, the
Department of Air Force*s Research Laboratory demonstration, and the
Department of Navy*s Research Laboratory demonstration, among others.)
Others, including the National Institute of Standards and Technology and
the Department of Commerce demonstration projects, deny both the annual
across the board base pay increase and the locality pay adjustment for
employees with unacceptable ratings. Currently, this Congress is
considering a NASA human capital proposal.
This proposal would provide NASA with further flexibilities and
authorities for attracting, retaining, developing, and reshaping a skilled
workforce. These include a scholarship- for- service program; a
streamlined hiring
authority for certain scientific positions; larger and more flexible
recruitment, relocation, and retention bonuses; noncompetitive conversions
of term employees to permanent status; a more flexible critical pay
authority; a more flexible limited- term appointment authority for the
SES; and greater flexibility in determining annual leave accrual rate for
new hires.
Safeguards Provided As we have testified, agencies should have modern,
effective, credible, and as appropriate, validated performance management
systems in place with
adequate safeguards, including reasonable transparency and appropriate
accountability mechanisms, to ensure fairness and prevent politicization
and abuse. While GAO*s transformation is a work in progress, we believe
that we are in the lead compared to executive branch agencies in having
the human capital infrastructure in place to provide such safeguards and
implement a modified pay system that is more performance oriented.
Specifically, for our Analyst pay group, we have gone through the first
cycle of a validated performance management system that has adequate
safeguards, including reasonable transparency and appropriate
accountability mechanisms. We have learned from what has worked and what
improvements can and should be made with respect to the first cycle. In
fact, we have adopted many of the recommendations and suggestions of
our managing directors and EAC and are now in the process of implementing
these suggestions.
The following is an initial list of possible safeguards, developed at the
request of Congressman Danny Davis, for Congress to consider to help
ensure that any pay for performance systems in the government are fair,
effective, and credible. GAO*s current human capital infrastructure has
most of these safeguards built in, and the others are in the process of
being incorporated.
Assure that the agency*s performance management systems (1) link to the
agency*s strategic plan, related goals, and desired outcomes and
(2) result in meaningful distinctions in individual employee performance.
This should include consideration of critical competencies and achievement
of concrete results.
Involve employees, their representatives, and other stakeholders in the
design of the system, including having employees directly involved in
validating any related competencies, as appropriate.
Ensure that certain predecisional internal safeguards exist to help
achieve the consistency, equity, nondiscrimination, and nonpoliticization
of the performance management process (e. g., independent reasonableness
reviews by the human capital offices and/ or the offices of opportunity
and inclusiveness or its equivalent in establishing and implementing a
performance appraisal system, as well as reviews of performance rating
decisions, pay determinations, and promotion actions before they are
finalized to ensure that they are
merit- based; internal grievance processes to address employee complaints;
and pay panels predominately made up of career officials who would
consider the results of the performance appraisal process and other
information in making final pay decisions).
Assure reasonable transparency and appropriate accountability mechanisms
in connection with the results of the performance management process (e.
g., publish overall results of performance management and pay decisions
while protecting individual confidentiality, and report periodically on
internal assessments and employee survey results).
Transition Period We have provided a statutory period minimum to allow for
a smooth implementation of the law as it applies to both our mission and
mission
support staff. Specifically, for our Analyst and Attorney communities, we
plan to allow for at least a two- year period, during which they will
continue to receive their annual across the board pay raise and their
locality pay, if applicable, based on the amount set by the GS system.
Once the proposal is fully implemented, the new across- the- board
increase, which provides for inflation protection and locality pay where
applicable, would be computed based on GAO compensation studies, and the
performancebased merit pay would be provided based on an employee*s
performance.
For our APSS employees, the transition period of at least 2 years would
allow for a smooth migration to the pay bands and the implementation of at
least one performance cycle of a newly validated competency based
performance appraisal system for that component of GAO*s workforce. Our
APSS employees are currently still in the GS system, but we are in the
process of moving them into pay bands. We will allow time for the group
to migrate to broad bands and to have at least one performance cycle under
pay bands before moving it into the new pay system. Therefore, as with the
analysts and attorneys, the administrative support staff will move into a
hybrid pay system once they migrate to pay bands. Also, as with the
analysts and attorneys, I have committed to providing them *pay
protection.* This guarantee would continue even after GAO*s authority to
adjust pay is fully implemented. We have a small Wage Grade community of
under 20 employees. As
mentioned earlier, we do not contemplate having the pay adjustment
provision apply to them. *Pay Protection* Guarantee My predecessor,
Comptroller General Charles A. Bowsher, provided the analysts and
attorneys a *pay protection* guarantee at the time of their conversion to
broad bands. This guarantee, later spelled out in a GAO order, provided
that the analyst and attorneys rated as meeting expectations in all
categories would fare at least as well under pay bands as under the GS
system. This guarantee would not apply to employees who are promoted after
conversion or demoted, and to new employees hired after the conversion. It
is my understanding that this guarantee provided by my predecessor is
unique to GAO and has generally not been applied by other agencies that
have migrated their employees to pay bands.
Currently, 535 GAO employees are still covered by this *pay protection*
guarantee, while less than 10 employees annually have their pay readjusted
after the merit pay process. I have committed to GAO employees that even
if we receive the new pay adjustment authority, I would still honor my
predecessor*s pay protection guarantee. In addition, our mission support
staff will also receive this guarantee upon conversion to pay bands. This
guarantee will continue through the implementation period for our new
human capital authority. Pay Retention Section 5 of our proposal would
allow GAO not to provide any automatic
increase in basic pay to an employee demoted as a result of workforce
restructuring or reclassification at his or her current rate until his or
her
salary is less than the maximum rate of the new position. Under current
law, the grade and pay retention provisions allow employees to continue to
be paid at a rate that exceeds the value of the duties they are performing
for
an extended period. Specifically, employees who are demoted (e. g., incur
a loss of grade or band) due to, among other things, reduction- in- force
procedures or reclassification receive full statutory pay increases for 2
years and then receive 50 percent of the statutory pay increases until the
pay of their new positions falls within the range of pay for those
positions. We believe that this antiquated system is inconsistent with the
merit principle that there should be equal pay for work of equal value.
In granting GAO this authority, we would be able to immediately place
employees in the band or grade commensurate with their roles and
responsibilities. It is important to note that we have a key safeguard*
employees whose basic pay exceeds the maximum rate of the grade or band in
which the employee is placed will not have their basic pay reduced. These
employees, who would still be eligible to increase their overall pay
through certain types of performance- based awards (e. g., incentive
awards), would retain this rate until their basic pay is less than the
maximum for their grade or band. As with all the provisions in our
proposal, we will not implement this pay retention provision until we have
consulted with the EAC and managing directors and have provided all GAO
employees an opportunity for notice and comment on any regulations.
Relocation Expenses Section 6 would provide GAO the authority, in
appropriate circumstances,
to reimburse employees for some relocation expenses when transfers do not
meet current legal requirements for entitlement to reimbursement but still
benefit GAO. Under current law, employees who qualify for relocation
benefits are entitled to full benefits; however, employees whose transfer
may be of some benefit or value to the agency would not be eligible to
receive any reimbursement. This provision would provide these employees
some relief from the high cost of relocating while at the same time
allowing GAO the flexibility to promulgate regulations in order to provide
such relief. This authority has been previously granted to other agencies,
including the FAA.
Leave for Upper Level Section 7 of the proposal provides GAO the authority
to provide 160 hours
Hires (20 days) of annual leave to appropriate employees in high- grade,
managerial or supervisory positions who have less than 3 years of federal
service. This is narrowly tailored authority that would apply only to GAO
and not to executive branch agencies. While it is been a long- standing
tenet that all federal employees earn annual leave based on years of
federal
service, we believe that there is substantial merit in revisiting this in
view of today*s human capital environment and challenges. We have found
that, in recruiting experienced mid- and upper- level hires, the loss of
leave they would incur upon moving from the private to the federal sector
is a major
disincentive. For example, an individual, regardless of the level at which
he enters first enters the federal workforce, is eligible to earn 4 hours
of annual leave for each pay period and, therefore, could accrue a total
of 104
hours (13 days) annually so long as they do not use any of that leave
during the year. This amount increases to 6 hours of annual leave after 3
years of federal service. By increasing the annual leave that certain
newly hired officers and employees may earn, this provision is designed to
help attract and retain highly skilled employees needed to best serve the
Congress and the country.
Executive Exchange Section 8 would authorize GAO to establish an executive
exchange
Program program between GAO and private sector entities. Currently, GAO
has the
authority to conduct such an exchange with public entities and non profit
organizations under the Intergovernmental Personnel Act; there is no such
authority for private sector exchanges. Under this program, high- grade,
managerial or supervisory employees from GAO may work in the private
sector, and private sector employees may work at GAO. While GAO will
establish the details of this program in duly promulgated regulations, we
have generally fashioned, with exceptions where appropriate, the legal
framework for this program on the Information Technology Exchange Program
authorized by Public Law 107- 347, the E- Government Act of 2002, which
the Congress enacted to address human capital challenges within the
executive branch in the information technology area.
While the Information Technology Exchange Program only involves technology
exchanges, GAO*s exchange program will cover not only those who work in
information technology fields, but also accountants, economists, lawyers,
actuaries, and other highly skilled professionals. This program will help
us address certain skills imbalances in such areas as well
as a range of succession planning challenges. Specifically, by fiscal year
2007, 52 percent of our senior executives, 37 percent of our
managementlevel analysts, and 29 percent of our analysts and related staff
will be eligible for retirement. Moreover, at a time when a significant
percentage of our workforce is nearing retirement age, marketplace,
demographic,
economic, and technological changes indicate that competition for skilled
employees will be greater in the future, making the challenge of
attracting and retaining talent even more complex. One of the key concerns
raised in the past regarding private sector
exchange programs has been the issue of conflict of interest. We believe
that in this regard GAO differs from executive branch agencies in that, as
reviewers, we are not as subject to potential conflicts of interest.
Nevertheless, it is important to note in requesting this authority that we
have made clear that the private sector participants would be subject to
the same laws and regulations regarding conflict of interest, financial
disclosure, and standards of conduct applicable to all employees of GAO.
Under the program, private sector participants would receive their
salaries
and benefits from their employers and GAO need not contribute to these
costs. We also believe that this will also encourage private sector
individuals to devote a portion of their careers to the public sector
without incurring substantial financial sacrifice.
Changing GAO*s Name Section 9 would change the name of our agency from the
*General
to the *Government Accounting Office* to the *Government Accountability
Office.* At the
same time, the well- known acronym *GAO,* which has over 80 years of
Accountability Office*
history behind it, will be maintained. We believe that the new name will
better reflect the current mission of GAO as incorporated into its
strategic plan, which was developed in consultation with the Congress. As
stated in GAO*s strategic plan, our activities are designed to ensure the
executive branch*s accountability to the American people. Indeed, the word
accountability is one of GAO*s core values along with integrity and
reliability. These core values are also incorporated in GAO*s strategic
plan for serving the Congress.
The GAO of today is a far cry from the GAO of 1921, the year that the
Congress established it through the enactment of the Budget and Accounting
Act. In 1921, GAO pre- audited agency vouchers for the legality,
propriety, and accuracy of expenditures. In the 1950s, GAO*s statutory
work shifted to the comprehensive auditing of government agencies. Later,
beginning during the tenure of Comptroller General Elmer B. Staats, GAO*s
work expanded to include program evaluation and policy analysis. Whereas
GAO*s workforce consisted primarily of accounting clerks during the first
three decades of its existence, today it is a multidisciplinary
professional services organization with staff reflecting the diversity of
knowledge and skills needed to deliver a wide range of services to the
Congress. Although currently less than 15 percent of agency resources are
devoted to
traditional auditing and accounting activities, members of the public, the
press, as well as the Congress often incorrectly assume that GAO is still
solely a financial auditing organization. In addition, our name clearly
confuses many potential applicants, who assume that GAO is only interested
in hiring accountants. We believe that the new name will help attract
applicants and address certain *expectation gaps* that exist outside of
GAO. Concluding
In conclusion, I believe that GAO*s human capital proposal merits prompt
Observations
passage by this committee and, ultimately, the Congress. We have used the
narrowly tailored flexibilities the Congress provided us previously in
Public Law 106- 303 responsibly, prudently, and strategically to help
posture GAO to ensure the accountability of the federal government for the
benefit of the Congress and the American people. Although some elements of
our initial straw proposal were controversial, we have made a number of
changes, clarifications, and commitments to address various comments and
concerns raised by GAO employees. We recognize that the pay adjustment
provision of this proposal remains of concern to some of our staff.
However, we believe that it is vitally important to GAO*s future that we
continue modernizing and updating our human capital policies and system in
light of the changing environment and anticipated challenges ahead. We
believe that the proposal as presented and envisioned is well reasoned and
reasonable with adequate safeguards for GAO employees. Given our
human capital infrastructure and our unique role in leading by example in
major management areas, including human capital management, the federal
government could benefit from GAO*s experience with pay for performance
systems. Overall, we believe that this proposal represents a logical
incremental advancement in modernizing GAO*s human capital policies, and
with your support, we believe that it will make a big difference for the
GAO of the future.
Chairwoman Jo Ann Davis, Mr. Davis, and Members of the Committee, this
concludes my prepared statement. I would be pleased to respond to any
questions you may have.
Contacts For further information regarding this testimony, please contact
Sallyanne Harper, Chief Mission Support Officer, on (202) 512- 5800 or at
harpers@ gao. gov or Jesse Hoskins, Chief Human Capital Officer, on (202)
512- 5553 or at hoskinsj@ gao. gov.
Analysts and Attorneys: Pay Increases under GAO*s Current System and Human
Capital
Appendi x I
Proposal Types of Pay Current Pay System b
Transition Period c Implementation Period d Increases a
(Broad band) (Guaranteed Minimum; (Pay Protection from Band
Pay Protection from Band Conversion) Conversion)
Included Permanent Included Permanent
Included Permanent
base pay base pay base pay Annual across- the- board
base pay (Same percentage as
(Percentage executive branch GS; decoupled from
for all satisfactory executive branch GS;
performers) for all satisfactory
performers) Locality pay
(Same percentage as (Percentage
executive branch GS; decoupled from for all satisfactory
executive branch GS; performers)
for all satisfactory performers)
Performance- based pay (Merit increases)
(Percentages determined (Percentages
(Percentages by EC annually; initial
determined by EC determined by additional performancebased annually;
actual
EC annually) funds limited due
incremental amount to transition period
will vary over time) guarantee)
Performance bonuses b- d (for individuals who are
One- time One- time
One- time pay capped)
Dividends b- d One- time
One- time One- time
Incentive awards One- time
One- time One- time
This element is applicable N/ A This element is not applicable Source:
GAO.
a The percentage allocated to each type of pay increase varies annually. b
Under our current pay system, GAO is linked to the executive branch for
annual base and locality pay adjustments; however, since the
implementation of broad banding, has not been linked to the executive
branch for performance- based merit pay increases, performance bonuses/
dividends, and other incentive award pay increases. The Executive
Committee determines on an annual basis which pay categories, if any, are
eligible for bonuses and dividends. For example, individuals in pay
categories one and two received dividends for their FY 02 performance. c
During the transition period, GAO staff rated as performing at a
satisfactory level (i. e., meeting
expectations or higher) will be guaranteed, at a minimum, barring
extraordinary economic
circumstances or serious budgetary constraints, base pay and locality pay
according to the same adjustment provided to executive branch employees.
All such GAO staff will also be eligible for additional performance- based
merit pay increases, performance bonuses (if pay capped)/ dividends, and
incentive awards. During the transition period, GAO will continue to raise
the pay cap for its pay bands commensurate with executive branch pay cap
increases absent extraordinary economic circumstances or serious budgetary
constraints. The Executive Committee will determine on an annual basis
which categories, if any, are eligible for bonuses and dividends. d Under
its human capital proposal, GAO proposes to decouple itself from the
executive branch for base
and locality pay adjustments after a 2 plus year transition period. After
the transition period, GAO will fully implement a modified pay system in
which absent extraordinary economic conditions or serious budgetary
constraints, all GAO staff rated as performing at a satisfactory level (i.
e., meeting expectations or higher) can expect to receive at a minimum an
annual adjustment designed to protect purchasing power (e. g., the
Consumer Price Index) and address differences in compensation ranges by
localities. In addition, all such staff will continue to be eligible for
performance- based merit pay increases, performance bonuses (if pay
capped)/ dividends, and incentive awards. Before finalizing and
implementing a modified pay system, GAO will seek the advice of the
managing directors and
GAO*s Employee Advisory Council. We will also draft revised pay
regulations and publish them for review and comment by all employees.
Appendi xes Professional Development Program (PDP) Staff: Pay Increases
under GAO*s Current
Appendi x II
System and Human Capital Proposal Current Pay System b Transition Period c
Implementation Types of Pay
(Broad band/ PDP) Guaranteed Minimum Period d Increases a Included
Permanent
Included Permanent Included Permanent
base pay base pay base pay
Annual across- the- board (Percentage
base pay (Same percentage
decoupled as executive
from executive branch GS; branch GS; for all satisfactory
for all satisfactory performers)
performers) Locality pay
(Same percentage (Percentage
as executive decoupled
branch GS; from executive for all satisfactory
branch GS; performers) for all satisfactory
performers) Performance- based pay (Percentages
(Percentages (Percentages
determined by determined by
determined by EC annually)
EC annually) EC annually)
Performance bonuses b- e (for individuals who are
One- time One- time One- time pay capped)
Dividends c- e N/ A N/ A N/ A N/ A N/ A N/ A Incentive awards
One- time One- time One- time This element is applicable N/ A This element
is not applicable Source: GAO.
Note: PDP Staff who are Band IF (full performance) are covered by the
merit pay system. See chart for Analysts & Attorneys. a The percentage
allocated to each type of pay increase varies annually.
b Under our current pay system, GAO is linked to the executive branch for
base and locality pay. Band I staff in the PDP are eligible for periodic
performance based PDP pay increases that are not available in the
executive branch. PDP staff are not eligible for performance based merit
increases and dividends. c During the transition period, PDP staff rated
as performing at a satisfactory level (i. e., meeting
expectations or higher) will be guaranteed, at a minimum, barring
extraordinary economic circumstances or serious budgetary constraints,
base pay and locality pay according to the same adjustment provided to the
executive branch employees. PDP staff rated as performing at the
satisfactory level (i. e., meeting expectations or higher) will be
eligible for performance- based PDP pay increases. During and after the
transition period, PDP staff will not be eligible for dividends because
PDP staff are evaluated every 6 months for performance based PDP
increases. During the transition period, GAO will raise the pay cap for
its Band I pay band commensurate with executive branch pay cap increases
absent extraordinary economic circumstances or serious budgetary
constraints. The
Executive Committee will determine on an annual basis which pay
categories, if any, are eligible for PDP bonuses. d Under its human
capital proposal, GAO proposes to decouple itself from the executive
branch for base
and locality pay after a 2 plus year transition period. After the
transition period, GAO will fully implement a modified pay system in which
absent extraordinary economic conditions or serious budgetary constraints,
all PDP staff rated as performing at a satisfactory level (i. e., meeting
expectations or higher) can expect to receive at a minimum, an annual
adjustment designed to protect purchasing power (e. g., the Consumer Price
Index) and address differences in compensation ranges by localities. In
addition, PDP staff rated as performing at a satisfactory level (i. e.,
meeting expectations or higher) will continue to be eligible for
additional performance- based compensation, including performance- based
PDP pay increases and incentive awards. Before finalizing and implementing
a modified pay system, GAO will seek the advice of the managing directors
and GAO*s Employee Advisory Council. We will also draft revised pay
regulations and publish them for review and comment by all employees.
Administrative Professional Support Staff (APSS): Pay Increases under
GAO*s Current
Appendi x III
System and Human Capital Proposal Types of Pay Transition Period c
Implementation Period d Increases a Current Pay System b
(Broad band) Pay Protection from Band Conversion
(GS) Pay Protection from Band
Conversion Included Permanent
Included Permanent Included
Permanent base pay base pay
base pay Annual across- the- board base pay
(Same percentage Percentage decoupled from
as executive executive branch GS; branch GS)
for all satisfactory performers) Locality pay
(Same percentage Percentage decoupled from
as executive executive branch GS; branch GS)
for all satisfactory performers) Quality step increase
(QSI) N/ A N/ A N/ A N/ A
Within grade increase N/ A N/ A N/ A N/ A (WIG)
Performance- based pay N/ A N/ A
(merit increases) (Percentages
(Percentages determined by determined by EC annually; actual incremental
EC annually)
amount will vary over time) Performance bonuses b- d (for individuals who
are
N/ A N/ A
One- time One- time pay capped)
Dividends b- d N/ A
N/ A N/ A Incentive awards
One- time One- time One- time This element is applicable N/ A This element
is not applicable Source: GAO.
a The percentage allocated to each type of pay increase varies annually.
This chart applies only to APSS employees who are under the General
Schedule (GS) system. APSS employees who are already in broad bands should
see the chart for Analysts and Attorneys. b Under our current pay system,
GAO is linked to the executive branch for annual base, locality, QSI,
and WIG pay adjustments. APSS staff are eligible for performance incentive
award pay increases; however, they are not eligible for performance
bonuses (if pay capped) or dividends. c During the transition period, GAO
will implement broad banding for the APSS community between
April * June 2004 and allow at least one full cycle of a new competency-
based performance appraisal system before implementing any additional
performance- based pay adjustments envisioned under HC II. Upon conversion
to broad bands, GAO, as it did with its Analyst and Attorney communities,
will
replace QSIs and WIGs with performance pay increases that are not linked
to the executive branch. Also, as it did with its Analyst and Attorney
communities when they were converted to bands, GAO will provide a pay
protection guarantee. Specifically, APSS staff who perform at the meets
expectations level on any performance rating will earn a salary at least
as high as they would have received had
they remained under the General Schedule at their grade at the time of
conversion. However, this
guarantee will not apply to staff who are promoted after conversion or
demoted and to new employees hired after the conversion. APSS staff will
be eligible for performance- based merit increases, performance bonuses
(if pay capped) /dividends, and incentive awards. During the transition
period, GAO will continue to raise the pay cap for its pay bands
commensurate with executive branch pay cap increases. The Executive
Committee will determine on an annual basis which pay categories, if any,
are eligible for bonuses and dividends.
d Under its human capital proposal, GAO proposes to decouple itself from
the executive branch for base and locality pay after a two plus year
transition for the broad band conversion. After the transition period, GAO
will fully implement a modified pay system in which absent extraordinary
economic conditions or serious budgetary constraints, all GAO staff rated
as performing at a satisfactory level (i. e., meeting expectations or
higher) can expect to receive at a minimum, an annual adjustment designed
to protect purchasing power (e. g., the Consumer Price Index) and address
differences in compensation ranges by localities. In addition, all APSS
staff will continue to be eligible for performance- based merit pay
increases, performance bonuses (if pay capped)/ dividends, and incentive
awards. Before finalizing and implementing a modified pay system, GAO will
seek the advice of the managing directors and GAO*s Employee Advisory
Council. We will also draft revised pay regulations and publish them for
review and comment by all employees. In addition, APSS staff receiving the
pay protection guarantee from their conversion into pay bands will
continue to be eligible for pay protection during the implementation
period.
Wage Grade (WG) Staff: Pay Increases under GAO*s Current System and Human
Capital
Appendi x IV
Proposal Current Pay System b Types of Pay Increases a (Wage Grade)
System Same Under HC II Included Permanent Annual across- the- board base
pay
Locality pay N/ A N/ A Quality step increase (QSI) N/ A N/ A Within grade
increase (WIG)
Incentive awards c One- time
. This element is applicable N/ A This element is not applicable Source:
GAO.
Note: HC II refers to GAO*s human capital proposal. a The percentage
allocated to each type of pay increase varies annually.
b Under its current wage grade pay system, GAO is linked to the executive
branch for base, locality, and WIG pay increases. Wage grade employees are
not eligible for QSIs and locality pay increases in GAO or anywhere in the
federal government. Because its wage grade community is so small, GAO does
not plan to include the wage grade community in the modified pay system
under its human capital proposal.
c Wage grade staff are not eligible for bonuses and dividends.
(997900)
GAO United States General Accounting Office
A
As an arm of the legislative branch, GAO exists to support the Congress in
meeting its constitutional responsibilities and to help improve the
performance and ensure the accountability of the federal government for
the American people. Unlike many executive branch agencies, which have
either recently received or are just requesting new broad- based human
capital tools and flexibilities, GAO has had certain human capital tools
and flexibilities for over two decades. GAO*s latest proposal combines
diverse initiatives that, collectively, should further GAO*s ability to
enhance its performance, assure its accountability, and help ensure that
it can attract, retain, motivate, and reward a top- quality and high-
performing workforce currently and in future years.
Specifically, GAO is requesting that the Congress (1) make permanent GAO*s
3- year authority to offer early outs and buyouts, (2) allow GAO to set
its own annual pay adjustment system separate from the executive branch,
(3) permit GAO to set the pay of an employee demoted as a result of
workforce restructuring or reclassification to keep his/ her basic pay but
to set future increases consistent with the new position*s pay parameters,
(4) provide authority to reimburse employees for some relocation expenses
when that transfer has some benefit to GAO but does not meet the legal
requirements for reimbursement, (5) provide authority to place upper-
level hires with fewer than 3 years of federal experience in the 6- hour
leave category, (6) authorize an executive exchange program with the
private
sector, and (7) change GAO*s legal name from the *General Accounting
Office* to the *Government Accountability Office.*
GAO has used the narrowly tailored flexibilities granted by the Congress
previously in Public Law 106- 303, the GAO Personnel Flexibilities Act,
responsibly, prudently, and strategically. GAO believes that it is vitally
important to its future to continue modernizing and updating its human
capital policies and system in light of the changing environment and
anticipated challenges ahead. GAO*s proposal represents a logical
incremental advancement in modernizing GAO*s human capital policies. Based
on employee feedback, there is little or no concern relating to most of
the proposal*s provisions. Although some elements of GAO*s initial straw
proposal were controversial (e. g., GAO*s pay adjustment provision), the
Comptroller General has made a number of changes, clarifications, and
commitments to address employee concerns. While GAO believes that some
employees remain concerned about the pay adjustment provision, GAO also
believes that employee concerns have been reduced considerably due to the
clarifications, changes, and commitments the Comptroller General has made.
Given GAO*s human capital infrastructure and unique role in leading by
example in major management areas, the rest of the federal government can
benefit from GAO*s pay system experience. The Subcommittee seeks GAO*s
views on its latest human capital proposal that is slated to be introduced
as a bill entitled the
GAO Human Capital Reform Act of 2003. GAO believes that its proposal is
well reasoned and reasonable.
Although GAO*s request for authority to adjust its annual pay system
separate from the executive branch appears broad based, there
are compelling reasons why GAO ought to be given this authority. These
include the fact that GAO already has a hybrid pay system established by
the authority the
Congress granted it over two decades ago, the proposed authority is not
radical if viewed in the light of authorities already
granted and requested by other agencies, and GAO already has a number of
key systems and safeguards in place and has plans to build in additional
safeguards if
granted the authority. GAO has conducted extensive external and internal
outreach efforts on its latest human capital proposal. GAO respectfully
requests the Subcommittee*s support and prompt passage by the
Congress.
www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 1024T. To view the full product,
including the scope and methodology, click on the link above. For more
information, contact Sallyanne Harper at (202) 512- 5800 or harpers@ gao.
gov. Highlights of GAO- 03- 1024T, a testimony
before the Subcommittee on Civil Service and Agency Organization,
Committee on Government Reform, House of Representatives
July 16, 2003
GAO
Additional Human Capital Flexibilities Are Needed
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Appendix I
Appendix I Analysts and Attorneys: Pay Increases under GAO*s Current
System and Human Capital Proposal
Page 29 GAO- 03- 1024T
Page 30 GAO- 03- 1024T
Appendix II
Appendix II Professional Development Program (PDP) Staff: Pay Increases
under GAO*s Current System and Human Capital Proposal
Page 31 GAO- 03- 1024T
Page 32 GAO- 03- 1024T
Appendix III
Appendix III Administrative Professional Support Staff (APSS): Pay
Increases under GAO*s Current System and Human Capital Proposal
Page 33 GAO- 03- 1024T
Page 34 GAO- 03- 1024T
Appendix IV
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