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




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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



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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


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