    Federal Personnel: Issues on the Need for the Public Health Service's
    Commissioned Corps (Letter Report, 05/07/96, GAO/GGD-96-55).

    Pursuant to a congressional request, GAO reviewed the operations of the
    Public Health Service's (PHS) Commissioned Corps, focusing on: (1)
    whether there continues to be a need for a commissioned corps with
    military-like pay, allowances, and benefits; and (2) potential costs if
    federal civilian employees performed the Corps' functions.

    GAO found that: (1) the Corps' original mission of providing medical
    care to ill and injured merchant seamen has evolved to include medical
    care for Native Americans and federal prison inmates and health sciences
    research; (2) Corps functions are essentially civilian and some civilian
    PHS employees also perform them; (3) new PHS employees have the option
    of serving in the Corps or in a civilian capacity; (4) the Corps assumed
    its military characteristics when it temporarily served with the armed
    forces during World Wars I and II, but the Department of Defense (DOD)
    has no specific plans on how to use the Corps during future emergency
    mobilizations; (5) Corps members assume military ranks and receive
    virtually the same compensation as the armed services, including
    retirement benefits; (6) in general, Corps members are not subject to
    the service requirements that DOD considers as justifying military
    compensation, or to the Uniform Code of Military Justice; (7) the Corps
    believes its existence is necessary to provide a mobile cadre of
    professionals who can be assigned on short notice to any locale and
    often under hazardous or harsh conditions; (8) PHS and other agencies
    often use civilian employees to respond quickly to emergencies; and (9)
    civilian employees would cost about $130 million less per year than
    Corps members to perform similar duties once the transition is complete.

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

     REPORTNUM:  GGD-96-55
         TITLE:  Federal Personnel: Issues on the Need for the Public Health
                 Service's Commissioned Corps
          DATE:  05/07/96
       SUBJECT:  Health care personnel
                 Officer personnel
                 Civilian employees
                 Federal employees
                 Fringe benefits
                 Federal agency reorganization
                 Military compensation
                 Defense contingency planning
                 Personnel management

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    Cover
    ================================================================ COVER

    Report to Congressional Requesters

    May 1996

    FEDERAL PERSONNEL - ISSUES ON THE
    NEED FOR THE PUBLIC HEALTH
    SERVICE'S COMMISSIONED CORPS

    GAO/GGD-96-55

    Need for the PHS' Commissioned Corps

    (966636)

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

      CDC - Centers for Disease Control and Prevention
      DOD - Department of Defense
      EPA - Environmental Protection Agency
      FEGLI - Federal Employees' Group Life Insurance
      FEHB - Federal Employees' Health Benefits Program
      FEMA - Federal Emergency Management Agency
      FERS - Federal Employees' Retirement System
      HHS - Department of Health and Human Services
      IHS - Indian Health Service
      NIH - National Institutes of Health
      NOAA - National Oceanographic and Atmospheric Administration
      NTSB - National Transportation Safety Board
      OASH - Office of the Assistant Secretary of Health
      OMB - Office of Management and Budget
      OPM - Office of Personnel Management
      PHS - Public Health Service
      SGLI - Serviceman's Group Life Insurance
      TSP - Thrift Savings Plan
      UNICEF - United Nations Children's Fund

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

    B-270284

    May 7, 1996

    The Honorable Lamar Smith
    House of Representatives

    The Honorable John R.  Kasich
    House of Representatives

    This report responds to your request that we review the operations of
    the Public Health Service's (PHS) Commissioned Corps, whose officers
    carry out a variety of public health functions.  You were interested
    in (1) whether there is a continuing need for the PHS Corps as a
    uniformed service with military-like pay, allowances, and benefits
    and (2) what the costs would be if federal civilian employees carried
    out the Corps' functions.  You were also interested in the same
    issues regarding the National Oceanographic and Atmospheric
    Administration's (NOAA) Commissioned Corps.  We plan to issue a
    separate report later on our findings on the NOAA Corps.

    In working with your designated representative on the request, it was
    agreed that answers to seven specific questions would provide the
    information you were seeking.  In general, the questions addressed
    why the Corps exists; Corps officers' duties; the rationale for their
    receiving military-like pay, allowances, and benefits; and any
    savings that might result from not using uniformed personnel to carry
    out Corps functions.  Our findings are summarized below, and detailed
    responses to each question are presented in appendix I.

    In doing our work, we interviewed and obtained documentation from
    officials of the Department of Health and Human Services (HHS), PHS,
    the Commissioned Corps, the Department of Defense (DOD), and other
    federal organizations that could provide insights into the Corps'
    functions, responsibilities, and costs.  Appendix II describes in
    detail the objective, scope, and methodology of our review.

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

    The PHS Corps was established in the late 1800s to provide medical
    care to sick and injured merchant seamen.  Over the ensuing years,
    the Corps' responsibilities have grown, and Corps officers are
    involved in a wide range of PHS programs, such as providing medical
    care to Native Americans at tribal and Indian Health Service
    facilities, psychiatric, medical, and other services in federal
    prisons, and health sciences research.

    The functions of the Corps are essentially civilian in nature.  In
    fact, some civilian PHS employees carry out the same functions as
    Corps members, and new employees hired for these functions are
    allowed to decide whether they will serve in a civilian capacity or
    as members of the Corps.

    Members of the Corps were authorized to assume military ranks and
    receive military-like compensation, including retirement eligibility
    (at any age) after 20 years of service, as the result of their
    temporary service with the armed forces during World Wars I and II.
    The Corps has not been incorporated into the armed forces since 1952,
    and DOD has no specific plans for how the Corps might be used in
    future emergency mobilizations.  Corps officers continue to receive
    virtually the same pay and benefits as the military, including
    retirement.

    Generally, the PHS Corps does not meet the criteria and principles
    cited in a DOD report as justification for the military compensation
    system.  According to the DOD report, the chief purpose of the
    military compensation system is to support the military services'
    mission readiness and sustainability.  Military members can be
    assigned at any time to any locations the services see fit,
    regardless of the members' personal preferences or risks.
    Accordingly, the military compensation system is based on the premise
    that individual aspirations and preferences are subordinated to the
    good of the service.  Other than officers who are detailed to the
    Coast Guard and DOD, Corps members are not subject to the Uniform
    Code of Military Justice, which underlies how military personnel are
    managed.\1

    Corps officials provided us their rationale for continuing the Corps
    as a uniformed service.  In large part, the officials maintained that
    uniformed Corps members are needed as mobile cadres of professionals
    who can be assigned with little notice to any location and function
    where their services are necessary, often in hazardous or harsh
    conditions.  We found that although some Corps assignments are of
    this nature, federal civilian employees are often also assigned to
    duties similar to those of the Commissioned Corps.  Some PHS civilian
    employees--physicians, nurses, pharmacists, and others--have
    responsibilities that are identical to those of PHS Corps officers.
    Other agencies, such as the Environmental Protection Agency, the
    National Transportation Safety Board, and the Federal Emergency
    Management Agency, use civilian employees to respond quickly to
    disasters and other emergency situations.

    According to our estimates, it would cost the government less to
    employ civilian workers than PHS Corps members.  As of March 1995,
    PHS employed 6,276 persons on active duty in its Commissioned Corps.
    On the basis of 1994 costs, we estimate that PHS' annual personnel
    costs could be as much as $130 million, or about 22 percent, a year
    lower if civilian employees were used for the functions carried out
    by Corps members, once a transition to civilian employment were
    completed.\2 The components of this $130 million cost reduction
    include special pays, allowances, bonuses, Corps officers' advantage
    from paying no taxes on their housing and subsistence allowances, and
    retirement.

    --------------------
    \1 Under a 1902 statute, the president can incorporate the Corps into
    the military service in the event of war or national emergency.
    Since all military personnel are subject to the Uniform Code of
    Military Justice, Corps officers, after being incorporated into the
    military, would be subject to the Code.  This situation has not
    occurred since 1952.

    \2 The actual net cost reduction would differ, depending on various
    factors, including the method by which any changes are implemented,
    the accuracy of the data PHS and DOD provided us, the applicability
    of 1994 costs to future years, and how closely our underlying
    assumptions match actual relationships between Corps and civilian
    personnel costs.  Cost reduction would result in budgetary savings
    only if Congress reduced appropriations by the amount of the cost
    reduction and lowered the discretionary spending caps.

       AGENCY COMMENTS
    ------------------------------------------------------------ Letter :2

    HHS provided written comments on a draft of this report.  Its
    specific comments on our responses to the seven questions are
    discussed at the end of the appropriate sections in Appendix I along
    with our responses to the comments.

    HHS maintained that continuation of the Corps is essential to
    effective operations of the government's health programs.  The
    primary argument advanced by HHS for retaining the Corps was an
    assertion that officers eligible to retire would, in fact, retire if
    the Corps functions were civilianized, and as many as 25 percent of
    the officers not eligible to retire would elect to leave their jobs,
    thereby creating immediate and long-term problems in the recruitment
    and retention of qualified health professionals and in the
    development of professional leadership for the future.  HHS said it
    was informed by the agencies to which Corps officers are assigned
    that loss of the Corps would have an extremely detrimental effect on
    their programs and that they believed it would be very difficult to
    replace Corps officers with similarly qualified civilian employees.

    We did not survey Corps officers to assess their potential actions if
    the Corps were civilianized.  More importantly, there are a number of
    ways in which a transition to civilian employment could be
    accomplished if the Corps were eliminated, and the time period over
    which the transition would occur would have to be determined.  In its
    comments, HHS presumed that the transition would be immediate and
    that all Corps officers would be required to decide whether to become
    civilian employees or leave their jobs.  While such an approach is
    possible, nothing in our report suggested that it was the appropriate
    arrangement.  It is also important to note that our report does not
    assess whether the Corps should be eliminated and reaches no
    conclusions nor makes any recommendations in this regard.  Rather, we
    were asked to answer seven questions related to the Corps' history,
    costs, and operations.  If a decision were made to eliminate the
    Corps, it is apparent that many considerations would be involved, not
    the least of which would be the manner in which a transition to
    civilian employment would be carried out and over what time frame.

    We believe it is informative to again note that each professional
    category (medical, dental, nursing, etc.) in the Corps had civilian
    employee counterparts, often with more civilian employees than Corps
    officers serving in the professional category.  Nothing came to light
    during our review or in the HHS comments to suggest that the civilian
    employees were incapable of carrying out their job responsibilities.

    HHS took issue with our estimates of the comparative costs of
    employing Corps officers and civilian employees included in the draft
    report.  After analyzing the HHS comments, including consideration of
    certain circumstances that had changed since our work was completed,
    we adjusted the cost comparisons accordingly.  However, HHS also
    maintained that one-time transition costs amounting to at least $575
    million could be incurred to convert the Corps to civilian
    employment.  We found this estimate to be questionable because it
    consisted mostly of costs that would be incurred regardless of
    whether the Corps were continued or terminated.

    DOD also provided written comments on the draft report.  DOD stated
    that the number of Corps officers currently assigned to DOD was
    somewhat greater than indicated in the report.  We did not change the
    report because the assignment data in the report reflected officer
    assignments as of a specific date.  DOD also suggested some wording
    changes for clarification, particularly with regard to PHS' role in
    DOD's emergency mobilization plans.  In consultation with a DOD
    official, we revised the wording to accommodate DOD's suggestions.

    ---------------------------------------------------------- Letter :2.1

    As agreed with your office, unless you publicly announce its contents
    earlier, we plan no further distribution of this report until 7 days
    from the date of this letter.  At that time, we will send copies to
    the Secretaries of HHS and DOD and other interested parties.  We will
    also make copies available to others upon request.

    If you have questions concerning this report, please telephone me at
    (202) 512-8676.  Major contributors to this report are listed in
    appendix V.

    L.  Nye Stevens
    Director, Federal Management
     and Workforce Issues

    (See figure in printed edition.)Appendix I
    INFORMATION ON THE PUBLIC HEALTH
    SERVICE'S COMMISSIONED CORPS
    ============================================================== Letter

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    OBJECTIVE, SCOPE, AND METHODOLOGY
    ========================================================== Appendix II

    The objective of this report is to provide information on the
    operations of the Public Health Service's (PHS) Commissioned Corps.
    We were asked to provide answers to seven questions regarding PHS
    Corps officers' duties; the rationale for their receiving
    military-like pay, allowances, and benefits; and any savings that
    might result from not using uniformed personnel to carry out Corps
    duties.  One of the questions asked about efforts to fund the Corps
    retirement system on the accrual basis.

    The seven questions were as follows:

    1.  When and why was the PHS Corps established?

    2.  When and why were members of the Corps first covered by
    military-like pay, allowances, and benefits?  What facts can be cited
    that are relevant to these justifications?  In what ways is the
    Corps' compensation program like, and unlike, the military
    compensation program?

    3.  What reasons does the Corps now give in support of the need for
    uniformed services personnel to carry out its functions?  What facts
    can be cited that are relevant to these arguments?

    4.  What are the DOD-stated principles of uniformed services'
    compensation?  In what way do the Corps functions conform to, or not
    conform to, these principles?

    5.  Would there be cost savings if the PHS Corps did not use
    uniformed services personnel to carry out its functions?

    6.  What are the functions of the reserve officers in the PHS Corps?
    What is the federal budgetary obligation to the inactive reserves?

    7.  Have there been efforts to change the Corps' retirement system to
    the accrual basis?  If yes, what has occurred as a result of those
    efforts?

    To gather information on the Corps' history and officers' duties, we
    reviewed PHS historical material and interviewed and obtained
    documentation from officials of the Office of the Secretary of the
    Department of Health and Human Services (HHS); PHS, including Corps
    officials; the Indian Health Service; the Department of Defense
    (DOD), including the Departments of the Army and Navy; the National
    Transportation Safety Board; the Federal Emergency Management Agency;
    the Environmental Protection Agency; the Coast Guard; and the Bureau
    of Prisons.

    Since the Corps' compensation system is very similar to the
    compensation system for military personnel, we identified the
    criteria DOD uses to justify the military compensation system.  These
    criteria were articulated in a report entitled The Fifth Quadrennial
    Review of Military Compensation.\1 We then obtained the views of PHS
    Corps officials on how service in the Corps related to these
    criteria.  We also interviewed officials of HHS component agencies,
    such as the National Institutes of Health and the Health Care
    Financing Administration, to determine whether positions occupied by
    Corps officers in those organizations could be filled by civilians.

    To compare the costs of using uniformed personnel or civilian
    employees to carry out Corps duties, we identified the different
    types of pay, allowances, bonuses, and benefits that officers receive
    in the Corps and obtained data from PHS that showed the cost to the
    government of providing each type of pay, allowance, bonus, and
    benefit during calendar year 1994.  We used 1994 data because that
    was the most recent full year for which data were available.  We
    obtained from PHS the equivalent General Schedule salary grades for
    civilian employees that would be appropriate for the duties and
    responsibilities of Corps members at each Corps grade.  We then
    obtained from PHS and applied the average annual compensation (total
    pay, allowances, bonuses, and benefits) costs for PHS civilian
    employees in these grades during the same time period to estimate
    what the cost would have been if civilian employees had carried out
    the Corps functions.

    We also obtained information on other types of benefits and
    privileges available to Corps members, such as military commissary
    and exchange privileges; access to military service clubs, health
    clubs, and other recreational facilities; and occupational health
    clinical services.  Some of these benefits and privileges, such as
    the commissaries and exchanges, recreational facilities, and
    occupational health clinics, involve some measure of cost to the
    government, although not necessarily to PHS.  However, because of the
    difficulty in determining the value of these benefits and privileges
    and the lack of information on the extent to which PHS personnel
    actually used them, we did not include these elements in our
    cost-comparison estimates.

    To gather information on the methods used to finance the Corps'
    retirement program, we interviewed officials from HHS and the Office
    of Management and Budget.

    We did our work in Washington, D.C., and Oklahoma City, Pawnee, and
    Claremore, OK, between November 1994 and January 1996.  Our work was
    done in accordance with generally accepted government auditing
    standards.

    HHS and DOD provided written comments on a draft of this report.
    Copies of their comments are included as appendixes III and IV.  HHS'
    comments included both a summary of HHS' positions on the matters
    discussed in the report and an appendix providing elaboration and
    details supporting the summary comments.  Because we found that the
    summary comments captured the essence of the information contained in
    the appendix, only the summary comments are included in appendix III.

    (See figure in printed edition.)Appendix III

    --------------------
    \1 The Fifth Quadrennial Review of Military Compensation, Department
    of Defense, January 1984.

    COMMENTS FROM THE DEPARTMENT OF
    HEALTH AND HUMAN SERVICES
    ========================================================== Appendix II

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    (See figure in printed edition.)Appendix IV
    COMMENTS FROM THE DEPARTMENT OF
    DEFENSE
    ========================================================== Appendix II

    (See figure in printed edition.)

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

    GENERAL GOVERNMENT DIVISION,
    WASHINGTON, D.C.

    Robert E.  Shelton, Assistant Director, Federal Management and
    Workforce
     Issues
    Nancy A.  Patterson, Assignment Manager
    Philip Kagan, Technical Advisor
    Steven J.  Berke, Evaluator-in-Charge
    Marlene M.  Zacharias, Evaluator Assistant

    *** End of document. ***