Posthearing Questions Related to Proposed Department of Homeland 
Security (DHS) Human Capital Regulations (22-MAR-04,		 
GAO-04-570R).							 
                                                                 
GAO testified before Congress and answered posthearing questions 
regarding "The Key to Homeland Security: The New Human Resources 
System."							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-570R					        
    ACCNO:   A09565						        
  TITLE:     Posthearing Questions Related to Proposed Department of  
Homeland Security (DHS) Human Capital Regulations		 
     DATE:   03/22/2004 
  SUBJECT:   Federal agency reorganization			 
	     Internal controls					 
	     Performance measures				 
	     Personnel management				 
	     Strategic planning 				 
	     Accountability					 
	     Collective bargaining				 
	     Human resources utilization			 

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GAO-04-570R

United States General Accounting Office Washington, DC 20548

March 22, 2004

The Honorable George V. Voinovich
Chairman
The Honorable Richard Durbin
Ranking Minority Member
Subcommittee on Oversight of Government

Management, the Federal Workforce, and the

District of Columbia
Committee on Governmental Affairs
United States Senate

The Honorable Jo Ann Davis
Chairwoman
The Honorable Danny Davis
Ranking Minority Member
Subcommittee on Civil Service and

Agency Organization
Committee on Government Reform
United States House of Representatives

Subject: Posthearing Questions Related to Proposed Department of Homeland
Security (DHS) Human Capital Regulations

On February 25, 2004, I testified before your subcommittees at a hearing
entitled "The Key to Homeland Security: The New Human Resources System."1
This letter responds to your request that I provide answers to posthearing
questions. The questions and responses follow.

1. In your testimony, you indicated that there were safeguards recommended
for the personnel system at the Department of Defense that were not
included in the Homeland Security Act. What safeguards do you think should
be included in the regulations for the DHS personnel system that are not
included currently?

We have proposed an initial list of safeguards based on our extensive body
of work looking at the performance management practices used by leading
public sector organizations both in the United States and in other
countries, as well as our own

1U.S. General Accounting Office, Human Capital: Preliminary Observations
on Proposed DHS Human Capital Regulations, GAO-04-479T (Washington, D.C.:
Feb, 25, 2004).

experiences at GAO in implementing a modern performance management system.
These safeguards include:

o  	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. As I noted in my testimony, DHS plans to align
individual performance management with organizational goals.

o  	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. In September 2003 we
reported that DHS's personnel system design effort provided for
collaboration and employee

2

participation. Employees were provided multiple opportunities to be
included in the design process, including participation in the Core Design
Team, the Town Hall meetings, the field team, the focus groups, an e-mail
mailbox for employee comments, and now through the public comment period
on the proposed system.

o  	Assure 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 Human Capital Offices and/or Offices of Opportunity and
Inclusiveness or their equivalent in connection with the establishment and
implementation of 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 whose
membership is predominately made up of career officials who would consider
the results of the performance appraisal process and other information in
connection with final pay decisions). DHS is proposing Performance Review
Boards (PRBs) to review ratings in order to promote consistency and
provide general oversight of the performance management system to ensure
it is administered in a fair, credible, and transparent manner. While much
remains to be determined about how the DHS PRBs will operate, we believe
that the effective implementation of such a board is important to assuring
that predecisional internal safeguards exist to help achieve consistency
and equity, and assure nondiscrimination and nonpolitization of the
performance management process.

o  	Assure reasonable transparency and appropriate accountability
mechanisms in connection with the results of the performance management
process. This can include reporting periodically on internal assessments
and employee survey results relating to the performance management system
and publishing overall results of performance management and individual
pay decisions while protecting individual confidentiality. Publishing the
results in a manner that protects individual confidentiality can provide
employees with the information they need to better understand the
performance management system. As we recently

2U.S. General Accounting Office, Human Capital: DHS Personnel System
Design Effort Provides for Collaboration and Employee Participation,
GAO-03-1099 (Washington, D.C.: Sept. 30, 2003).

Page 2

reported, several of OPM's personnel demonstration projects publish
information for employees on internal Web sites about the results of
performance appraisal and pay decisions, such as the average performance
rating, the average pay increase, and the average award for the
organization and for each individual unit. 3

There are also important safeguards in areas other than performance
management. For example, I noted in my testimony that, as an additional
safeguard, DHS should consider identifying mandatory removal offenses in
regulations as a means to ensure appropriate due process. I also believe
that the independence of the panel to hear appeals of violations of the
mandatory removal offenses could be strengthened. As we note in the
response to question 4 below, the independence of the DHS labor relations
board deserves serious consideration.

2.	The regulations don't allow collective bargaining on matters that do
not "significantly affect a substantial portion of the bargaining unit."
What do you think would be a reasonable percentage or number to be
considered a "substantial portion?"

As I noted in my testimony, leading organizations involve employees and
unions in major changes such as redesigning work processes, changing work
rules, or developing new job descriptions. Such involvement can avoid
misunderstandings, speed implementation, and more expeditiously resolve
problems that occur. I also noted that DHS employees suggested having
informal mechanisms in place to resolve issues before escalating them to
the formal process. However we do not have a specific percentage to
recommend for this provision.

3. In your testimony you stated concern for the Department of Defense's
intention to implement a personnel system by the Fall of 2004. What do you
believe would be an appropriate implementation timetable for the
Department of Homeland Security?

We have found that a key practice for successful transformations is to set
implementation goals and establish a timeline to build momentum and show
progress from day one. 4 A transformation, such as the one being
undertaken by DHS, is a substantial commitment that could take years
before it is completed, and therefore must be carefully and closely
managed. As a result, it is essential to establish and track
implementation goals and establish a timeline to pinpoint performance
shortfalls and gaps so that midcourse corrections can be made.

According to DHS's proposed regulations, the labor relations, adverse
actions, and appeals provisions will be effective 30 days after issuance
of the interim final regulations later this year. DHS plans to implement
the job evaluation, pay, and

3U.S. General Accounting Office, Human Capital: Implementing Pay for
Performance at Selected
Personnel Demonstration Projects, GAO-04-83 (Washington, D.C.: Jan. 23,
2004).
4U.S. General Accounting Office, Results-Oriented Cultures: Implementation
Steps to Assist Mergers
and Organizational Transformations, GAO-03-669 (Washington, D.C.: July 2,
2003).

Page 3

performance management system in phases to allow time for final design,
training, and careful implementation. Although we do not recommend a
specific implementation timetable for DHS, we strongly support a phased
approach to implementing major management reforms. A phased implementation
approach recognizes that different organizations will have different
levels of readiness and different capabilities to implement new
authorities. Moreover, a phased approach allows for learning so that
appropriate adjustments and midcourse corrections can be made before the
regulations are fully implemented organizationwide. However, it is
important to note that the proposed regulations do not apply to nearly
half of all DHS civilian employees, including more than 50,000 screeners
in the Transportation Security Administration (TSA). Based on the
department's progress in implementing the system and any appropriate
modifications made based on their experience, DHS should consider moving
all of its employees under the new human capital system.

4.	Would you characterize the proposed Labor Relations Board in these
regulations as "independent"?

I did not directly comment on this matter in my statement. However, in my
statement I did raise independence concerns about a separate panel to be
created to hear appeals for mandatory removal offenses. Members of that
panel are appointed by the DHS Secretary for three-year terms and may be
removed by the Secretary "only for inefficiency, neglect of duty, or
malfeasance." These appointment and removal procedures are identical to
the appointment and removal provisions for the members of the proposed DHS
Labor Relations Board. As I noted in my statement with regard to the
mandatory removal offense panel, removal of the panel members by the
Secretary may potentially compromise the real or perceived independence of
the panel's decisions. We suggested, as an alternative, that the
Department should consider having members of the panel removed only by a
majority decision of the panel. We also said that DHS might wish to
consider staggering the terms of the members to ensure a degree of
continuity on the board. Such changes might also strengthen the
independence of the Labor Relations Board.

Page 4

We are sending copies of this report to the Chair and Ranking Minority
Member, Senate Committee on Governmental Affairs; the Chairman and Ranking
Minority Member, House Committee on Government Reform; the Chairman and
Ranking Minority Member, House Select Committee on Homeland Security; and
other interested congressional parties. We will also send copies to the
Secretary of the Department of Homeland Security and the Director of the
Office of Personnel Management. Copies will be made available at no charge
on the GAO Web site at http://www.gao.gov. For additional information on
our work on federal agency transformation efforts and strategic human
capital management, please contact me on (202) 512-5500 or J. Christopher
Mihm, Managing Director, Strategic Issues, on (202) 512-6806 or at
[email protected].

Sincerely,

David M. Walker Comptroller General of the United States

(450312)

Page 5

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