Veterans' Preference: Data on Employment of Veterans (Letter Report,
02/01/95, GAO/GGD-96-13).

Pursuant to a congressional request, GAO provided information on whether
the Office of Personnel Management (OPM) and other federal agencies have
given veterans hiring preference, focusing on: (1) OPM implementation of
its veterans' preference oversight responsibilities; (2) whether the
Merit Systems Protection Board's (MSPB) authority over veterans'
preference appeals has been weakened by the Civil Service Reform Act of
1978; and (3) how reductions-in-force (RIF) have affected women and
minorities when veterans' preference was applied.

GAO found that: (1) veterans' preferences given to OPM and
governmentwide new hires has increased since 1990; (2) OPM policies
encourage the employment and career enhancement of veterans; (3) OPM
guidance explains veterans hiring policies and the responsibilities of
OPM veterans program coordinator; (4) OPM routinely reviews veterans
preference hiring procedures at various agencies to determine if
veterans receive the percentage points to which they are entitled; (5)
the Civil Service Reform Act has not weakened MSPB authority over
veterans' preference appeals; and (6) women and minorities are
disproportionately separated during a RIF because they rank lower than
white males in areas such as veterans' preference.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  GGD-96-13
     TITLE:  Veterans' Preference: Data on Employment of Veterans
      DATE:  02/01/95
   SUBJECT:  Veterans employment programs
             Reductions in force
             Veterans benefits
             Hiring policies
             Personnel management
             Women
             Minorities
             Labor statistics
IDENTIFIER:  OPM Central Personnel Data File
             Senior Executive Service
             SES
             OPM Recruitment and Special Programs Handbook
             
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Cover
================================================================ COVER


Report to the Chairman, Committee on Veterans' Affairs, House of
Representatives

February 1996

VETERANS' PREFERENCE - DATA ON
EMPLOYMENT OF VETERANS

GAO/GGD-96-13

Veterans' Preference

(966677)


Abbreviations
=============================================================== ABBREV

  DOD - Department of Defense
  MSPB - Merit Systems Protection Board
  OPM - Office of Personnel Management
  RIF - reduction-in-force
  SES - Senior Executive Service
  VRA - Veterans Readjustment Appointment

Letter
=============================================================== LETTER


B-265702

February 1, 1996

The Honorable Bob Stump
Chairman, Committee on Veterans'
 Affairs
House of Representatives

Dear Mr.  Chairman: 

Under federal law, agencies are to give preferential hiring
consideration to eligible veterans as a measure of national gratitude
for their military service.  Agencies are also to give preference to
veterans in retaining their jobs during a reduction-in-force (RIF). 

This report responds to your request for information on the veterans'
preference practices of executive branch agencies.  As agreed with
your office, we are providing information on

  whether statistics indicate that the Office of Personnel Management
     (OPM) and other federal agencies have given veterans hiring
     preference;

  how OPM has implemented its veterans' preference oversight
     responsibilities;

  whether the Merit Systems Protection Board's (MSPB) authority over
     veterans' preference appeals was weakened by the Civil Service
     Reform Act of 1978 (P.L.  95-454); and

  how RIFs have affected women and minorities when veterans'
     preference was applied. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

Veterans represented a generally increasing share of the new hires
made by OPM in recent years.  In fiscal year 1994, for example, over
18 percent of OPM's new hires had veterans' preference, up from 6.6
percent in fiscal year 1990.  The increased representation of
veterans among new hires at OPM was generally reflected
governmentwide.  Among all agencies, the percentage of new hires with
veterans' preference increased from 12 percent in fiscal year 1990 to
14.8 percent in fiscal year 1994.  OPM's policies encourage the
employment and career enhancement of veterans.  OPM's guidance
explains the various ways veterans can be hired and details the
responsibilities of OPM's veterans program coordinator. 

In terms of OPM's oversight of agencies' implementation of veterans'
preference regulations, our prior work found that veterans'
preference procedures were being properly applied in virtually all of
the hiring instances we examined.\1 We did not examine whether
agencies were correctly applying veterans' preference during RIFs. 

With regard to MSPB's authority over veterans' preference appeals, we
believe the current legal framework to protect veterans' rights was
not weakened by the Civil Service Reform Act.  While the act extended
appeal rights to other competitive service employees, veterans'
rights to appeal RIFs and adverse personnel actions were not
affected. 

In our prior work on how women and minorities were affected during a
RIF at three Department of Defense (DOD) installations, we found that
women and minorities were disproportionately separated, in part
because they ranked lower than white males in one of three retention
factors, including veterans' preference.\2


--------------------
\1 Federal Hiring:  Does Veterans' Preference Need Updating? 
(GAO/GGD-92-52, Mar.  20, 1992). 

\2 Federal Personnel:  The EEO Implications of Reductions-In-Force
(GAO/T-GGD-94-87, Feb.  1, 1994). 


   BACKGROUND
------------------------------------------------------------ Letter :2

To help reward veterans for their military service, the Veterans'
Preference Act of 1944, as amended, requires that eligible veterans
be given enhanced consideration for federal jobs.  This is done by
adding either 5 or 10 points to the passing examination scores of
honorably discharged veterans meeting certain military service
requirements.  The basic preference to which applicants are entitled
is the 5-point preference.  The 10-point preference is given to
disabled veterans and Purple Heart recipients, as well as to the
eligible spouses, unmarried widows and widowers, and mothers of
disabled or deceased veterans. 

Candidates are listed on civil service registers in order of their
examination ratings augmented by their preference points, except that
disabled veterans who have compensable service-connected disabilities
of 10 percent or more automatically rise to the top of civil service
registers for nonprofessional, nonscientific positions below GS-9. 
Federal agencies have discretionary authority to give noncompetitive
appointments to any veteran who has a service-connected disability of
30 percent or more. 

Federal law also gives eligible veterans certain protections that
help them retain their jobs during a RIF.  These protections are
discussed in greater detail in a later section of this report. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3

Data on OPM's veterans' preference employment statistics were
provided by OPM's Personnel Programs and Systems Division. 
Governmentwide data on veteran employment was obtained from OPM's
Central Personnel Data File.  The file includes information on
federal workers in most agencies, the major exclusions being Members
of Congress and employees of Congress, the Judicial Branch, and the
Postal Service.  The time period covered by both sets of data was
fiscal years 1990 through 1994.  We did not verify the accuracy of
the OPM data. 

To obtain information on OPM's oversight of veterans' preference
regulations, we used our prior work that examined whether OPM and
other executive agencies were giving veterans the preference to which
they were entitled.\3 In producing this report, we reviewed 1,136
randomly selected certificates (lists of eligible candidates) and
1,862 federal job applications submitted by persons on those
certificates.  We determined whether the applicants received
appropriate preference points and certificate rankings and whether
they were hired.  The applications included 342 from veterans and
1,520 from nonveterans.  OPM and other executive agencies prepared
the certificates between July 1990 and June 1991.  To obtain
information on OPM's current role in monitoring agencies'
implementation of veterans' preference hiring procedures, we
interviewed OPM's Associate Director for Employment. 

To obtain information on MSPB's authority over veterans' preference
appeals, we analyzed applicable laws, regulations, and other
pertinent documents.  We also interviewed an official from MSPB's
Office of Policy and Evaluation. 

To determine how RIFs affect women and minorities when veterans'
preference is applied, we used our earlier work that focused on RIFs
at DOD, the only federal agency to have significant RIFs in fiscal
year 1991.\4 For that analysis, we selected for review one location
each from the Army, Navy, and Air Force. 

We performed our review from July 1995 through September 1995 in
accordance with generally accepted government auditing standards.  We
obtained comments on a draft of our report from OPM and MSPB.  These
comments and our evaluation are discussed in the Agency Comments
section. 


--------------------
\3 GAO/GGD-92-52. 

\4 GAO/T-GGD-94-87. 


   EMPLOYMENT STATISTICS SHOW
   VETERANS COMPRISE AN INCREASING
   SHARE OF NEW HIRES AT OPM AND
   GOVERNMENTWIDE, BUT A SMALLER
   SHARE OF THE FEDERAL WORKFORCE
   AS A WHOLE
------------------------------------------------------------ Letter :4

The percentage of new hires with veterans' preference at OPM has
generally increased in recent years, even as the agency has scaled
back its hiring because of downsizing.  As shown in figure 1, in
fiscal year 1994, 18.4 percent of OPM's new hires had veterans'
preference, compared with 6.6 percent in fiscal year 1990. 

The proportional increase in veteran hires at OPM was generally
reflected governmentwide.  Among all agencies, the percentage of new
hires with veterans' preference (including dependents of veterans
with veterans' preference) increased overall from 12 percent in
fiscal year 1990 to 14.8 percent in fiscal year 1994 (see fig.  1). 
According to an official from OPM's Employment Service, one reason
for this increase could be that, as the demand for new employees has
diminished, agencies have not needed to go as far down on employment
registers as they have in the past.  Because candidates at the top of
registers are more likely to have veterans' preference, a larger
proportion of these new hires would be veterans.  Another factor
suggested by OPM is the popularity of the Veterans Readjustment
Appointment (VRA) authority, which allows agencies to directly hire
veterans.\5

In comparing OPM's performance in hiring preference eligibles with
that of other agencies, the comparatively large percentage of
employees claiming preference hired by OPM in fiscal year 1994 is
noteworthy because OPM has generally lagged behind other agencies in
previous years. 

   Figure 1:  Agencies Are Hiring
   Proportionately More Candidates
   With Veterans' Preference

   (See figure in printed
   edition.)

Note:  Data includes dependents of veterans with veterans'
preference. 

Source:  OPM's Central Personnel Data File. 

Defense agencies, led by the Army and Navy, hired a higher percentage
of veterans with preference than did non-Defense agencies in fiscal
years 1990 through 1994.  In fiscal year 1994, for example, 20
percent of the Army's new hires and 21.4 percent of the Navy's new
hires had veterans' preference.  Among non-Defense agencies, the
Department of Veterans Affairs had the largest proportion of veterans
in its new hires.  In fiscal year 1994, nearly 18 percent of its new
hires had veterans' preference. 


--------------------
\5 VRA is a special authority by which agencies, at their discretion,
can appoint an eligible veteran without competition.  VRA employees
are initially hired for a 2-year period, after which they are
eligible for a permanent appointment. 


      THE PROPORTION OF VETERANS
      IN THE OPM WORKFORCE HAS
      INCREASED SLIGHTLY BUT
      REMAINS LOWER THAN IN OTHER
      AGENCIES
---------------------------------------------------------- Letter :4.1

Over the last several years, OPM has substantially reduced the size
of it workforce, going from 7,023 employees at the end of fiscal year
1992 to 5,618 employees at the end of fiscal year 1994.  During this
period, veterans with preference, as a share of all OPM employees,
slightly increased their representation.  At the end of fiscal year
1992, employees with veterans' preference made up 17 percent of OPM's
workforce compared with about 18 percent at the end of fiscal year
1994.  While veterans with preference now comprise a larger share of
OPM's workforce than in previous years, their representation is still
lower than in many other agencies.  Governmentwide, 27 percent of the
workforce had veterans' preference at the end of fiscal year 1994. 


      VETERANS AND NONVETERANS
      WERE EQUALLY DISTRIBUTED
      ACROSS LOWER AND MIDDLE
      GRADE LEVELS AT OPM
---------------------------------------------------------- Letter :4.2

As shown in figure 2, no pattern existed with regard to the
distribution of veterans and nonveterans across grade levels (GS and
GS-equivalent) and pay plan (general schedule or wage grade) at OPM. 
Both groups were almost equally concentrated at grade levels 1 to 4
and 9 to 12.  At the same time, there were proportionately more
veterans at the higher grade levels--GS-13 to Senior Executive
Service (SES)--compared with nonveterans, and a larger percentage of
veterans than nonveterans were blue collar employees. 

   Figure 2:  Distribution of OPM
   Employees Across Grade Levels
   and Pay Plans by Veterans'
   Preference Status, Fiscal Year
   1994

   (See figure in printed
   edition.)

Note:  Percentages are based on 1,035 employees with veterans'
preference and 4,583 employees without veterans' preference. 

Source:  OPM. 

With regard to the type of preference claimed by veterans at OPM, as
shown in figure 3, of the 1,035 OPM employees that had veterans'
preference at the end of fiscal year 1994, the vast majority claimed
a 5-point preference.  This is the basic veterans' preference to
which eligible employees are entitled. 

   Figure 3:  Types of Veterans'
   Preference Claimed by OPM
   Employees, Fiscal Year 1994

   (See figure in printed
   edition.)

Note 1:  Percentages are based on 1,035 OPM employees with veterans'
preference.  Numbers may not add due to rounding. 

Note 2:  10-point (other) preference is that granted to the
widow/widower or mother of a deceased veteran or to the spouse or
mother of a disabled veteran. 

Source:  OPM. 


      OPM'S POLICIES ENCOURAGE THE
      HIRING AND CAREER
      DEVELOPMENT OF VETERANS
---------------------------------------------------------- Letter :4.3

OPM's policies on its internal employment of veterans are described
in its Recruitment and Special Programs Handbook.  The chapter on
employment programs for veterans, for example, lists the various
mechanisms and legal authorities through which veterans may be hired. 
OPM also has a veterans program coordinator who is responsible for
recruiting, placing, counseling, and helping to develop veterans'
careers at OPM.  Because of the sporadic need for the program
coordinator's services, the position is a collateral responsibility
of an employee in OPM's Employment Service. 

To help veterans find employment at OPM, the agency publishes a
pamphlet that describes its general career positions, including how
candidates can qualify for either the VRA authority or the
30-percent-disabled veterans program.  It also lists the forms
applicants would need to complete in order to be considered for the
various veterans programs. 


      THE PROPORTION OF VETERANS
      IN THE FEDERAL WORKFORCE IS
      DECLINING
---------------------------------------------------------- Letter :4.4

As noted earlier, preference-eligible veterans comprised 27 percent
of the federal workforce as of September 30, 1994.  This continued a
downward trend in veteran employment that had been ongoing for a
number of years.  According to OPM data, preference-eligible veterans
made up about 39 percent of the federal workforce at the end of
fiscal year 1983, and 34 percent of the workforce at the end of
fiscal year 1987. 

A likely reason for the decline is that preference-eligible veterans
are leaving the workforce in greater numbers than they are entering
it, as a result of the aging of the veteran workforce and the
shrinking of the pool of preference eligibles.  For example, while
veterans with preference accounted for 14.8 percent of all hires in
fiscal year 1994, they accounted for nearly 49 percent of all
retirements. 

Throughout the 1980s, much of the decline in the number of veterans
in the federal workforce could be attributed largely to the shrinking
pool of preference eligibles.  While Operation Desert Storm added to
this pool, it is not known how many of these veterans are interested
in applying for federal employment.  Thus, whether the downward trend
in veteran employment will be reversed in future years is unclear. 


   HOW OPM HAS IMPLEMENTED ITS
   VETERANS' PREFERENCE OVERSIGHT
   RESPONSIBILITIES
------------------------------------------------------------ Letter :5

To ensure that eligible veterans receive the preference due them,
federal law requires that applicants for many federal positions be
hired according to specific scoring, ranking, and selection
procedures.  These procedures are to be carried out either by OPM or
by agencies when OPM delegates hiring authority to them. 

According to OPM, as part of its oversight of veterans' preference,
its various offices

  routinely review returned certificates to determine whether
     agencies properly gave veterans preference in hiring,

  periodically audit agency-delegated examining units to assess
     whether they are applying veterans' preference properly,

  decide whether to allow agencies to pass over disabled veterans or
     to object to the qualifications of a disabled veteran for
     medical reasons,

  address issues on veterans' reemployment rights, and

  respond to agency and employee inquiries on RIF policies and
     procedures. 

OPM's Office of Merit Systems Oversight and Effectiveness has
oversight responsibility for veteran employment programs and
authorized demonstration projects that test alternative veterans'
preference hiring procedures.  According to OPM, the oversight--done
in response to specific complaints--is performed by OPM's service
centers located in various cities across the country.  OPM maintains
that very few violations are found because hiring officials are good
at seeing that veterans get the points and other preference to which
they are entitled. 

While we did not assess OPM's oversight practices for this
assignment, in our March 1992 review of veterans' preference hiring
procedures at OPM and other executive agencies, we found that
veterans received the preference points to which they were entitled
in nearly all cases.  Of the 1,862 applications we examined,
veterans' preference points were properly awarded in all but 6
instances.  Moreover, veterans were properly placed on all but 1 of
the 1,136 hiring certificates we reviewed.  However, we also found
that, at the time of our review, agency managers had returned a
greater percentage of certificates without making a selection when a
veteran appeared at the top (71 percent) than when a nonveteran did
(51 percent).\6 As a result, we recommended, and OPM implemented, a
tracking system to identify and correct problems related to veterans'
preference and the nonuse of certificates. 

OPM does not believe that there is a problem with agencies'
implementation of veterans' hiring procedures at this time.  OPM
meets quarterly with representatives of veterans service
organizations to discuss veteran employment issues.  According to an
official from OPM's Employment Service, the lack of complaints from
veterans at these meetings indicates to OPM that agencies are
properly following veterans' preference hiring procedures. 


--------------------
\6 GAO/GGD-92-52, pp.  27-28. 


   THE CIVIL SERVICE REFORM ACT
   AUTHORIZED MSPB TO HEAR CERTAIN
   VETERANS' PREFERENCE APPEALS
------------------------------------------------------------ Letter :6

Based on our review of pertinent laws and regulations and interviews
with an official from MSPB's Office of Policy and Evaluation, we
believe that the Civil Service Reform Act did not weaken MSPB's
authority to protect veterans' employment rights.  Veterans are still
entitled to appeal certain personnel actions to MSPB, and in some
cases they are afforded special rights of redress that nonveterans
lack. 

Sections 12 and 14 of the Veterans Preference Act of 1944 gave
veterans certain procedural and appeal protections for RIF actions,
as well as for adverse personnel actions such as removals,
suspensions of more than 14 days, reductions in grade or pay, and
furloughs of 30 days or less.  Under the act, veterans were to appeal
their cases to the U.S.  Civil Service Commission.  Later, these
protections were extended to nonveteran competitive service employees
by executive order. 

The Civil Service Reform Act of 1978 created MSPB, which was
established to hear appeals previously taken to the Civil Service
Commission.  The act also granted all competitive service employees,
not just veterans, a statutory right to appeal adverse personnel
actions to MSPB.  Thus, while the act created some new appeal rights
that did not previously exist, it did not change the existing actions
that could be appealed or the kinds of employees who could file those
cases. 

Moreover, in some instances, preference-eligible veterans have appeal
rights not granted to others.  For example, at certain agencies, such
as the Postal Service, the Postal Rate Commission, the Panama Canal
Commission, and the Tennessee Valley Authority, preference-eligible
veterans can appeal RIFs and adverse actions to MSPB while other
employees of these agencies generally cannot.  And, while both
veterans and nonveterans may appeal RIF procedures,\7 under RIF
regulations, employees with veterans' preference have significantly
greater retention rights.  As a result, they have greater substantive
rights in their appeals to MSPB. 

While MSPB has authority over certain types of appeals by
preference-eligible veterans, the extent to which veterans actually
appeal cases to MSPB is unclear.  MSPB does not keep data on whether
appellants were preference eligible. 


--------------------
\7 RIF procedures that can be appealed include, for example, agency
failure to make a reasonable offer of assignment, failure to properly
apply veterans' preference, and improper determination of an
employee's tenure group or length of service. 


   THE EFFECT ON WOMEN AND
   MINORITIES WHEN VETERANS'
   PREFERENCE IS APPLIED DURING A
   RIF
------------------------------------------------------------ Letter :7

Federal law gives eligible veterans certain protections that help
them retain their jobs during a RIF.  As set forth in 5 U.S.C
3501-3504, whether an employee is retained depends on the following
factors (listed in order of priority):  (1)tenure (i.e.  career,
career conditional, or temporary); (2)veterans' preference; and
(3)seniority (adjusted for performance ratings).  Using these
factors, agencies are to rank each employee where jobs are to be
eliminated and record this ranking in a retention register.  Within
each tenure group, disabled veterans are listed first, followed by
veterans.  Nonveterans are ranked last.  Employees are separated
starting at the bottom of a retention register.  As positions are
abolished, incumbents of those positions may have assignment rights
to other positions depending on their retention status and
qualifications. 

According to OPM, while agencies may consider the impact RIFs may
have on women and minorities, employees in these categories are not
afforded the statutory protections given to veterans during a RIF. 
Thus, unless the women and minorities are veterans, they may be
separated at a rate that is unintentionally disproportionate to their
numbers. 

In our February 1994 testimony on the demographic impacts of RIFs
that occurred at three locations in 1991--Alameda Naval Aviation
Depot, Kelly Air Force Base, and Watervliet Army Arsenal--we found
that, at all three sites, minorities were separated at a rate
disproportionate to their numbers, and that women were separated
disproportionate to their numbers at Watervliet and Alameda.\8 In
some cases, these disproportionate separations occurred because women
and minorities ranked lower than white males in one of the three
retention factors, including veterans' preference.  In other cases,
the disproportionate separations occurred because minorities occupied
a large proportion of the positions abolished and the employees had
no assignment rights to other positions. 

For example, at Alameda, although 73 of 147 (50 percent) of wage
grade 10 (WG-10) machinists were minorities, 9 of 13 (69 percent) of
those separated were minorities.  Similarly, at Watervliet, although
only 15 of the 182 (8 percent) WG-8 machine tool operators were
women, 13 of 56 (23 percent) of those separated were women.  Overall,
minorities at Alameda had slightly lower career tenure status (87
percent compared to 88 percent for nonminorities); 39 percent had
veterans' preference status compared to 46 percent of nonminorities;
and 42 percent had above average performance-adjusted seniority
compared to 52 percent of nonminorities. 

A variation among the groups in even one of the three retention
factors could markedly affect separation rates.  For example, the 13
women at Watervliet Army Arsenal generally were separated because
they lacked veterans' preference.  On the other hand, tenure was the
most significant factor affecting the separations of the nine
minority employees at Alameda. 


--------------------
\8 GAO/T-GGD-94-87, p.  2. 


   AGENCY COMMENTS AND OUR
   EVALUATION
------------------------------------------------------------ Letter :8

We requested comments on a draft of this report from the Chairman of
MSPB and the Director of OPM.  On October 6, 1995, MSPB's Deputy
Director of Policy and Evaluation provided us with oral comments. 
MSPB agreed with our findings but suggested some minor changes to
help clarify our discussion of RIF procedures and who is eligible to
appeal them.  On October 11, 1995, we received oral comments from the
Associate Director, Employment Service, OPM.  OPM agreed with our
findings but suggested that we attach several additional oversight
activities to those already cited in our report in order to make our
discussion of OPM's oversight of veterans' preference more complete. 
We found both agencies' comments to be reasonable and have
incorporated them in our report where appropriate. 


---------------------------------------------------------- Letter :8.1

Copies of this report are being sent to the Ranking Minority Member
of the House Committee on Veterans' Affairs, as well as the Chairmen
and Ranking Minority Members of the Subcommittee on Civil Service,
House Committee on Government Reform and Oversight; the Subcommittee
on Post Office and Civil Service, Senate Committee on Governmental
Affairs; and the Senate Committee on Veterans' Affairs.  Upon
request, copies will

be made available to others interested in veterans' preference and
employment issues.  The major contributors to this report are listed
in the appendix.  Please call me on (202) 512-3511 if you have any
questions concerning this report. 

Sincerely yours,

Timothy P.  Bowling
Associate Director
Federal Management and
 Workforce Issues


MAJOR CONTRIBUTORS TO THIS REPORT
==================================================== Appendix Appendix

GENERAL GOVERNMENT DIVISION,
WASHINGTON, D.C. 

Steven J.  Wozny, Assistant Director,
 Federal Management and Workforce Issues
Robert Goldenkoff, Evaluator-in-Charge

OFFICE OF THE GENERAL COUNSEL

Alan Belkin, Assistant General Counsel
Robert Heitzman, Senior Attorney

DENVER REGIONAL OFFICE

Thomas Kingham, Senior Evaluator


*** End of document. ***