Personnel Practices: Improper Personnel Actions on Selected CPSC
Appointments (Letter Report, 06/27/97, GAO/GGD-97-131).

Pursuant to a congressional request, GAO investigated alleged improper
personnel activities at the Consumer Product Safety Commission (CPSC),
focusing on: (1) whether the appointments of six individuals who were
the subjects of the allegations were made in accordance with merit
system principles and applicable rules and regulations; and (2) the
number of appointments that CPSC had made at advanced rates of pay
during the period beginning in March 1994 and ending in March 1997.

GAO noted that: (1) the allegations concerning the six appointments
proved to be partially true; (2) the appointments did not, as alleged,
constitute "burrowing in" because the individuals did not convert from
noncareer political appointments to career appointments in the
competitive service; (3) each of the appointments was beset, however, by
one or more irregular or improper personnel actions; (4) these included:
(a) three instances in which proper candidate examination and selection
procedures were not followed, causing, in two cases, veterans with
veterans preference eligibility to be denied proper consideration in the
selection process; (b) three instances in which advanced rates of pay
based on superior qualifications were set without the required
documentation to justify such rates; and (c) two instances in which the
proper use of the term appointment authority was questionable; (5) in
December 1996, GAO asked the Office of Personnel Management (OPM), which
is responsible for overseeing the federal personnel system, to review
GAO's findings for the six appointments and, if those findings were
accurate, to tell GAO what corrective actions it would instruct CPSC to
take; (6) OPM generally agreed with GAO's findings and directed CPSC to
take certain actions, such as to notify the veterans that they are to
receive priority consideration for the next positions that become
available that are similar to those for which they had applied; (7) CPSC
made 20 additional appointments between March 1994 and March 1997 in
which, according to CPSC data, the appointees received advanced rates of
pay; (8) in 2 of the 20 cases the individuals had resigned from CPSC,
and their official personnel folders were not readily available; (9) of
the remaining 18 appointments, 9 were based on the superior
qualifications of the appointees and 8 were based on previous salary
levels of the appointees; (10) CPSC officials attributed the irregular
or improper personnel actions to administrative error and
misunderstanding by its personnel staff and said that the agency has
taken steps to improve its personnel operations; (11) according to
CPSC's personnel director, additional training is being provided to
personnel staff, internal controls are being enhanced, and guidelines
are being written to help ensure that future personnel actions are
conducted properly; and (12) in February 1996, OPM delegated to CPSC th*

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

 REPORTNUM:  GGD-97-131
     TITLE:  Personnel Practices: Improper Personnel Actions on Selected 
             CPSC Appointments
      DATE:  06/27/97
   SUBJECT:  Hiring policies
             Personnel management
             Personnel recruiting
             Civil service appointments
             Federal personnel administrative law
             Veterans
             Executive compensation
             Human resources utilization
             Administrative errors
             Independent agencies

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


Report to the Chairman, Subcommittee on Civil Service, Committee on
Government Reform and Oversight House of Representatives

June 1997

PERSONNEL PRACTICES - IMPROPER
PERSONNEL ACTIONS ON SELECTED CPSC
APPOINTMENTS

GAO/GGD-97-131

Personnel Practices

(410131)


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

  CPSC - Consumer Product Safety Commission
  FTE - full-time equivalent
  IRS - Internal Revenue Service
  OPM - Office of Personnel Management
  OPF - Official Personnel Folder
  PBGC - Pension Benefit Guaranty Corporation

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


B-276748

June 27, 1997

The Honorable John L.  Mica
Chairman, Subcommittee on Civil Service
Committee on Government Reform and Oversight
House of Representatives

Dear Mr.  Chairman: 

Your July 23, 1996, letter requested that we investigate alleged
improper personnel activities at the Pension Benefit Guaranty
Corporation (PBGC) and the Consumer Product Safety Commission (CPSC). 
More specifically, you were concerned about alleged improper hirings
of former Internal Revenue Service (IRS) employees by PBGC and
alleged improper personnel actions and "burrowing in" by political
appointees at CPSC.\1 We reported on the results of our work at PBGC
in October 1996.\2 This report provides the results of our work at
CPSC. 

The original objective of our work at CPSC was to determine whether
the appointments of six individuals who were the subjects of the
allegations received by your office were made in accordance with
merit system principles and applicable rules and regulations.  As we
conducted our audit work and at your request, we added an objective
to identify the number of appointments that CPSC had made at advanced
rates of pay (pay at a level higher than the minimum for the
position's grade) during the period beginning in March 1994 when the
current CPSC Chairman assumed office, and ending in March 1997; and
to determine whether the justification for those rates was documented
as required by federal regulations. 


--------------------
\1 "Burrowing in" is a term generally used to refer to the conversion
of former political appointees to career status in the competitive
service. 

\2 Hiring of Former IRS Employees by PBGC (GAO/GGD-97-9R, Oct.  2,
1996). 


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

The allegations concerning the six appointments proved to be
partially true.  The appointments did not, as alleged, constitute
burrowing in because the individuals did not convert from noncareer
political appointments to career appointments in the competitive
service.\3 Each of the appointments was beset, however, by one or
more irregular or improper personnel actions.  These included (1)
three instances in which proper candidate examination and selection
procedures were not followed, causing, in two cases, veterans with
veterans preference eligibility to be denied proper consideration in
the selection process; (2) three instances in which advanced rates of
pay based on superior qualifications were set without the required
documentation to justify such rates; and (3) two instances in which
the proper use of term appointment authority was questionable. 

In December 1996, we asked the Office of Personnel Management (OPM),
which is responsible for overseeing the federal personnel system, to
review our findings for the six appointments and, if those findings
were accurate, to tell us what corrective actions it would instruct
CPSC to take.  OPM generally agreed with our findings and directed
CPSC to take certain actions, such as to notify the veterans that
they are to receive priority consideration for the next positions
that become available that are similar to those for which they had
applied.  CPSC took the instructed steps and reported to OPM in April
1997.  OPM subsequently notified CPSC on May 28, 1997, that it was
satisfied with the actions taken. 

CPSC made 20 additional appointments between March 1994 and March
1997 in which, according to CPSC data, the appointees received
advanced rates of pay.  In 2 of the 20 cases the individuals had
resigned from CPSC, and their official personnel folders (OPFs) were
not readily available.  Of the remaining 18 appointments, 9 were
based on the superior qualifications of the appointees and 8 were
based on previous salary levels of the appointees.  In the one
remaining case, the basis for the advanced rate of pay could not be
determined.  Supporting documentation for five of the nine superior
qualification appointments was in the appointees' OPFs.  Supporting
documentation for the other four was not present.  CPSC officials
said that they have since prepared, or are preparing, supporting
justification for these four.  Supporting documentation existed in
the OPFs of the eight appointees whose salary was set based on their
highest previous salary levels. 

CPSC officials attributed the irregular or improper personnel actions
to administrative error and misunderstandings by its personnel staff
and said that the agency has taken steps to improve its personnel
operations.  According to CPSC's personnel director, additional
training is being provided to personnel staff, internal controls are
being enhanced, and guidelines are being written to help ensure that
future personnel actions are conducted properly. 

In February 1996, OPM delegated to CPSC the authority to conduct
open, competitive examinations for entry to various CPSC positions
and from the results of those entry examinations, develop lists of
qualified applicants.  Given the problems CPSC has had in properly
carrying out personnel actions, it is important that CPSC is
successful in improving its personnel operations and is able to
competently handle its delegated authority.  OPM is responsible for
ensuring that CPSC exercises its delegated authority in full
compliance with merit system principles, rules, and regulations.  The
primary way OPM ensures such compliance is by conducting oversight
reviews.  An OPM official told us that the agency plans to conduct
such a review of CPSC in 1998.\4


--------------------
\3 The six allegations involved one noncareer, Schedule C political
appointment; one career appointment based on the individual's
eligibility due to prior service in the legislative branch; three
noncareer, term appointments lasting up to 2 years; and one
noncareer, temporary appointment. 

\4 A CPSC official told us that the agency plans to contract with OPM
by July 1997 for an independent audit of CPSC's use of delegated
examining authority.  Such an audit would be in addition to the
planned oversight review by OPM in 1998. 


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

CPSC is an independent federal agency established by the Consumer
Product Safety Act (P.L.  92-573) with the mission to reduce
unreasonable risks of injury and deaths associated with consumer
products.  As an injury prevention agency, CPSC is to research
product hazards, participate with industry in developing voluntary
standards for products, issue and enforce mandatory standards, and
inform the public of potential product hazards.  CPSC also is to
direct the recall of dangerous products and enforce its statutes in
administrative and federal court proceedings. 

The authorizing legislation provides for the appointment of five
commissioners by the President for staggered 7-year terms.  As of
June 1997, CPSC had three commissioners, one of whom was designated
CPSC Chairman.  The Chairman is the principal executive officer of
CPSC, with authority to exercise all executive and administrative
functions of the agency.  Personnel operations are to be conducted by
a staff of nine employees.  During fiscal year 1997, CPSC has hired
approximately 40 individuals. 

CPSC received appropriations of approximately $42.5 million for
fiscal years 1994 and 1995 and about $40 million for fiscal year
1996.  Its personnel ceiling was 511 full-time equivalent (FTE)
positions in fiscal year 1994 and 487 FTE positions in fiscal years
1995 and 1996. 


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

To determine whether the six appointments that were the subject of
allegations were made in accordance with merit system principles and
applicable rules and regulations, we (1) identified the appointment
procedures followed, as documented in the OPFs and in CPSC's merit
staffing case files\5 for each appointment, and (2) reviewed the
procedures in light of merit system principles and applicable federal
personnel rules and regulations.  We interviewed CPSC personnel and
management officials to discuss questions we developed on each case. 
We also provided our case summaries, including the problems we
identified, to OPM and asked whether it agreed with our findings and,
if so, what corrective actions OPM intended to instruct CPSC to take. 
We discussed and clarified OPM's response, where necessary, with
officials from that agency. 

To identify the number of appointments that CPSC had made at advanced
rates of pay during the period March 1994 through March 1997, and to
determine whether the justification for those rates was documented as
required by federal regulations, we obtained a listing from CPSC of
appointments made during this period with advanced salary rates.  The
listing contained the names of three individuals who were part of the
six appointments that were the subjects of allegations of improper
personnel actions and burrowing in, and whose advanced pay rates we
had already reviewed.  After subtracting those 3 from the listing, 20
others remained.  We reviewed the OPFs of 18 of the 20 to determine
whether the required documentation to justify the advanced rates was
present.  The other two appointees had resigned from CPSC, and their
OPFs had been sent to the Federal Records Center and were not readily
available. 

We did not verify the completeness of CPSC's listing of those
appointments involving advanced salary rates.  We also did not
attempt to reach conclusions about the quality or sufficiency of the
written justifications in those cases in which written justifications
were present. 

During our review, CPSC obtained OPM's assistance in reviewing
appointments and promotion actions taken by CPSC during the period
March 10, 1994, through October 31, 1996.  OPM also reviewed the
appointments of senior executive and Schedule C employees on board at
the time OPM provided the assistance.  We discussed this work with
OPM and CPSC officials, reviewed a summary of observations made by
OPM on the results of its review, and discussed with CPSC's personnel
director actions planned and taken to improve personnel operations. 

We did our work in Washington, D.C., from August 1996 to June 1997 in
accordance with generally accepted government auditing standards.  We
requested comments on a draft of this report from the Chairman of
CPSC and the Director of OPM.  CPSC provided written comments, and
OPM provided comments orally.  Their comments are discussed at the
end of this letter, and CPSC's written comments are reprinted in
appendix III. 


--------------------
\5 Merit staffing case files contain information related to the
competitive examining process used in filling a position.  The kind
of information generally contained includes a copy of the vacancy
announcement, the application packages of each applicant, the results
of the entry examinations and the rating panel, the listing of
qualified applicants, and documentation showing which applicant was
selected for the position. 


   PROBLEMS IDENTIFIED WITH
   APPOINTMENTS MADE BY CPSC
------------------------------------------------------------ Letter :4

Each of the six appointments we reviewed and that were the subject of
allegations--while not involving burrowing in--involved one or more
irregular or improper personnel actions.  OPM generally agreed with
our findings.  Also, our review of an additional 18 appointments
showed that in 9 cases, advanced salaries were provided due to the
superior qualifications of the individuals.  However, written
justification to support the superior qualifications--as required by
regulations--did not exist in four of the nine cases.  CPSC officials
told us that corrective actions have been, or are being, taken in
each of the cases in which we found problems. 


      SIX APPOINTMENTS INVOLVING
      IRREGULAR OR IMPROPER
      ACTIONS
---------------------------------------------------------- Letter :4.1

The nature of the irregular or improper actions in the six
appointments is summarized below and fully described in appendix I. 
We have redacted personal identifiers of the appointees in appendix I
for privacy protection purposes. 

  -- For three appointments, CPSC used improper candidate examination
     and selection procedures.  In two of those cases, it failed to
     follow veterans preference rules.  As a result, military
     veterans who were among the candidates for the two positions
     were not provided the preference consideration they were
     entitled to under veterans preference laws.  In the third case,
     CPSC failed to process the applications for appointment in
     conformance with OPM instructions.  As a result, CPSC made an
     invalid appointment. 

  -- Three of the six appointments were made with advanced rates of
     pay based on the superior qualifications of the candidate, but
     we found no written documentation to justify such rates.  As
     required by federal personnel regulations, agencies need to
     document the superior qualifications that justify an advanced
     rate of pay. 

  -- Two appointments were made using term appointment authority in
     which, under justifiable circumstances, an agency can hire an
     individual for a specific period of time, generally not
     exceeding 4 years.  We questioned whether the term appointment
     authority was properly used in these cases.  According to
     information in the employees' personnel folders, the
     justification cited for the term appointments was to provide
     expertise on special projects.  However, the selecting official
     told us there were no special projects in her office. 

We brought our findings to OPM's attention in December 1996 and asked
OPM, in its oversight capacity for ensuring agencies' compliance with
personnel laws and regulations, whether it agreed with our assessment
and, if so, what corrective actions it would instruct CPSC to take. 
OPM responded to us in March 1997 and, in general, agreed with our
findings.  In regard to the two term appointments that did not appear
to be justified, OPM officials said that CPSC informed them that
because the agency's funding level was uncertain, it decided to use
term rather than permanent appointments to meet staffing needs.  The
use of term appointments is authorized under such conditions and
therefore OPM did not consider these appointments inappropriate.  We
agree that uncertain funding levels is a bona fide justification for
using term appointments, but the documentation we reviewed did not
indicate this rationale for these two term appointments. 

After receiving OPM's response, we went back to CPSC and asked agency
officials the basis for providing OPM with a new justification for
the term appointments.  CPSC officials said that the information in
the two appointees' personnel folders citing special projects as the
justification for the term appointments was incorrect.  CPSC
officials told us that when the two individuals were hired--in
January 1995--the agency had already received its fiscal year 1995
appropriation.  But the agency felt considerable uncertainty about
the level of its 1996 funding due to the possibility of changed
political priorities in Congress.  Officials said that CPSC was
concerned about committing permanent positions to the office in
question because an overcommitment of resources could require a later
reorganization.  The officials acknowledged that they did not have
any documentation contemporaneous with the two appointments to
support the uncertain funding justification. 

On one of the three superior qualification appointments, OPM
determined that the individual was eligible for the advanced pay rate
based on his previous highest salary and CPSC did not need to base
the advanced pay rate on superior qualifications.  OPM instructed
CPSC to correct the personnel folder by deleting reference to
superior qualifications. 

OPM agreed with our remaining concerns and instructed CPSC to take
certain actions.  For example, in the two instances in which CPSC did
not follow veterans preference rules, CPSC was instructed to notify
the veterans that they will receive priority consideration for the
next available similar positions.  OPM also instructed CPSC to fully
document the superior qualifications of and justify an advanced rate
of pay for the two remaining appointments made using the superior
qualifications provision.  CPSC reported to OPM in April 1997 that it
took the instructed corrective actions, and OPM subsequently notified
CPSC on May 28, 1997, that it was satisfied with the actions taken. 
We verified that the actions were taken.  OPM's position on each of
the six cases is detailed in appendix II.  We have redacted personal
identifiers of the appointees in appendix II for privacy protection
purposes. 


      ADDITIONAL APPOINTMENTS
      REVIEWED
---------------------------------------------------------- Letter :4.2

CPSC, at our request, identified all appointments made between March
1994 and March 1997 in which advanced pay rates had been set. 
Excluding 3 advanced pay rate appointments that were part of our
original review of the 6 allegations, CPSC identified 20 cases.  In 2
of the 20 cases, the individuals had resigned from CPSC, their OPFs
were not readily available for review, and CPSC officials were unable
to recall the details of the cases.  Of the remaining 18 cases, our
review of the OPFs and discussions with CPSC officials showed that
the advanced rates of pay were based on the superior qualifications
of the individuals in 9 instances and on the highest previous
salaries of the individuals in 8 instances.  In one instance, the
basis for the advanced rate of pay could not be determined from the
employee's OPF. 

Of the nine cases involving superior qualifications, five were
justified at the time of appointment by written documentation as
required by regulations.  CPSC officials have since taken, or are
currently taking, actions to correct the other four cases.  In the
eight cases involving highest previous salaries, supporting
documentation was in the OPFs.  In the remaining case where the basis
for the advanced rate could not be determined, the CPSC personnel
director told us that CPSC has since determined that the employee's
pay was improperly set and that the correction would be to reset the
pay at a lower rate.  However, because this would result in a
decreased salary level, and the error was made through no fault of
the employee, CPSC has requested a variance (or exception) on this
matter from OPM.  According to the CPSC personnel director, at the
time this report was prepared OPM had not responded to CPSC's
request. 

During a 2-week period beginning in September 1996, an OPM
official--at the request of CPSC--reviewed the appointments of all
senior executives and Schedule C employees employed at CPSC as of
that time, as well as all appointment and promotion actions taken on
CPSC employees since March 10, 1994.  In total, the OPM official
reviewed actions involving 167 employees and raised a variety of
issues.  Some were of an administrative nature, such as filing
employees' security forms and fingerprint charts in OPFs when such
forms should be part of the employees' security investigation files. 
Other issues were of a more significant nature.  For example, OPM
also identified, as we did, the four cases of advanced pay rates
based on superior qualifications where supporting documentation did
not exist.  OPM also identified another case, not included in the
scope of our review, in which an employee had improperly received a
quality step increase (an increase in salary within the same pay
grade based on quality performance.) OPM determined that the increase
was improper because it was provided 8 weeks earlier than allowed by
regulation.  Federal regulations provide that such an increase cannot
be given an employee who has received a quality step increase within
the preceding 52 weeks.  CPSC waived the 8 weeks of overpayment and
is correcting the OPF. 

According to CPSC officials, all of the personnel problems we and OPM
identified were due to administrative errors or misunderstandings on
the part of the personnel office staff.  The CPSC personnel director
told us that CPSC has taken numerous steps during our review to
improve its personnel operations and ensure compliance with all
applicable federal laws and regulations in the future.  These include
(1) providing additional training to all personnel staff, (2)
developing a checklist to ensure that personnel actions are processed
correctly, (3) developing written guidelines on processing and
documenting appointments with advanced rates of pay, and (4) holding
weekly staff meetings for personnel staff to discuss current
regulations. 


   CPSC WAS DELEGATED EXAMINING
   AUTHORITY
------------------------------------------------------------ Letter :5

In February 1996, OPM delegated examining authority to CPSC.  Under
delegated examining authority, agencies typically recruit, accept
applications, score applicants on the basis of a review of education
and experience, maintain registers of qualified applicants, create
certificates listing the top-ranked candidates from the registers,
and hire employees from those certificates.  Thus, CPSC now has
greater responsibility for personnel matters.  While the problems
CPSC had in the appointments we reviewed occurred before the
delegation of examining authority, the greater responsibility
provided to CPSC by that authority makes it more important now that
OPM carefully watch over CPSC personnel activities. 

According to OPM, it uses oversight reviews of agencies' personnel
activities to gauge and ensure their compliance with merit system
principles, rules, and regulations.  OPM annually selects and
schedules agencies for these reviews.  An OPM official said OPM is
planning to review CPSC in 1998. 


   CONCLUSIONS
------------------------------------------------------------ Letter :6

Irregular and improper personnel appointments have been made at CPSC
over the past several years.  CPSC has recognized the existence of
such problems and began to take actions during the course of our
review to correct previous improprieties and improve its personnel
operations.  Such actions were both necessary and appropriate, as the
integrity of the civil service system rests on the consistent
adherence to merit system principles, rules, and regulations.  Also,
CPSC now has greater responsibility for personnel actions under the
examining authority delegated by OPM.  Because of this, and because
of the past problems, we believe it important for OPM to closely
monitor CPSC's personnel operations to ensure that the agency is
successful in its efforts to improve personnel operations. 


   RECOMMENDATION TO THE DIRECTOR
   OF OPM
------------------------------------------------------------ Letter :7

To help ensure that CPSC's efforts to improve personnel operations
are successful and result in adherence to merit system principles,
rules, and regulations, we recommend that the Director of OPM include
CPSC on OPM's next annual schedule of oversight reviews of agencies'
personnel actions.  CPSC should remain on OPM's schedule until OPM is
satisfied that CPSC is maintaining personnel operations at a
satisfactory level. 


   AGENCY COMMENTS
------------------------------------------------------------ Letter :8

On June 17, 1997, the Executive Director of CPSC provided us written
comments on the draft (see app.  III); and on June 19, 1997, the
Deputy Chief of Staff of OPM provided us oral comments on the draft. 
CPSC agreed with our findings that errors in personnel processing
occurred during the period covered by our review and noted that the
agency has worked to implement the necessary corrective actions.  OPM
officials also agreed with our findings.  The Deputy Chief of Staff
pointed out that OPM plans to conduct an oversight review of CPSC
personnel operations in 1998.  He also said that CPSC plans to
contract with OPM for an independent audit of CPSC's use of delegated
authority. 


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

As agreed with the Subcommittee, unless you publicly announce the
report's contents earlier, we plan no further distribution of it
until 15 days after the date of this report.  We will then send
copies to the Ranking Minority Member of the Subcommittee, the
Chairman and Ranking Minority Member of the Senate Committee on
Governmental Affairs, the Director of OPM, and the Chairman and other
commissioners of CPSC.  We will also make copies available to others
on request. 

Please contact me at (202) 512-9039 if you or your staff have any
questions.  Major contributors to this report were Richard W. 
Caradine, Assistant Director; N.  Scott Einhorn, Evaluator-in-Charge;
and Stephen J.  Kenealy, Technical Advisor. 

Sincerely yours,

Michael Brostek
Associate Director, Federal Management
and Workforce Issues




(See figure in printed edition.)Appendix I
DECEMBER 5, 1996, REFERRAL LETTER
TO THE DIRECTOR, OFFICE OF
PERSONNEL MANAGEMENT, FROM GAO
============================================================== Letter 



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(See figure in printed edition.)Appendix II
MARCH 3, 1997, RESPONSE FROM THE
DIRECTOR, OFFICE OF PERSONNEL
MANAGEMENT, TO GAO'S REFERRAL
LETTER
============================================================== Letter 



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(See figure in printed edition.)Appendix III
COMMENTS FROM THE U.S.  CONSUMER
PRODUCT SAFETY COMMISSION
============================================================== Letter 



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