2006 Report on GAO's Use of Provisions in the GAO Personnel	 
Flexibilities Act of 2000 and the GAO Human Capital Reform Act of
2004 (01-DEC-06, GAO-07-289SP). 				 
                                                                 
This is Appendix 2 of GAO's 2006 Performance and Accountability  
Report. Section 6 of the GAO Personnel Flexibilities Act of 2000,
Pub. L. No. 106-303 (2000), and section 11 of the GAO Human	 
Capital Reform Act of 2004, Pub. L. No. 108-271 (2004), require  
GAO to report to the Congress regarding its use of certain of the
provisions of these acts.					 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-289SP					        
    ACCNO:   A64164						        
  TITLE:     2006 Report on GAO's Use of Provisions in the GAO	      
Personnel Flexibilities Act of 2000 and the GAO Human Capital	 
Reform Act of 2004						 
     DATE:   12/01/2006 
  SUBJECT:   Accountability					 
	     Agency missions					 
	     Civilian employees 				 
	     Early retirement					 
	     Federal employees					 
	     Federal personnel law				 
	     Performance management				 
	     Reporting requirements				 
	     Strategic planning 				 
	     Wage surveys					 
	     Policies and procedures				 
	     Executive Exchange Program 			 

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GAO-07-289SP

   

     * [1]Public Law 106-303-GAO Personnel Flexibilities Act of 2000
     * [2]Public Law 108-271-GAO Human Capital Reform Act of 2004
     * [3]GAO's Mission
     * [4]Obtaining Copies of GAO Reports and Testimony

          * [5]Order by Mail or Phone

     * [6]To Report Fraud, Waste, and Abuse in Federal Programs
     * [7]Congressional Relations
     * [8]Public Affairs

United States Government Accountability Office
Washington, DC 20548

Section 6 of the GAO Personnel Flexibilities Act of 2000, Pub. L. No.
106-303 (2000), and section 11 of the GAO Human Capital Reform Act of
2004, Pub. L. No. 108-271 (2004), require GAO to report to the Congress
regarding its use of certain of the provisions of these acts. Our report
on these provisions is set forth below.

Public Law 106-303-GAO Personnel Flexibilities Act of 2000

Section 6 requires us to report on an annual basis during the 5-year
period beginning on the date of the enactment of the act all actions taken
under sections 1 through 3. Because the date of enactment was October 13,
2000, this report will be our last under this act and only covers 13 days
of fiscal year 2006. (October 1 through October 13, 2005).

Section 1, regarding voluntary early retirement authority, and section 2,
regarding voluntary separation incentive payments, initially were not
permanent. However, both sections were made permanent under the GAO Human
Capital Reform Act of 2004, which incorporated the same reporting
requirements for these sections. Therefore, we will report on our use of
these sections below under Pub. L. No. 108-271.

Section 3 amended our prior reduction in force procedures. We did not
utilize this provision during the reporting period of October 1 through
October 13, 2005.

Public Law 108-271-GAO Human Capital Reform Act of 2004

Section 11 requires us to report on an annual basis during the 5-year
period beginning on the date of the enactment of the act (July 7, 2004) on
certain activities taken under sections 2, 3, 4, 6, 7, 9, and 10.

Section 2 made permanent the authority of GAO to provide voluntary early
retirements and voluntary separation incentive payments. While we have
used the early retirement authority on several occasions, we have chosen
not to implement the voluntary separation payments because of the costs
associated with their use. In addition to voluntary separation payments,
which can be as much as $25,000, GAO must pay the retirement fund an
amount equal to 45 percent of the employee's final base pay, a cost that
has deterred us from using the authority. Nevertheless, we believe that
this authority could prove useful at some point in very limited
circumstances.

During fiscal year 2006, we granted voluntary early retirement to 28
employees. As in the past, these early retirements helped GAO reshape its
workforce by providing retirement to mostly high-graded staff. Fiscal year
2006 recruitment focused primarily on entry-level positions to be filled
by employees possessing the skills and knowledge necessary to accomplish
GAO's work and provided assistance in GAO's efforts to reshape its
workforce.

Section 3(a) of the 2004 act established a requirement that an employee
must be performing at a satisfactory level in order to receive an annual
pay adjustment. Regulations were issued in January 2005 to implement the
satisfactory performance requirement for GAO's analysts and attorneys and
in January 2006 for remaining GAO staff in administrative, professional,
and support staff (APSS) occupations. All employees had been covered by a
validated competency-based appraisal system for at least one full
appraisal cycle when the satisfactory performance requirement was first
applied.

In addition, section 3(a) of the 2004 act amended 31 U.S.C. S 732(c),
which required GAO employees' pay to be adjusted at the same time and to
the same extent as the pay of employees under the General Schedule. It
gave the Comptroller General the authority to determine the amount of the
annual pay adjustment for GAO employees independent of General Schedule
increases. This authority was effective for any increase on or after
October 1, 2005.

For calendar year 2006, the Comptroller General provided an annual
adjustment of 2.6 percent to those who were performing at a satisfactory
level and who were paid within applicable competitive compensation limits,
except for wage-grade employees, and GAO Personnel Appeals Board employees
who received annual salary adjustments under alternative procedures
provided by regulation.^1 Additionally, the Senior Executive Service and
Senior Level employees received increases pursuant to section 3(b),
discussed below.

In determining the 2.6 percent annual adjustment, GAO considered the
criteria set forth in section 3(a) of the act, including relevant
information obtained from GAO's market-based compensation surveys
conducted by Watson Wyatt, a leading compensation consulting firm. The 2.6
percent increase was the same as the salary structure adjustment factor
that the survey relied upon by Watson Wyatt showed had been used for the
consulting, professional, scientific, and technical service industries in
2005. These industries are comparator organizations for GAO. The
Comptroller General did not determine that extraordinary economic
conditions or serious budget constraints existed in fiscal year 2006.

^1In addition, employees who were rated at meets expectations or higher
were eligible for performance-based compensation, which included a merit
increase to base pay or a lump sum performance bonus.

Under section 3(b), the Comptroller General is required to consider the
statutory criteria set out in section 3(a) in determining an annual
increase for members of the GAO Senior Executive Service and Senior Level
employees. The Comptroller General considered these criteria and
determined that each member performing at a satisfactory level would
receive a 1.9 percent increase, the same increase that was provided to the
Executive Schedule for calendar year 2006. The Comptroller General did not
determine that extraordinary economic conditions or serious budget
constraints existed in fiscal year 2006.

During fiscal year 2006, 329 employees were covered by the pay retention
provision under section 4. Two hundred and fifty of these employees were
above the pay range maximum for Band IIA. The remaining employees were
above the pay caps for the Analyst Band I or APSS bands.

Under section 6, certain key employees with less than 3 years' service for
purposes of leave accrual may be treated as if they had 3 years of federal
service. Therefore, they would earn 160 hours on an annual basis instead
of 104 hours. There were 5 employees who received this benefit during
fiscal year 2006.

Regarding the Executive Exchange Program provided for in section 7, GAO is
in the process of actively seeking individuals to participate in the
program. However, during fiscal year 2006, GAO had no program participants
from either GAO or the private sector.

Section 9 relates to GAO's performance management system and, among other
things, requires a link between the performance management system and the
agency's strategic plan, adequate training on the implementation and
operation of the system, and a process for ensuring ongoing performance
feedback. Even before the imposition of these requirements, GAO's
performance management system was in conformity with the statutory
requirements of section 9. GAO, however, continues to review and analyze
the system and make improvements, when appropriate.

Section 10 requires that before the implementation of any changes under
the Human Capital Reform Act, the Comptroller General shall consult with
any interested groups or associations representing officers and employees
of GAO. The Comptroller General and other relevant agency officials meet
periodically with the Employee Advisory Council (EAC) to discuss current
and emerging issues of mutual interest and concern, especially those in
the human capital area. GAO also uses focus groups, employee forums, and
other mechanisms to obtain employee input on major proposals. In addition,
GAO provides all employees with advance copies of draft orders concerning
proposed policies and regulations for their comments prior to publication
in final form. These steps were taken in regard to the promulgation of all
policies and regulations to implement the provisions of the Human Capital
Reform Act of 2004. We carefully considered the input from the comments of
EAC members and other GAO employees before implementing any changes.

In regard to human capital management at GAO, sections 2, 3, 4, 6, 7, 9,
and 10 have provided GAO with valuable tools to reshape its workforce and
acquire and retain the necessary talent to carry out its mission, meet its
performance goals, and fulfill its strategic plan. These sections
collectively are a part of the total human capital management tools at
GAO, which enable GAO to be a world-class professional services
organization. Without these provisions, GAO would have difficulty in
competing in the marketplace for employees with the appropriate knowledge,
skills, and abilities to do its work, a result that could have an adverse
impact on GAO's ability to fulfill its responsibilities to the Congress
and the American people.

(976621)

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