The Excepted Service: A Research Profile (Staff Study, 05/01/97,
GAO/GGD-97-72).

GAO provided information on the excepted service, focusing on: (1) the
distribution of excepted service employees across government
organizations; (2) the composition of the excepted service in terms of
the various legal bases under which employees were appointed; (3) policy
concerns and study focuses that have guided some prior studies; (4) the
coverage of agencies and employees, as well as data elements, in two
data sources that were useful for studying the excepted service; and (5)
research issues and methodological difficulties associated with each of
these objectives.

GAO noted that: (1) the excepted service is not really a coherent
"service" so much as a residual category covering all the many federal
entities and groups of employees that are not part of the competitive
service or the Senior Executive Service; (2) based on available data,
this study portrays the distribution of excepted service employees
across government, but with some significant omissions--primarily the
intelligence agencies, for which official data were not readily
available; (3) there were over 100 agencies employing excepted service
employees in June 1996; (4) for excepted service positions, each agency
develops, within basic requirements prescribed by law or regulation, its
own hiring system, which establishes the evaluation criteria to be used
in filling these excepted positions; (5) the many exceptions have led to
a range of variances from competitive service practices; (6) GAO found
that issues in studying the excepted service range from the apparent
lack of a central source of information on the excepted service
personnel systems, to the variations among excepted entities in the
extent to which they are excepted, to how little officials at excepted
service entities might understand of the differences between their
systems and those of the competitive service, to the limitations on the
basic statistical data now available; (7) information on the excepted
service entities' personnel systems is apparently not collected in a
single place; therefore, determining any trends or widespread practices
in the excepted service would seem to necessitate original research,
including extensive data gathering in many locations; (8) another
complexity in studying the excepted service arises from the varying
exceptions from title 5 that apply to excepted entities; (9) surveying
officials of the excepted service entities directly might have limited
value because these officials might not be familiar with the details of
the title 5 requirements that do not apply to them; (10) merely drawing
some statistical portraits of the excepted service might pose
difficulties, and the two sources of statistical data available from the
Office of Personnel Management both have advantages and disadvantages as
sources of information on the excepted service; and (11) to mitigate
some of the difficulties of researching the excepted service,
researchers might want to narrow the potential scope of their studies f*

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

 REPORTNUM:  GGD-97-72
     TITLE:  The Excepted Service: A Research Profile
      DATE:  05/01/97
   SUBJECT:  Civil service
             Civil service appointments
             Federal intelligence agencies
             Hiring policies
             Personnel management
             Data collection
             Government employees
             Federal personnel law
             Labor statistics
IDENTIFIER:  SES
             Senior Executive Service
             OPM Central Personnel Data File
             
**************************************************************************
* This file contains an ASCII representation of the text of a GAO        *
* report.  Delineations within the text indicating chapter titles,       *
* headings, and bullets are preserved.  Major divisions and subdivisions *
* of the text, such as Chapters, Sections, and Appendixes, are           *
* identified by double and single lines.  The numbers on the right end   *
* of these lines indicate the position of each of the subsections in the *
* document outline.  These numbers do NOT correspond with the page       *
* numbers of the printed product.                                        *
*                                                                        *
* No attempt has been made to display graphic images, although figure    *
* captions are reproduced. Tables are included, but may not resemble     *
* those in the printed version.                                          *
*                                                                        *
* A printed copy of this report may be obtained from the GAO Document    *
* Distribution Facility by calling (202) 512-6000, by faxing your        *
* request to (301) 258-4066, or by writing to P.O. Box 6015,             *
* Gaithersburg, MD 20884-6015. We are unable to accept electronic orders *
* for printed documents at this time.                                    *
**************************************************************************


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


Staff Study

May 1997

THE EXCEPTED SERVICE - A RESEARCH
PROFILE

GAO/GGD-97-72

The Excepted Service

(410077)


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

  CFR - Code of Federal Regulations
  CIA - Central Intelligence Agency
  CPDF - Central Personnel Data File
  CSRA - Civil Service Reform Act
  DIA - Defense Intelligence Agency
  FAA - Federal Aviation Administration
  FBI - Federal Bureau of Investigation
  FEMA - Federal Emergency Management Agency
  FIPS - Federal Information Processing Standards
  FPM - Federal Personnel Manual
  GPRA - Government Performance and Results Act
  GSA - General Services Administration
  HRM - Human resource management
  MSPB - Merit Systems Protection Board
  NRC - Nuclear Regulatory Commission
  NSA - National Security Agency
  OPM - Office of Personnel Management
  OMB - Office of Management and Budget
  PBO - Performance-based organizations
  SES - Senior Executive Service
  TVA - Tennessee Valley Authority
  USC - United States Code
  VA - Department of Veterans Affairs
  VHA - Veterans Health Administration

PREFACE
============================================================ Chapter 0

The Government Performance and Results Act of 1993 (GPRA) has put
discussions of civil service reform in a new light.  Beginning this
year, GPRA requires federal agencies to identify their missions and
strategic goals, create measures by which to gauge their progress in
meeting these goals, and focus their resources--whether budgetary,
technological, or human--on creating results.  But a key question is
whether, under the current civil service system, agencies will have
the flexibility to shape their human resource management (HRM)
systems to meet these new needs.  As we testified before the House
Civil Service Subcommittee in October 1995, the civil service system
as a whole is still viewed by many as burdensome to managers,
unappealing to ambitious recruits, hidebound and outdated,
overregulated, and inflexible.\1

When considering civil service reform, it is useful to remember that
the federal government is not the "single employer" it is widely
reputed to be.  In the broadest sense, the civil service is actually
divided into three services, for which different statutory provisions
may apply for hiring, pay, labor-management relations, and other
employment matters.  The largest service--52 percent of the civil
service in June 1996--is known as the "competitive service," which
has its statutory basis in the personnel provisions in title 5 of the
U.S.  Code.  Almost all of the remaining 48 percent of federal
civilian workers--nearly 1.4 million in all--are in the "excepted
service." They are employed in agencies or other federal
organizations (such as certain government corporations) that operate
outside the appointment provisions in title 5 of the U.S.  Code. 
Besides the "competitive service" and the "excepted service," the
civil service includes the "Senior Executive Service," or SES, which
in June 1996 included some 7,000 members employed in many agencies
across the federal government. 

Some positions in the excepted service are covered by alternative
personnel systems.  One of Congress's reasons for establishing
alternative personnel systems for some federal entities was to exempt
them from the strict rules governing the competitive service under
title 5.  At the previously mentioned hearing, we said that Congress
might consider examining these alternative personnel systems for
ideas about how the competitive service could be made more flexible
and results-oriented.\2

With the intention of delving further into the possibility that
innovative models already exist, we took a broad, preliminary look at
the excepted service as a whole.  As the chapters that follow
indicate, we found that the excepted service is not really a coherent
"service" so much as a residual category covering all the many
federal entities and groups of employees that are not part of the
competitive service or the SES.  Based on available data, this study
portrays the distribution of excepted service employees across
government, but with some significant omissions--primarily the
intelligence agencies, for which official data were not readily
available.  (See chapter 1.) We found over 100 agencies employing
excepted service employees in June 1996.  These agencies ranged in
size from the U.S.  Postal Service, with more than 850,000 employees,
to small agencies such as the Commission on Immigration Reform, with
14. 

We also identified a number of methodological difficulties in
examining the excepted service systematically and in greater detail. 
These constitute real stumbling blocks to exploring the excepted
service for models or lessons applicable to civil service reform. 
They could make a wide-ranging study of the excepted service a
demanding one, in both time and resources. 

In preparing this study, our overarching objective was to provide an
introduction to the excepted service and to identify issues that
researchers would need to consider when planning future studies of
it.  Specifically, our objectives were to describe (1) the
distribution of excepted service employees across government
organizations; (2) the composition of the excepted service in terms
of the various legal bases under which employees were appointed; (3)
policy concerns and study focuses that have guided some prior
studies; and (4) the coverage of agencies and employees, as well as
data elements, in two data sources that were useful for studying the
excepted service.  Additionally, we sought to identify research
issues and methodological difficulties associated with each of these
objectives. 


--------------------
\1 Civil Service Reform:  Changing Times Demand New Approaches
(GAO/T-GGD-96-31, Oct.  12, 1995). 

\2 GAO/T-GGD-96-31, pp.  5-6. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:1

As defined in section 2103 of title 5, the excepted service is a
residual category of the civil service--that is, it comprises those
civil service positions that are not in the competitive service or
the SES.  The Office of Personnel Management (OPM) has described the
competitive service as including positions subject to the appointment
provisions in chapter 33 of title 5; the excepted service includes
all other positions (excluding those in the SES), regardless of
whether they are subject to other chapters of title 5.  For excepted
service positions, each agency develops, within basic requirements
prescribed by law or regulation, its own hiring system, which
establishes the evaluation criteria to be used in filling these
excepted positions.  Exceptions may be granted for agencies (such as
the Tennessee Valley Authority (TVA) and the Federal Bureau of
Investigation (FBI)) or for specific positions (such as Foreign
Service employees and certain medical care personnel in the
Department of Veterans Affairs (VA)).\3

Although exception from the appointment provisions of title 5 is the
minimum requirement for being considered part of the excepted
service, excepted service entities may be excepted from other
personnel provisions of title 5 as well, such as those covering
position classification, pay, leave, and retirement.  Because the
circumstances and rationales under which these exceptions were
granted or retained have varied, the component entities and
employment systems in the excepted service are not uniformly excepted
from the many personnel provisions of title 5.  Nor are they subject
to any single alternative set of laws, rules, and regulations, or to
uniform oversight by OPM. 

Originally, all federal employees were appointed noncompetitively,
and a widespread practice arose that based hiring on political
considerations--the so-called "spoils system." But with the
establishment of the competitive service in 1883, some--initially
very few--civil servants came under the competitive service, for
which positions were filled competitively, while others--the vast
majority--were "excepted." Over time, both the competitive and
excepted services evolved significantly, with the excepted service's
component agencies and employment systems generally gaining or
retaining their exceptions on an individual basis rather than a
systematic one.  The Foreign Service, for example, traces its
exceptions back to the Constitution and to laws made in the 19th
century, while the Federal Aviation Administration (FAA) received its
general exception in 1995. 

The rationale for exceptions has varied from one situation to the
next.\4 For example, TVA received its exception on the basis that the
agency ought to be run like a business.  The intelligence agencies
(that is, the Central Intelligence Agency (CIA), the Defense
Intelligence Agency (DIA), and the National Security Agency (NSA))
received their exceptions on national security grounds.  Doctors and
nurses at VA were excepted under the rationale that the job market
for these professionals was highly competitive. 

The many exceptions have led to a range of variances from competitive
service practices.  For example, the CIA internal regulations for
adverse actions are similar to the procedures of other federal
agencies in providing employees with some protections, at least in
cases of the removal of an employee.  However, these protections are
not guaranteed because CIA regulations provide the director with
carte blanche authority to remove an employee.  Also, in contrast to
the right of most federal employees under title 5 provisions, CIA
employees have no general right to appeal adverse actions to the
Merit Systems Protection Board (MSPB).\5


--------------------
\3 Exceptions are authorized (1) under statute (for example, for TVA
and FBI) and, pursuant to statute, (2) under regulations issued by
OPM (such as for certain positions held by attorneys, research
associates, or political appointees), and (3) by Executive Order
(such as for foreign nationals employed overseas and certain
presidential appointees). 

\4 We located only one general study of the excepted service done by
the federal government that sought to identify the reasons for
continuing agency exceptions.  That study was done by the Civil
Service Commission at the request of the Senate Committee on Post
Office and Civil Service, and resulted in the 1973 report, Statutory
Exceptions to the Competitive Service.  The study's coverage was not
exhaustive of all exceptions; however, the study included about 40
agencies, and the Commission believed that the study covered all
significant statutory exceptions from the competitive service. 

\5 Intelligence Agencies:  Personnel Practices at CIA, NSA, and DIA
Compared With Those of Other Agencies (GAO/NSIAD-96-6, March 11,
1996), especially pp.  4, 31-33.  This study was limited to examining
equal employment opportunity and adverse action practices. 


   THE RELEVANCE OF THE EXCEPTED
   SERVICE TO CIVIL SERVICE REFORM
---------------------------------------------------------- Chapter 0:2

While federal entities and groups of federal employees have gained or
retained exceptions from the competitive service based on a variety
of rationales, the assumption common to many of these exceptions
seems to have been that exception from competitive service rules
would help agencies do their jobs.\6 A similar line of reasoning is
commonly heard today in discussions concerning the best way to ensure
the successful implementation of GPRA and, more broadly, to advance
the idea of results-oriented government. 

Part of this debate is over whether, with the goal of enhancing
productivity and mission accomplishment, federal entities now
governed by the competitive service rules should be allowed further
flexibility in fashioning their HRM approaches, or even granted more
widespread exceptions from the competitive service requirements.  For
example, the National Performance Review criticized competitive
service rules as being too restrictive, and proposed granting
agencies more flexibility in administering personnel systems that
support their missions.  This sort of criticism of the competitive
service is not uncommon, even though many of the restrictions imposed
on the competitive service have been loosened over the past 2
decades.  Beginning with the Civil Service Reform Act of 1978 (CSRA),
repeated efforts have been made to create a competitive service that
would allow individual agencies greater flexibility in shaping their
own HRM practices.  Nonetheless, what is sometimes heard today is a
call for escaping the confines of title 5 entirely.  FAA, for
example, was granted a broad statutory exception in 1995 to develop
its own HRM system.  The administration, in its proposal to create
nine performance-based organizations (PBO), would give these
organizations considerable personnel authority outside competitive
service rules. 

Because excepted service entities are, to one extent or another,
already outside title 5, we thought that comparing their existing
employment systems and HRM practices with the competitive service
could shed light on the current debate.  A key question, however, for
anyone who attempted so wide-ranging an examination of the excepted
service would be the scope of the task at hand.  We found, for
example, that the heading "excepted service" covers positions in 123
organizations, and many more suborganizations.  Further, we located
relatively little recent research on which to base secondhand
descriptions and analysis of the various personnel systems in the
excepted service.  Finally, we identified a variety of methodological
difficulties that would need to be addressed if the excepted service
were to be studied in depth. 


--------------------
\6 However, the reasons for some exceptions may be based in
practicality (such as it being impractical to examine, or impractical
to hold competitive examinations, for certain government positions),
or other national goals (such as those reflected in veterans
readjustment appointments, which are noncompetitive appointments for
certain veterans). 


   CHALLENGES TO FUTURE STUDIES OF
   THE EXCEPTED SERVICE
---------------------------------------------------------- Chapter 0:3

Although studying the excepted service in depth might be worthwhile
for identifying innovative models for civil service reform, doing so
could be a substantial challenge.  We found that issues range from
the apparent lack of a central source of information on the excepted
service personnel systems, to the variations among excepted entities
in the extent to which they are excepted, to how little officials at
excepted service entities might understand of the differences between
their systems and those of the competitive service, to the
limitations on the basic statistical data now available. 

Information on the excepted service entities' personnel systems is
apparently not collected in a single place; therefore, determining
any trends or widespread practices in the excepted service would seem
to necessitate original research, including extensive data gathering
in many locations.  Surveying the components of the excepted service
could be difficult because not all of them exist as discrete
organizations.  (See chapter 2.) Some excepted entities are defined
by agency--for example, TVA.  But other exceptions may exist for
classes of employees defined by a particular "appointing authority."
Federal workers employed under a single appointing authority do not
necessarily work for a single federal entity.  We found that Foreign
Service employees, for example, worked for the Departments of State,
Agriculture, and Commerce; the Agency for International Development;
and the Peace Corps.  Similarly, we found that the 2,156 workers
employed under the Panama Canal Employment Service appointing
authority were spread over 32 separate organizations, from the Panama
Canal Commission (648 employees) to the Defense Mapping Agency (1
employee).  (See chapter 2.)

Another complexity in studying the excepted service arises from the
varying exceptions from title 5 that apply to excepted entities. 
FAA, for example, is broadly excepted from title 5, in part to
provide greater flexibility in compensation.  But the FBI, although
its positions are excepted from the competitive service, is still
subject to the pay provisions of title 5.  We did not find a recent
comprehensive example of anyone having identified the statutory
exceptions for all the excepted entities, proceeding through title 5
by chapter, subchapter, and section.\7 Nor did we find recent broad
studies on whether the many excepted entities have pursued different
HRM approaches than they would have had they not been excepted. 

Moreover, as suggested by findings from some previous studies,
surveying officials of the excepted service entities directly to
determine the differences between their HRM approaches and those of
the competitive service might have limited value because these
officials might not be familiar with the details of the title 5
requirements that do not apply to them.  Therefore, they might not be
able to accurately describe how their practices differ from those of
the competitive service.  (See chapter 3.)

Finally, merely drawing some statistical portraits of the excepted
service might pose difficulties.  The two sources of statistical data
available from OPM both have advantages and disadvantages as sources
of information on the excepted service.  (See chapter 4.)

These and other methodological difficulties are discussed in the
chapters that follow.  These discussions are not intended to
discourage further inquiry into the excepted service, but merely to
point out some of the potential challenges such an inquiry would
encounter.  Some of the factors that would create these challenges
are the same ones that would make an examination of the excepted
service so promising--the sheer variety of exceptions, for example,
and the likely variety of resulting personnel systems and practices. 
It is possible that approaches that would be new to the competitive
service already have a "track record" in the excepted service, and
that wider knowledge of some of these approaches would inform the
debate on civil service reform in a results-oriented environment. 

To mitigate some of the difficulties of researching the excepted
service, researchers might want to narrow the potential scope of
their studies from the entire excepted service to the personnel
systems of specific excepted service entities, as one agency has done
on two occasions.  (See chapter 3).  Remembering that most excepted
service employees are located in a relatively few government
organizations (see chapter 1), this may be an approach worth
considering. 

Major contributors to this study are identified in appendix II. 

L.  Nye Stevens
Director, Federal Management
 and Workforce Issues


--------------------
\7 The study we identified that comes closest is partial and somewhat
dated.  See "Comparison of Selected Features of Competitive and
Excepted Services," Appendix XI of Personnel Management Project,
Volume 3, December 1977.  The Personnel Management Project is
discussed in chapter 3. 


ORGANIZATIONAL DISTRIBUTION OF
EXCEPTED SERVICE EMPLOYEES
============================================================ Chapter 1

The distribution of the approximately 1.4 million excepted service
employees among the three branches of government, and among federal
agencies, resists a simple description.  This difficulty derives from
the fact that the excepted service encompasses workers in all
branches and many agencies, who are distributed unequally across and
within branches and agencies.  The following description introduces
some of that complexity, while indicating some key generalizations
that can be made about these employees' numbers and organizational
locations.  At the end of this discussion, we briefly note some
additional portraits of the excepted service employees that could be
done with the same data source. 

Our description is based on OPM data from its Monthly Report of
Federal Civilian Employment (Monthly Report) for June 1996.  Civil
service positions are in three services:  the competitive service,
the Senior Executive Service (SES), and the excepted service. 
Monthly Report data do not count SES employees separately from
excepted service employees.  We will refer to these combined counts
as only representing excepted service employees.  Treating the SES
component of the counts as negligible is justified because other data
for most civil service employees indicated that SES employees were
less than 2 percent of the combined total. 


   PREVALENCE IN ORGANIZATIONS
---------------------------------------------------------- Chapter 1:1

Generalization 1:  The majority of employees in the judicial and
legislative branches were in the excepted service, but this was not
true for the executive branch. 

As shown in table 1.1, excepted service personnel in June 1996 made
up fewer than half of the employees in the executive branch, but they
predominated in both the judicial and legislative branches.  Indeed,
almost every employee in the judicial branch was in the excepted
service, as were almost 90 percent of employees in the legislative
branch.\8



                               Table 1.1
                
                 Federal Civilian Employment by Type of
                 Service and Branch of Government (June
                                 1996)


                         Total
                        number    Number              Number
                            of        of   Percent        of   Percent
                      employee  employee        of  employee        of
Branch of government         s         s    branch         s    branch
--------------------  --------  --------  --------  --------  --------
Executive             2,826,65  1,503,83     53.2%  1,322,82     46.8%
                             9         7                   2
Judicial                29,249         8     0.0\a    29,241   100.0\a
Legislative             32,715     3,895      11.9    28,820      88.1
======================================================================
Total                 2,888,62  1,507,74     52.2%  1,380,88     47.8%
                             3         0                   3
----------------------------------------------------------------------
Note:  Numbers include employees located in the United States and
overseas.  Numbers exclude employees of the CIA, DIA, and NSA. 

\a Percentages equal 0.0 and 100.0 percent due to rounding. 

Source:  GAO analysis of OPM's Monthly Report of Federal Civilian
Employment. 

Generalization 2:  In the executive branch, excepted service
personnel were more prevalent in independent agencies than in
executive departments. 

Table 1.2 shows that the proportions of employees who were in the
excepted service varied markedly between the parts of the executive
branch.  The largest employing part of the executive branch,
executive departments, had a relatively low proportion of excepted
service positions--about one employee in four was in the excepted
service.  In contrast, independent agencies, on average,
predominantly employed excepted service employees.  (Their proportion
of 85 percent in the excepted service almost equaled the 88 percent
of the legislative branch.) The part of the executive branch with the
fewest employees, the Executive Office of the President, also
predominantly employed excepted service employees, but to a somewhat
lesser degree. 



                               Table 1.2
                
                 Federal Civilian Employment by Type of
                Service in Parts of the Executive Branch
                              (June 1996)


                          Total
                         number   Number              Number
Parts of the                 of       of   Percent        of   Percent
executive branch of    employee  employe    of the  employee    of the
government                    s       es      part         s      part
---------------------  --------  -------  --------  --------  --------
Executive Office of       1,587      630     39.7%       957     60.3%
 the President
Executive departments  1,751,98  1,346,5      76.9   405,474      23.1
                              3       09
Independent agencies   1,073,08  156,698      14.6   916,391      85.4
                              9
======================================================================
Total                  2,826,65  1,503,8     53.2%  1,322,82     46.8%
                              9       37                   2
----------------------------------------------------------------------
Note:  Numbers include employees located in the United States and
overseas.  Numbers exclude employees of the CIA, DIA, and NSA. 

Source:  GAO analysis of OPM's Monthly Report of Federal Civilian
Employment; OPM. 


--------------------
\8 In the legislative branch, most agencies' personnel were all in
the excepted service.  The major break with this generalization was
in the Government Printing Office, where almost all of the employees
were in the competitive service and accounted for most of the
competitive service employees in the legislative branch. 


   THE LOCATION OF MOST EXCEPTED
   SERVICE EMPLOYEES
---------------------------------------------------------- Chapter 1:2

Generalization 3:  Most excepted service employees were located in
the executive branch, particularly among independent agencies. 

Despite the fact that the proportions of excepted service employees
were higher in the legislative and judicial branches, the much larger
executive branch employed the vast majority of excepted service
employees.  As shown in table 1.3, almost 96 percent of excepted
service employees were located in the executive branch.  Most of
these employees (constituting about two-thirds of all excepted
service employees) were spread across the many independent agencies,
ranging from large agencies, such as the Postal Service (which had
855,579 excepted service employees),\9 to small agencies, such as the
Commission of Fine Arts (which had 1 excepted service employee).  The
remaining 4 percent of all excepted service employees were about
equally split between the judicial and legislative branches. 



                               Table 1.3
                
                 Excepted Service and Senior Executive
                     Service Employees by Branch of
                         Government (June 1996)


                                              Number of     Percent of
Branch of government                          employees          total
----------------------------------------  -------------  -------------
Executive                                     1,322,822        95.8%\a
Executive Office of the President                   957            0.1
Executive departments                           405,474           29.4
Independent agencies                            916,391           66.4
Judicial                                         29,241            2.1
Legislative                                      28,820            2.1
======================================================================
Total                                         1,380,883         100.0%
----------------------------------------------------------------------
Note:  Numbers include employees located in the United States and
overseas.  Numbers exclude employees of the CIA, DIA, and NSA. 

\a The sum of the subtotal percentages does not precisely equal this
percentage due to rounding error. 

Source:  GAO analysis of OPM's Monthly Report of Federal Civilian
Employment. 

Generalization 4:  Most excepted service employees were located in a
relatively few government organizations. 

Although table 1.4 lists 123 government organizations that had at
least 1 excepted service employee, most excepted service employees
were located in a few large organizations.\10 A single agency, the
U.S.  Postal Service, employed 62 percent of such employees.  The
eight largest employers of excepted service workers employed over 90
percent of these employees.  The first 32 organizations listed in
table 1.4--those that had 1,000 or more such employees--employed over
99 percent of all excepted service employees.  The remaining 91
organizations (of which 65 employed fewer than 100 excepted service
employees) accounted for the locations of the remaining 1 percent of
excepted service employees. 



                               Table 1.4
                
                   Federal Civilian Employment in the
                Excepted and Senior Executive Services,
                         by Agency (June 1996)


                                            Number
                                                of            Cumulati
                                          employee   Percent        ve
                     Organization                s    of all   percent
-------------------  -------------------  --------  --------  --------
1                    U.S. Postal Service   855,579     62.0%     62.0%
2                    Defense, Military     124,761       9.0      71.0
                      Function (includes
                      military
                      departments;
                      Military Function
                      primarily excludes
                      the Army Corps of
                      Engineers)
3                    Department of         112,800       8.2      79.2
                      Veterans Affairs
4                    Department of          47,916       3.5      82.6
                      Transportation
5                    Department of          43,059       3.1      85.8
                      Justice
6                    U.S. Courts            28,857       2.1      87.8
                      (excludes the
                      Supreme Court)
7                    Department of State    19,646       1.4      89.3
8                    Congress               17,964       1.3      90.6
9                    Tennessee Valley       16,390       1.2      91.8
                      Authority
10                   Department of          13,491       1.0      92.7
                      Health and Human
                      Services
11                   Department of the      10,840       0.8      93.5
                      Interior
12                   Department of          10,460       0.8      94.3
                      Agriculture
13                   Panama Canal            9,152       0.7      94.9
                      Commission
14                   Department of the       8,652       0.6      95.6
                      Treasury
15                   Department of           6,814       0.5      96.1
                      Commerce
16                   Library of Congress     4,580       0.3      96.4
17                   U.S. Information        4,221       0.3      96.7
                      Agency
18                   Social Security         3,813       0.3      97.0
                      Administration
19                   General Accounting      3,623       0.3      97.2
                      Office
20                   Defense, Civilian       3,389      0.2%     97.5%
                      Function
                      (primarily
                      includes the Army
                      Corps of
                      Engineers)
21                   Nuclear Regulatory      3,187       0.2      97.7
                      Commission
22                   Federal Emergency       2,884       0.2      97.9
                      Management Agency
23                   Federal Deposit         2,313       0.2      98.1
                      Insurance
                      Corporation
24                   U.S. International      2,152       0.2      98.2
                      Development
                      Cooperation Agency
25                   Architect of the        1,984       0.1      98.4
                      Capitol
26                   Board of Governors,     1,744       0.1      98.5
                      Federal Reserve
                      System
27                   Environmental           1,728       0.1      98.6
                      Protection Agency
28                   Department of           1,456       0.1      98.7
                      Energy
29                   National                1,335       0.1      98.8
                      Aeronautics and
                      Space
                      Administration
30                   Securities and          1,168       0.1      98.9
                      Exchange
                      Commission
31                   Peace Corps             1,125       0.1      99.0
32                   Small Business          1,019       0.1      99.1
                      Administration
33                   Executive Office of       957       0.1      99.1
                      the President
34                   Office of Personnel       830       0.1      99.2
                      Management
35                   Department of             791       0.1      99.3
                      Housing and Urban
                      Development
36                   National Labor            752       0.1      99.3
                      Relations Board
37                   National Archives         726       0.1      99.4
                      and Records
                      Administration
38                   Department of             701      0.1%     99.4%
                      Education
39                   Department of Labor       698       0.1      99.5
40                   General Services          693       0.1      99.5
                      Administration
41                   Equal Employment          547       0.0      99.6
                      Opportunity
                      Commission
42                   Federal                   543       0.0      99.6
                      Communications
                      Commission
43                   Federal Trade             530       0.0      99.6
                      Commission
44                   National Science          479       0.0      99.7
                      Foundation
45                   Smithsonian               463       0.0      99.7
                      (includes the
                      National Gallery
                      of Art,
                      Smithsonian
                      Institution,
                      Woodrow Wilson
                      Center, and JFK
                      Center for the
                      Performing Arts)
46                   Supreme Court             384       0.0      99.7
47                   American Battle           325       0.0      99.8
                      Monuments
                      Commission
48                   Federal Election          303       0.0      99.8
                      Commission
49                   Corporation for           284       0.0      99.8
                      National and
                      Community Service
50                   Congressional             243       0.0      99.8
                      Budget Office
51                   Commodity Futures         209       0.0      99.8
                      Trading Commission
52                   Federal Mediation         204       0.0      99.8
                      and Conciliation
                      Service
53                   U.S. Tax Court            153       0.0      99.9
54                   Armed Forces              136       0.0      99.9
                      Retirement Home
55                   Merit Systems             135       0.0      99.9
                      Protection Board
56                   Federal Labor             114      0.0%     99.9%
                      Relations
                      Authority
57                   Pension Benefit           112       0.0      99.9
                      Guaranty
                      Corporation
58                   National Foundation       102       0.0      99.9
                      on the Arts and
                      the Humanities
59                   International Trade        86       0.0      99.9
                      Commission
60                   Defense Nuclear            78       0.0      99.9
                      Facilities Safety
                      Board
61                   U.S. Court of              76       0.0      99.9
                      Veterans Appeals
62                   National                   69       0.0      99.9
                      Transportation
                      Safety Board
63                   Government Printing        62       0.0      99.9
                      Office
64                   Consumer Product           58       0.0      99.9
                      Safety Commission
65                   U.S. Institute of          56       0.0      99.9
                      Peace
66                   Export-Import Bank         52       0.0      99.9
                      of the U.S.
67                   Arms Control and           52       0.0      99.9
                      Disarmament Agency
68                   Holocaust Memorial         51       0.0      99.9
                      Council
69                   Botanic Garden             49       0.0     100.0
70                   Postal Rate                49       0.0     100.0
                      Commission
71                   Federal Maritime           35       0.0     100.0
                      Commission
72                   Office of Special          34       0.0     100.0
                      Counsel
73                   Advisory Council on        34       0.0     100.0
                      Historical
                      Preservation
74                   Federal Housing            34       0.0     100.0
                      Finance Board
75                   National Credit            33      0.0%    100.0%
                      Union
                      Administration
76                   Commission on Civil        30       0.0     100.0
                      Rights
77                   Selective Service          28       0.0     100.0
                      System
78                   Occupational Safety        26       0.0     100.0
                      and Health Review
                      Commission
79                   U.S. Enrichment            25       0.0     100.0
                      Corporation
80                   Assassinations             23       0.0     100.0
                      Records Review
                      Board
81                   Federal Mine Safety        23       0.0     100.0
                      and Health Review
                      Commission
82                   Railroad Retirement        21       0.0     100.0
                      Board
83                   Office of                  21       0.0     100.0
                      Government Ethics
84                   Farm Credit                21       0.0     100.0
                      Administration
85                   Federal Retirement         21       0.0     100.0
                      Thrift Investment
                      Board
86                   Physician Payment          18       0.0     100.0
                      Review Commission
87                   Office of                  17       0.0     100.0
                      Compliance
88                   International              16       0.0     100.0
                      Boundary and Water
                      Commission (U.S.
                      and Mexico)
89                   Prospective Payment        15       0.0     100.0
                      Assessment
                      Commission
90                   Commission on              14       0.0     100.0
                      Immigration Reform
91                   National Capital           13       0.0     100.0
                      Planning
                      Commission
92                   National Mediation         13       0.0     100.0
                      Board
93                   Advisory Commission        11      0.0%    100.0%
                      on
                      Intergovernmental
                      Relations
94                   Nuclear Waste              11       0.0     100.0
                      Technical Review
                      Board
95                   Commission on               8       0.0     100.0
                      Protecting and
                      Reducing
                      Government Secrecy
96                   Inter-American              7       0.0     100.0
                      Foundation
97                   National Commission         7       0.0     100.0
                      on Libraries and
                      Information
                      Science
98                   James Madison               7       0.0     100.0
                      Memorial
                      Scholarship
                      Foundation
99                   International               7       0.0     100.0
                      Boundary
                      Commission (U.S.
                      and Canada)
100                  Competitiveness             6       0.0     100.0
                      Policy Council
101                  John C. Stennis             5       0.0     100.0
                      Center for Public
                      Service Training
                      and Development
102                  International Joint         4       0.0     100.0
                      Commission (U.S.
                      and Canada)
103                  Architectural and           4       0.0     100.0
                      Transportation
                      Barriers
                      Compliance Board
104                  National Education          3       0.0     100.0
                      Goals Panel
105                  National Council on         3       0.0     100.0
                      Disability
106                  African Development         3       0.0     100.0
                      Foundation
107                  National Bankruptcy         3      0.0%    100.0%
                      Review Commission
108                  Appalachian                 3       0.0     100.0
                      Regional
                      Commission
109                  Harry S. Truman             2       0.0     100.0
                      Scholarship
                      Foundation
110                  Office of Navajo            2       0.0     100.0
                      and Hopi Indian
                      Relocation
111                  Marine Mammal               2       0.0     100.0
                      Commission
112                  Arctic Research             2       0.0     100.0
                      Commission
113                  Morris K. Udall             2       0.0     100.0
                      Scholarship and
                      Excellence in
                      National
                      Environmental
                      Policy Foundation
114                  Committee for               2       0.0     100.0
                      Purchase from
                      People Who Are
                      Blind or Severely
                      Disabled
115                  Barry Goldwater             2       0.0     100.0
                      Scholarship and
                      Excellence in
                      Education
                      Foundation
116                  Martin Luther King,         1       0.0     100.0
                      Jr. Federal
                      Holiday Commission
117                  Farm Credit System          1       0.0     100.0
                      Insurance
                      Corporation
118                  Federal Financial           1       0.0     100.0
                      Institutions
                      Examination
                      Council
119                  Japan-U.S.                  1       0.0     100.0
                      Friendship
                      Commission
120                  Delaware River              1       0.0     100.0
                      Basin Commission
121                  Susquehanna River           1      0.0%    100.0%
                      Basin Commission
122                  Columbus Fellowship         1       0.0     100.0
                      Foundation
123                  Commission of Fine          1       0.0     100.0
                      Arts
======================================================================
Total                                     1,380,88    100.0%    100.0%
                                                 3
----------------------------------------------------------------------
Note 1:  Numbers include employees located in the United States and
overseas.  Numbers exclude employees of the CIA, DIA, and NSA. 

Note 2:  The "cumulative percent" will not always precisely equal the
sum of all the relevant "percent of all" numbers due to rounding
error.  Numbers of employees that do not round up to 0.1 percent will
show no impact on the percentages in the table. 

Source:  GAO analysis of OPM's Monthly Report of Federal Civilian
Employment. 


--------------------
\9 The Postal Reorganization Act of 1970 designated the Postal
Service as an independent establishment--not agency--of the executive
branch.  Because we refer to it and others collectively as
independent agencies, we do not maintain that distinction in the
language of the text. 

\10 Many of these organizations consist of suborganizations, such as
departments, services, bureaus, and administrations.  Excepted
service employment was more concentrated in some of these
suborganizations than in others.  The headings shown in the table are
the first-level headings published by OPM in its Employment and
Trends reports. 


   RESEARCH ISSUES
---------------------------------------------------------- Chapter 1:3

Since the excepted service is not a static entity, research interest
may focus on the changing numbers and locations of excepted service
employees.  Change can occur for a variety of reasons.  For instance,
some agencies (for example, the Pennsylvania Avenue Development
Corporation in 1996) may cease to exist; some (for example, the
Office of Compliance in 1995) may come into being; and yet others
(for instance, the Federal Aviation Administration, effective in
1996) may be newly excepted.  Through OPM's Employment and Trends
reports, which routinely provide tables based on Monthly Report data,
these changes can be traced.  Some data on the early history and
growth of the competitive service can be found in the U.S.  Civil
Service Commission's History of the Federal Civil Service:  1789 to
the Present (1941). 

For some research purposes, it may be important to separate
nonpermanent (temporary or indefinite) employees from permanent
employees.  The Monthly Report data allow for this separation. 
Agencies can vary greatly in their mix of permanent and nonpermanent
appointments among excepted service employees.  For example,
according to the June 1996 data, 3 percent of the excepted service
appointments in the Nuclear Regulatory Commission were nonpermanent
appointments; the corresponding figure was 89 percent in the Federal
Emergency Management Agency.  (The average for all agencies with
excepted service employees was 19 percent.)


EXCEPTED SERVICE EMPLOYMENT BY
TYPES OF APPOINTING AUTHORITY
============================================================ Chapter 2

In chapter 1, we described the distribution of excepted service
employees among federal branches and agencies.  Another way to
portray the distribution of excepted service employees is according
to the many legal bases under which excepted service employees are
appointed to their jobs. 

The 1977 staff report for the President's Personnel Management
Project characterized the complexities of the excepted service as "a
tangled, confusing web of laws, regulations, authorities, and
exceptions."\11 Exceptions may be granted for entire agencies (for
example, the Tennessee Valley Authority or the Postal Service); parts
of departments (for example, the Federal Bureau of Investigation
within the Department of Justice); or specific positions (for
example, Foreign Service positions in various agencies).  In some
instances, the exception applies to all personnel provisions of the
competitive service; in other instances, the exception applies only
to some provisions.  Moreover, the legal basis of the exception may
be by statute, or pursuant to statute through a regulation or an
executive order.\12

The purpose of this chapter is to examine some of the patterns and
complexities of the excepted service that are associated with
appointing authorities.  The illustrations are based on OPM's Central
Personnel Data File (CPDF) data on appointing authorities for June
1996.\13 First, we illustrate that a single agency may include
excepted service employees appointed under various authorities. 
Second, we discuss how a single appointing authority may be used to
appoint excepted service employees in various agencies.  Finally, we
note some methodological difficulties arising out of the limitations
of the CPDF data and the complexities of appointing authorities. 


--------------------
\11 The President's Reorganization Project:  Personnel Management
Project:  Final Staff Report, Volume 1, December 1977, p.  42. 

\12 Under 5 U.S.C.  3302, the president is authorized to prescribe
rules governing the competitive service, including authority to
provide for necessary exceptions from competitive service.  The
president has delegated to OPM the authority to promulgate
regulations implementing this provision. 

\13 According to the technical definition used by CPDF, "current
appointment authority" refers to the law, executive order, rule,
regulation, or other basis that authorizes an employee's most recent
conversion or accession action.

CPDF data are not directly comparable to the Monthly Report data,
which were used in chapter 1 to describe the distribution of excepted
service employees.  Among other differences between the two data
sources, which are detailed in chapter 4, the CPDF has less
comprehensive coverage of agencies than the Monthly Report.  However,
of the two data sources, only the CPDF includes appointing authority
data. 


   MANY APPOINTING AUTHORITIES
   WITHIN A SINGLE AGENCY
---------------------------------------------------------- Chapter 2:1

Beyond excepted service employees possibly working side by side with
competitive service employees in an agency, excepted service
employees appointed under many different authorities may work in the
same agency.  As shown in table 2.1, as of June 1996, excepted
service employees in the Veterans Health Administration (VHA) within
VA were appointed under a variety of authorities.  They were
predominantly appointed under the authority of the VA Medical
Personnel system, which is codified in title 38 of the U.S.  Code. 
However, VHA also employed other excepted service employees under
Schedules A, B, or C.\14 VHA also had two presidential appointees. 
About 6,200 other employees had been appointed through another OPM
regulation (5 CFR 307.103), which provides for the excepted service
appointment of eligible veterans.  A few others were appointed under
other miscellaneous authorities.  (As indicated by the authority
categories of "missing codes" and "other citation," this data source
did not identify the appointing authority of over 21,000 excepted
service employees in VHA.)



                               Table 2.1
                
                  Appointing Authorities for Excepted
                Service Employees in the Veterans Health
                       Administration (June 1996)

                                                             Number of
Appointing authority                                         employees
--------------------------------------------------  ------------------
VA medical personnel (38 U.S.C.)                                80,024
Schedule A                                                       1,786
Schedule B                                                       1,070
Schedule C                                                           4
Presidential                                                         2
Veterans' readjustment                                           6,208
Miscellaneous authorities\a                                         23
"Other citation"\b                                              21,095
No information (missing codes)                                     586
======================================================================
Total                                                          110,798
----------------------------------------------------------------------
\a This category includes appointments under additional authorities,
such as those governing restored employment. 

\b In the data, some appointing authorities are no more specifically
defined than "other citation."

Source:  GAO analysis of OPM's Central Personnel Data File. 


--------------------
\14 Appointments under Schedule A are for positions, such as
attorneys and chaplains, for which it is impracticable to examine. 
Schedule B covers positions for which it is impracticable to hold an
open competition or to apply usual competitive examining
procedures--for example, students in cooperative education programs. 
Appointments under Schedule C are for positions of a confidential or
policy-determining nature, or which involve a close and confidential
working relationship with the agency head or other key appointed
officials; these positions include the majority of political
appointees below cabinet and subcabinet levels.  As described in part
213 of title 5 of the Code of Federal Regulations (5 CFR 213), OPM
authorizes agencies to make appointments under these schedules. 


   APPOINTING AUTHORITIES SPANNING
   AGENCIES
---------------------------------------------------------- Chapter 2:2

Appointing authorities may span agencies.  An example is provided in
table 2.2, which portrays the distribution of excepted service
employees appointed under the authority of the Foreign Service
statutory provisions, which are codified under title 22 of the U.S. 
Code.  Although most of these employees were located in the
Department of State and the Agency for International Development,
this appointing authority was used in seven organizations. 



                               Table 2.2
                
                    Excepted Service Employees With
                 Appointments Under the Foreign Service
                    Authority, by Agency (June 1996)


                                          Under Foreign
                                                Service    Under other
Organization                                  authority    authorities
----------------------------------------  -------------  -------------
Department of State                               9,223            678
Agency for International Development              1,399            195
Department of Commerce: International               218            105
 Trade Administration
Department of Agriculture: Foreign                  189            128
 Agricultural Service
Department of Agriculture: Animal and                67          2,045
 Plant Health Inspection Service
Department of Commerce: unknown                       9              0
 suborganization
Peace Corps                                           1            879
======================================================================
Total                                            11,106          4,030
----------------------------------------------------------------------
Source:  GAO analysis of OPM's Central Personnel Data File. 


   METHODOLOGICAL DIFFICULTIES
---------------------------------------------------------- Chapter 2:3

The complexity of the excepted service raises various methodological
difficulties.  One is the difficulty of designing questionnaires or
interviews that will successfully elicit information on various
categories of excepted service employees.  For example, excepted
service employees in a single agency may be employed under different
appointing authorities and may, therefore, be under differing sets of
exceptions.  Thus, a survey directed to their agency would either
have to specify the categories of excepted service employees to which
the various questions applied or allow the respondents to designate
the categories of employees for which their answers applied. 

Another methodological difficulty concerns identifying the entities
for research, since excepted service entities can be either
individually excepted agencies or appointing authorities under which
workers are employed in several, or even many, agencies.  A related
issue is that of deciding the level of organization, and the number
of entities within an agency or appointing authority, from which data
should be gathered.  If, for example, one were researching the Panama
Canal Employment Service appointing authority, one could choose to
gather data from as many as 32 entities employing workers under its
auspices.  (See table 2.3.) The decision on how many entities to
study in order to get adequate coverage of the Panama Canal
Employment Service appointing authority might be a difficult one
because significant variations in personnel systems among the
entities might be unknown before surveying them, while trying to
identify and contact respondents at every site might be difficult. 



                               Table 2.3
                
                  Number of Excepted Service Employees
                With Appointments Under the Panama Canal
                Employment Service Authority (June 1996)

                                                             Number of
Agency/suborganization                                       employees
--------------------------------------------------  ------------------
Panama Canal Commission                                            648
Army--U.S. Army Southern Command                                   502
Air Force--Air Combat Command                                      291
Army--U.S. Army Information Systems Command                        170
Army--U.S. Army Medical Command                                    141
Army--Joint Activities                                             118
Navy--Atlantic Fleet                                                83
Department of Defense--Dependents Schools                           75
Air Force--Air Mobility Command                                     31
Department of Defense--Defense Commissary Agency                    20
Army--U.S. Army Armament, Munitions and Chemical                    17
 Command
Army--Field Operating Office of Office of                            8
 Secretary of Army
GSA--Federal Supply Service                                          7
Army--U.S. Army Forces Command                                       6
Army--Military Traffic Management Command                            5
Department of Defense--Defense Logistics Agency                      4
Army--U.S. Army Aviation Systems Command                             4
Army--Materiel Readiness Activities                                  4
Navy--Naval Facilities Engineering Command                           3
Army--U.S. Army Corps of Engineers                                   3
Navy--Naval Medical Command                                          2
Navy--Naval Education and Training Command                           2
Air Force--Office of Special Investigations                          2
Army--U.S. Army Test and Evaluation Command                          2
Army--U.S. Special Operations Command (Army)                         1
Navy--Naval Security Group Command                                   1
Army--U.S. Army Criminal Investigation Command                       1
Department of Defense--Defense Mapping Agency                        1
Army--U.S. Army Tank Automotive Command                              1
Army--U.S. Army Communications Electronics Command                   1
Army--U.S. Army Intelligence and Security Command                    1
Army--Field Operations Agencies of the Army Staff                    1
 resourced through OA-22
======================================================================
Total                                                            2,156
----------------------------------------------------------------------
Note:  Numbers exclude foreign nationals employed overseas.  Numbers
exclude employees of the CIA, DIA, and NSA. 

Source:  GAO analysis of OPM's Central Personnel Data File. 

Another methodological difficulty involves the CPDF.  Our analysis
above shows the usefulness of the CPDF data for tracing appointing
authorities within and among agencies.  Nevertheless, the CPDF has
some important methodological limitations when used for this purpose. 
In particular, it cannot be used for comprehensive descriptions of
the excepted service because it excludes some important excepted
service agencies (for instance, the Postal Service, the CIA, NSA, and
DIA) and foreign nationals working overseas.  Further, CPDF
information for a significant number of employees did not identify a
specific appointing authority.  For example, the authority for all of
the excepted service employees in the FBI was only identified as
"other citation." (Additional information about the CPDF as a data
source can be found in chapter 4.)


SOME PRIOR STUDIES OF THE EXCEPTED
SERVICE
============================================================ Chapter 3

Past policy concerns about the excepted service have led to different
study focuses.  One policy concern about the lack of unity resulting
from the number of alternative personnel systems within the civil
service led to studies of the validity of reasons for continuing
agencies' exceptions to the competitive service.  For example, why
did one agency need policies different from those found in the
competitive service to fill a clerk's job?  Another concern focused
on the criticisms of the competitive service's laws and regulations. 
This led to examinations of whether the various personnel systems in
the excepted service offered beneficial models for reforming the
competitive service. 

In this chapter, we examine some prior reviews and studies that
discussed these policy concerns.  We also discuss some methodological
difficulties that were revealed by the studies. 


   REASONS FOR EXCEPTIONS
---------------------------------------------------------- Chapter 3:1

At the request of the Senate Committee on Post Office and Civil
Service, the Civil Service Commission produced a 1973 report,
Statutory Exceptions to the Competitive Service.  A central question
at that time concerned the circumstances requiring agencies to have
different personnel policies.  The Commission addressed this question
by asking 44 agencies to offer reasons that would justify the
continuation of their exceptions.  The study concentrated on
exceptions from appointment provisions rather than on possible
exceptions from the many other areas of human resource management
covered by title 5. 

This study revealed diverse reasons used to justify exceptions. 
Reasons included the need to work in a business-like fashion (TVA,
Postal Service, and Veterans Canteen Service); the need to maintain
secrecy about personnel matters for national security reasons
(intelligence agencies); the need to serve several--federal, state,
and military--masters concurrently (National Guard civilians);
special needs in staffing overseas positions (Department of State);
special needs in recruiting and paying medical personnel (VA); and
the need for separate treatment of government branches (Library of
Congress).  The Commission concluded that a common theme throughout
the various justifications was an emphasis on the flexibility
provided by being excepted from the competitive service. 

The Commission also reported its own technical opinion on the
desirability of continuing each exception.  It generally found the
justifications lacking, concluding that many of the historical
reasons for the statutory exceptions had ceased to exist.  It
expressed concern "over the agencies' apparent inability to
articulate specific reasons for continuing the statutory
exceptions."\15 In its view, the inflexibilities of the competitive
service perceived by the agencies were not numerous or of
overwhelming significance, and the competitive service could be
adapted to include some flexibility features found in the excepted
service.  The Commission also expressed its general preference for
further modification of the competitive service rather than for the
exception of agencies or segments of agencies from the competitive
service. 

Similar to the Civil Service Commission's earlier report, the 1977
final staff report, Personnel Management Project (done as part of the
President's Reorganization Project), characterized the excepted
service in a way that generally questioned the reason for continuing
exceptions.  It stated that most agencies with exceptions operated
smaller merit systems with features that paralleled or were
comparable to the key merit requirements of the competitive service. 
To paraphrase the question asked in the report:  If the competitive
service could be reformed to provide greater policy diversity and
procedural flexibility, and the circumstances that supported creating
the exceptions had already greatly changed, what would be the
remaining logic for the excepted service?\16

The staff report differed from the earlier Commission report in that
it did not try to catalog agencies' reasons for exceptions; rather,
it recommended creating a framework to end the exceptions that could
not be justified.  (The Commission had differentiated its technical
opinions from recommendations for legislative action, which would
have had to take into account other factors, such as disruptions of
functioning personnel systems and administrative and legislative
convenience.) The staff report proposed the establishment of criteria
by which to evaluate the need to continue to except certain agencies
and alternative personnel systems from the competitive service. 
Under the proposal, agencies with alternative systems would have been
required to present justifications, based on these criteria, to the
president for his decision on whether to continue their excepted
status or recommend to Congress legislation to change that status. 


--------------------
\15 U.S.  Civil Service Commission, Statutory Exceptions to the
Competitive Service, September 1973, p.  323. 

\16 The President's Reorganization Project:  Personnel Management
Project:  Final Staff Report, Volume 1, December 1977, pp.  42-43. 


   FINDING MODELS IN THE EXCEPTED
   SERVICE
---------------------------------------------------------- Chapter 3:2

Other studies have had a different focus, one that sought to compare
the personnel systems of individual excepted service entities with
the systems created under title 5.  These studies were based on the
premise that particular alternative personnel systems included in the
excepted service might provide models for rules, methods, or
practices that could be beneficially adopted in the competitive
service.  The Merit Systems Protection Board (MSPB) has done two case
studies based on this premise--one on health care occupations within
VA and one on TVA.\17 In contrast to the Commission's report, the
MSPB studies focused on personnel systems rather than on appointments
and tenure, and MSPB considered personnel improvements without
raising the possibility of ending exceptions. 

MSPB's study focus and policy concerns are illustrated by its report
on TVA.  On the one hand, MSPB noted that TVA had certain policies,
such as granting union preference for certain hiring, that appeared
to conflict with merit principles.  It recommended that TVA change
these policies.  On the other hand, MSPB suggested that TVA's
managerial discretion and ability to make rapid and significant
changes in human resource management helped it to meet new or
changing organizational demands.  Here, MSPB recommended that
Congress, OPM, and individual agencies consider TVA's policies and
practices as they seek to improve relevant personnel laws, policies,
and practices. 


--------------------
\17 MSPB published its studies as The Title 38 Personnel System in
the Department of Veterans Affairs:  An Alternative Approach (1991)
and The Tennessee Valley Authority and the Merit Principles (1989). 


   RESEARCH ISSUES AND
   METHODOLOGICAL DIFFICULTIES
---------------------------------------------------------- Chapter 3:3

These previous studies implicitly or explicitly raise many research
issues and methodological difficulties.  These include how to judge
the validity of reasons for exceptions, to measure the impact of a
personnel practice on an agency's mission, and to determine whether
successful features of a personnel system in one agency might be
beneficially transferred to another agency. 

Three other relevant issues are discussed below.  These concern how
to establish reasons for exceptions, determine the reliability of
agency responses about flexibility, and describe and compare
personnel systems.  For each of these issues, prior studies
illustrate some important methodological difficulties. 


      ESTABLISHING THE REASONS FOR
      EXCEPTIONS
-------------------------------------------------------- Chapter 3:3.1

Establishing the reasons for exceptions poses certain methodological
difficulties for gathering adequate information.  Although examining
the legislative history might be helpful in determining the original
reasons for the exceptions, there are limitations to this approach. 
First, the available legislative history record may not be
definitive, since, as the Civil Service Commission noted in its 1973
report, it is reasonable to assume that considerations may have been
involved that were not fully reflected in historical records. 
Second, unless the exception was created recently, legislative
histories may not be relevant for establishing the current reasons
because circumstances may have changed since the exception's
creation.\18

Another approach to establishing current reasons may be to ask
agencies to justify their exceptions.  This approach requires
respondents to construct reasons, and the Commission's 1973 study
raised issues about what constitutes an adequate response.  The
Commission concluded that most agencies were unable to articulate
specific reasons for continuing their statutory exceptions.  It is
unclear whether this vagueness resulted from an actual lack of
adequate justification, the respondents' misunderstanding of what
constituted an adequately specific justification, or the respondents'
lack of knowledge about the competitive service provisions to which
their exceptions needed to be compared.  The Commission's study
relied on agencies to provide narrative justifications for continuing
the exceptions, and the Commission emphasized that it had asked
respondents to be very specific.  Any future researcher might
consider whether, and if so how, more specific responses could be
elicited from respondents. 


--------------------
\18 Although a complete legislative history of an agency's operation
outside of, or prior to, the creation of the competitive service may
go back more than a century, the history of many current exceptions
goes back no farther than the Ramspeck Act of 1940.  That act
authorized the president to remove almost all exceptions that had
been created since the passage of the Civil Service Act of 1883.  In
the Civil Service Commission's 1973 report about statutory
exceptions, it is noted that the Ramspeck Act resulted in the
Commission being largely concerned with exceptions that had occurred
since 1940. 


      DETERMINING THE RELIABILITY
      OF RESPONSES
-------------------------------------------------------- Chapter 3:3.2

A second research issue is whether agency respondents can reliably
assess the flexibility of personnel requirements and practices under
the competitive service.  In Statutory Exceptions to the Competitive
Service (1973), the Civil Service Commission agreed with certain
agencies' assertions that their personnel practices would not be
allowed under title 5, and disagreed with others.  For example, the
Commission stated that several agencies were under the misconception
that competitive procedures for selection necessarily required a
written test; it also noted that both interviews and peer referrals
could have their place in competitive service selections.  The
Commission speculated that some responses might reflect some excepted
service agencies' long independence from competitive service
appointment laws and regulations; such respondents might not be
familiar with the ways in which the competitive service had evolved
in response to concerns with past rigidities and weaknesses. 

However, this reliability problem may not simply reflect the
misperceptions of officials in excepted service agencies, whose role
might not require a working knowledge of the competitive service
provisions that cover other agencies.  Our prior work suggests that
some agency officials may not clearly understand the actual sources
of perceived inflexibilities or constraints in their own agencies. 
For example, at a 1995 symposium we sponsored,\19 a participant
recounted an incident in which Internal Revenue Service officials
learned that constraints on their prerogatives were not so extensive
as they had thought; OPM representatives at one meeting told them a
particular constraint was self-imposed and not an OPM requirement. 
In addition, a recent study of ours found that several participating
agencies discovered, while preparing their waiver requests for a
pilot project, that the burdens and constraints that confronted their
managers often were imposed by the agency itself or its parent
department and were not the result of requirements imposed by central
management agencies.\20

This reliability issue is critical to a comparison of the flexibility
of personnel systems in the competitive and excepted services.  If
respondents' assessments cannot be assumed to be reliable, any
comparison based on their views would be suspect.  Thus, one would be
uncertain whether policies and procedures found in excepted service
agencies would be unavailable to competitive service agencies due to
the stricter requirements of title 5.  Conversely, one would also be
uncertain whether excepted service agencies needed their exceptions
in order to adopt particular policies or procedures. 

Consequently, researchers addressing the flexibility issue might take
one of two differing approaches to reliably determining and comparing
the approaches and legal bases of personnel systems in the two
services.  The first approach would be to rely on respondents to make
the comparisons, while (1) ensuring that respondents were adequately
knowledgeable in this regard and/or (2) finding methods to confirm
the legal basis of any constraints they perceived.  The second
approach would be to rely on the respondents only for descriptions of
their personnel systems; the researchers would then compare the
personnel systems and determine their legal bases.  The second
approach would probably require more time and expertise on the part
of researchers than would the first. 


--------------------
\19 Transforming the Civil Service:  Building the Workforce of the
Future:  Results of a GAO-Sponsored Symposium (GAO/GGD-96-35, Dec. 
26, 1995), p.  9. 

\20 GPRA:  Managerial Accountability and Flexibility Pilot Did Not
Work as Intended (GAO/GGD-97-36, April 1997) p.4.  A similar instance
is reported in Management Reform:  Status of Agency Reinvention
Efforts (GAO/GGD-96-69, March 1996). 


      DESCRIBING AND COMPARING
      PERSONNEL SYSTEMS
-------------------------------------------------------- Chapter 3:3.3

Identifying the appointing authority (as was done in chapter 2) is
only a starting point for describing a personnel system in the
excepted service.  Such a description could include the personnel
system's various exceptions from title 5; its statutory, regulatory,
and policy bases; and the actual practices it involves.  The set of
exceptions might be identified through an extensive review of the
many relevant chapters and subchapters of title 5 where exceptions to
coverage by particular provisions are defined.\21 The statutory
requirements for the personnel system might be found in a separate
title of the U.S.  Code, and regulatory requirements might be found
in the Code of Federal Regulations.  Personnel manuals and union
agreements might further define policies and procedures covering
particular personnel systems within the excepted service.  To
understand actual day-to-day practices and how the features of the
personnel system interact would likely require additional information
for each personnel system to be studied.  This information might
already exist, for example, in previous research documents, or new
information might be gathered through case studies. 

However, legal research may well involve complications that are not
immediately apparent.  For example, all applicable statutes for an
alternative personnel system may not be explicit in the public law
creating the exception.  For instance, section 347 of the 1996
Department of Transportation Appropriation Act directed the FAA to
develop a new personnel management system.  The act states that the
new system is not subject to title 5 provisions, except for some
clearly specified sections and chapters.  Although other applicable
statutes are not explicitly specified in the act, an FAA document
explains that FAA continues to be subject to four more chapters of
title 5, the non-personnel management provisions of title 5, and
those portions of title 5 that specifically apply to the Secretary of
Transportation.  Through its own discretion, FAA also incorporated
additional sections and chapters of title 5 into its new personnel
management system.\22

A researcher can also find complexities in the configuration of
exceptions under a single appointing authority.  For instance,
according to the 1991 MSPB report, the law provides for different
personnel rules for the different medical care occupations under
title 38 U.S.C.  Seven occupations--physician, dentist, registered
nurse, expanded-function dental auxiliary, optometrist, physician
assistant, and podiatrist--"are covered by rules separate from those
of title 5 for placement, pay administration, leave, hours of duty,
discipline, adverse actions and appeals, and performance management. 
These employees are covered only by the title 5 retirement rules."\23
Another five occupations--practical nurse, occupational therapist,
pharmacist, physical therapist, and respiratory therapist--share
placement and pay administration provisions with other title 38
occupations.  However, unlike other title 38 employees, persons in
these occupations are paid under the General Schedule rather than
under a separate pay scale and are subject to title 5 performance
management, leave, and discipline provisions. 

Comparing excepted service and competitive service human resource
management systems may require detailed examinations of the personnel
systems within both services.  In some ways, title 5 provisions do
provide stark contrasts with personnel practices in some excepted
service agencies.  For example, TVA negotiates with employee unions
on a wide range of matters, including pay, job classification, and
health insurance, but title 5 specifically prohibits agencies from
negotiating on these and other specific matters.  Nevertheless, one
cannot assume that the title 5 requirements result in a single
personnel system among competitive service agencies that always
sharply contrasts with those of excepted service agencies.  For
example, title 5 provides OPM the discretion to use pay and
grade-setting provisions provided under title 38 for VA health care
occupations currently covered under title 5 in other agencies; in
effect, this means that some competitive service positions could have
the same pay and grade- setting provisions as found in the excepted
positions in VA.  A second example arises from OPM's authority under
title 5 to conduct demonstration projects, under which participating
agencies can diverge from a broad range of title 5 requirements. 
Thus, to the extent that the flexibilities allowed under title 5
result in less uniform agency personnel systems in the competitive
service, comparisons between the competitive service and the excepted
service personnel systems would have to consider variations in the
competitive service, as well as in the excepted service.\24


--------------------
\21 This type of analysis is illustrated in Appendix XI, "Comparison
of Selected Features of Competitive and Excepted Services," in
Personnel Management Project, Volume 3, December 1977. 

\22 FAA Personnel Management System, March 28, 1996, pp.  i-ii. 

\23 The Title 38 Personnel System in the Department of Veterans
Affairs:  An Alternative Approach (1991), p.  7. 

\24 Recent proposals for performance-based organizations have
described some of the existing personnel flexibilities under title 5. 
For example, see OPM's "Template of Personnel Flexibilities for Use
by Agencies Selected for Conversion to Performance-Based
Organizations," March 27, 1996, especially part II. 


TWO SOURCES OF DATA ON THE
EXCEPTED SERVICE
============================================================ Chapter 4

OPM maintains two data sources, based on data routinely submitted by
agencies, that provide information about the excepted service.  One
is the Monthly Report of Federal Civilian Employment (Monthly
Report), which contains summary employment data for agencies.  The
other is the Central Personnel Data File (CPDF), which contains
personnel information on most federal civilian employees.  Each data
source has advantages and disadvantages for providing information
about the excepted service. 

In chapters 1 and 2, we used these data sources to draw different
statistical portraits of the excepted service.  In this chapter, we
detail the differences between the two data sources that affect their
use for this purpose.  We also identify some unresolved issues
concerning their coverage and accuracy, as well as the methodological
difficulty of mixing data from the two sources in an analysis. 


   COVERAGE OF AGENCIES
---------------------------------------------------------- Chapter 4:1

Of the two sources, the Monthly Report gives more comprehensive
information on the governmentwide distribution of excepted service
employees.  As shown in table 4.1, the Monthly Report was designed to
provide more comprehensive coverage of federal agencies than the
CPDF.  Although both sources exclude nonappropriated fund
employees\25 and some agencies (for example, the CIA, DIA, and NSA),
the CPDF excludes more agencies (for example, all judicial branch
agencies and many legislative branch agencies).  The CPDF also
excludes the Postal Service, which employed 62 percent of all
excepted service employees in June 1996. 



                               Table 4.1
                
                   Comparison of Coverage of Federal
                Civilian Employment for Two Data Sources

                                          Monthly Report of Federal
Central Personnel Data File               Civilian Employment
----------------------------------------  ----------------------------
Includes employees in the executive       Includes employees in the
branch, with some exclusions:             executive branch, with some
                                          exclusions:
Excludes White House Office and Office
of the Vice President employees.

Excludes Board of Governors of the
Federal Reserve System, Postal Rate
Commission, U.S. Postal Service, and
Tennessee Valley Authority employees.

Excludes commissioned officers in the
Department of Commerce, Department of
Health and Human Services, and the
Environmental Protection Agency.

Excludes Central Intelligence Agency,
Defense Intelligence Agency, and          Excludes Central
National Security Agency employees.       Intelligence Agency,
                                          Defense Intelligence Agency,
                                          and National Security Agency
                                          employees.

Excludes employees in the judicial        Includes employees in the
branch.                                   judicial branch.

Includes legislative branch employees in  Includes employees in the
only the Government Printing Office, the  legislative branch.
U.S. Tax Court, and several small
commissions.

Excludes most nonappropriated fund        Excludes nonappropriated
personnel.                                fund personnel.

Excludes non-U.S. citizens in foreign     Includes non-U.S. citizens
countries.                                in foreign countries.
----------------------------------------------------------------------
Source:  OPM, Operating Manual:  Federal Workforce Reporting Systems,
December 26, 1994. 


--------------------
\25 These include employees paid from nonappropriated funds of the
Army and Air Force Exchange Service, Army and Air Force Motion
Picture Service, Navy exchanges, Marine Corps exchanges, Coast Guard
exchanges, and other instrumentalities of the United States conducted
for the comfort and improvement of personnel of the armed forces. 
These employees are broadly excepted from title 5, as specified in
section 2105 of that title. 


   AVAILABLE INFORMATION
---------------------------------------------------------- Chapter 4:2

Although limited to fewer agencies, the CPDF has been designed to
provide more information about excepted service employees than does
the Monthly Report.  The Monthly Report collects summary counts for
employees in the excepted service and the SES (combined) by agency,
with breakouts for permanent (versus temporary or indefinite)
appointments, major geographic locations, and accessions.\26
(Accessions are additions to an agency's workforce resulting from new
hires, reappointments, transfers, and other personnel actions.)

In contrast, the CPDF includes all this information and considerably
more personnel data, such as occupation and pay plan,\27 and collects
this data on each employee.  Perhaps most importantly, the CPDF can
separate excepted service employees from SES and competitive service
employees.  It also indicates the legal or regulatory basis (that is,
the appointing authority) for appointing excepted service employees. 
For agencies covered by both sources, the CPDF also provides data on
more agency suborganizations.  Thus, the CPDF--and not the Monthly
Report--could show, for example, that most excepted service employees
in VA were within the Veterans Health Administration, and that most
of these were appointed under the Veterans Medical Personnel
Authority. 


--------------------
\26 The reporting system for the Monthly Report is described in OPM's
Operating Manual:  Federal Workforce Reporting Systems, December 26,
1994.  Additional details are found in OPM's Standard Form 113-A: 
Monthly Report of Federal Civilian Employment:  User Guide, August 1,
1996.  Tables based on the data are routinely disseminated through
OPM's Employment and Trends reports. 

\27 The many data elements of the CPDF are listed in OPM's Operating
Manual:  Federal Workforce Reporting Systems, December 26, 1994.  The
full data dictionary is found in The Guide to Personnel Data
Standards (previously known as FPM Supplement 292-1, Personnel Data
Standards). 


   METHODOLOGICAL DIFFICULTIES
---------------------------------------------------------- Chapter 4:3

Future researchers will have to consider at least two unresolved
issues about these data sources.  As we have shown, the Monthly
Report has better coverage of the excepted service than does the
CPDF; the first unresolved issue concerns the completeness of the
Monthly Report's coverage.  A second unresolved issue is the accuracy
of data in the CPDF and the Monthly Report.  Moreover, future
researchers should be aware of the methodological difficulty of
mixing data from the two data sources. 

Since the Monthly Report is designed to capture almost all federal
civilian employment, it does provide an extensive list of agencies
with excepted service employees.  However, we have not verified that
it is an exhaustive list.\28 In particular, although the Monthly
Report includes data on government corporations, we have not verified
that all corporations with federal civilian employment are reported
in it.\29 Previous studies of the excepted service, although dated,
have examined other entities that are explicitly excluded from
reporting to the Monthly Report.  These include the major
intelligence agencies and the nonappropriated fund employees at
various agencies.  (According to a Department of Defense official,
that department alone had about 170,000 nonappropriated fund
employees.)

We have not examined the accuracy of either data source.  According
to OPM, a number of quality control operations are performed on CPDF
data, and, where possible, comparisons are made between CPDF data and
Monthly Report data to identify any large data discrepancies.\30 OPM
has also developed a program for checking Monthly Report data for
logical inconsistencies, missing values, and out-of-expected-range
data; through this program, agencies may interactively correct their
data in response to error messages, when they have electronically
submitted their data.\31

Given the differences between the two data sources, mixing their data
in an analysis can raise issues of accuracy.  Since the Monthly
Report data cover different agencies than do CPDF data, aggregate
findings are not directly comparable between the two data sources. 
Moreover, even data for the same agency drawn from the two sources
may not be comparable.  Discrepancies in counts for agencies--whether
resulting from understandable differences in coverage (such as CPDF's
exclusion of foreign nationals employed overseas) or other possible
reasons, such as inaccurate counts--can be fairly large.  For
instance, CPDF data as of June 1996 indicated that the Federal
Emergency Management Agency (FEMA) employed 7,984 excepted service
employees; Monthly Report data for the same month indicated that FEMA
employed 2,884.\32


--------------------
\28 Other agencies' lists of federal agencies might be used to
identify federal agencies, if any, that do not appear in OPM lists. 
These other lists include the Office of Management and Budget's (OMB)
annual list of designated federal entities and federal entities,
OMB's federal budget data by agency, the National Institute of
Standards and Technology's Codes for the Identification of Federal
and Federally Assisted Organizations (FIPS PUB 95-1), and the Office
of the Federal Register's The United States Government Manual.  Even
if additional agencies were found on these lists, further
investigation would be necessary to determine whether the discovered
agencies were subsumed under other agencies in the OPM lists, and
whether they were employing excepted service employees. 

\29 Determining the universe of government corporations may be
difficult.  Our prior study found that no comprehensive descriptive
definition of, or criteria for, creating government corporations
existed, and counts of their number have varied widely.  See
Government Corporations:  Profiles of Existing Corporations
(GAO/GGD-96-14, December 1995). 

\30 We have a separate study currently under way to examine the
accuracy of data in the CPDF. 

\31 OPM's efforts to promote quality control for the CPDF are
described in its Operating Manual:  Federal Workforce Reporting
Systems, December 26, 1994, especially pp.  2-3, 41.  OPM's program
to check Monthly Report data is presented in its "Listing of SF 113-A
Reporting Edits," Standard Form 113-A:  Monthly Report of Federal
Civilian Employment:  User Guide, August 1, 1996, pp.  36-45. 

\32 According to an OPM official, this discrepancy primarily resulted
from the many FEMA employees on nonpay status in June 1996, who were
counted in the CPDF data and not in the Monthly Report data. 


OBJECTIVES, SCOPE, AND METHODOLOGY
=========================================================== Appendix I

Our overarching objective was to provide an introduction to the
excepted service and to identify research issues for planning future
studies of it.  Specifically, our objectives were to describe (1) the
distribution of excepted service employees across government
organizations; (2) the composition of the excepted service in terms
of the various legal bases under which employees were appointed; (3)
policy concerns and study focuses that have guided some prior
studies; and (4) the coverage of agencies and employees, and
available information, in two data sources that were useful for
studying the excepted service.  Additionally, we sought to identify
research issues and methodological difficulties associated with each
of these objectives. 

For the first objective of describing the distribution of excepted
service employees across government organizations, we analyzed OPM
data from the Monthly Report of Federal Civilian Employment (Monthly
Report) for June 1996.  Since Monthly Report data do not count SES
employees separately from excepted service employees, our use of the
combined number is not a precise count of excepted service employees. 
However, we determined that the imprecision was very small; based on
our analysis of data from the CPDF, which covers most federal
civilian employees, SES employees made up less than 2 percent of the
combined count in June 1996.  Although the Monthly Report covers
almost all agencies, it does not provide a full count of excepted
service employees since it collects data neither from the major
intelligence agencies nor on nonappropriated fund employees who were
included in some previous studies of statutory exceptions to the
competitive service. 

For the second objective of describing the legal bases of excepted
service employees' appointments, we analyzed OPM's CPDF data on
appointing authorities for June 1996.  Because the CPDF data exclude
over half the positions in the excepted service, we illustrate
patterns for particular agencies and appointment authorities, rather
than describing the entire excepted service. 

For the first and second objectives, we did not verify the data used
in our descriptions since that was beyond the scope of this
introduction to the excepted service.  The descriptions are for June
1996. 

To identify policy concerns and study focuses in prior studies of the
excepted service, we reviewed four studies that illustrate
significantly different approaches to studying the excepted service. 

Our fourth objective was to describe the completeness of coverage and
available information in two data sources, the CPDF and the Monthly
Report, that we used for analyzing aspects of the excepted service
for objectives 1 and 2.  We described their coverage and information
based primarily on OPM documentation, although we also clarified some
details about the Monthly Report with the OPM manager in charge of
it. 

We identified research issues and methodological difficulties
associated with the four objectives by considering them in light of
our standard processes for planning a study.\33 We examined the
various ways in which data on the personnel systems in the excepted
service might be collected, and identified the limitations on what
these data might reveal and on what we might be able to report about
them.  These considerations, and our review of some previous studies,
led us to identify certain research issues and methodological
difficulties that are likely to confront any researcher who intends
to delve more deeply into the excepted service in the future. 


--------------------
\33 These processes include identifying research questions, the
needed data, available data sources, methods of data collection and
analysis, the type of supportable findings, and potential limitations
of findings. 


MAJOR CONTRIBUTORS TO THIS STAFF
STUDY
========================================================== Appendix II


   GENERAL GOVERNMENT DIVISION,
   WASHINGTON, D.C. 
-------------------------------------------------------- Appendix II:1

Stephen E.  Altman, Assistant Director, Federal Management and
Workforce Issues
Michael J.  O'Donnell, Advisor
Gregory H.  Wilmoth, Senior Social Science Analyst


   DENVER REGIONAL OFFICE
-------------------------------------------------------- Appendix II:2

Terry J.  Hanford, Evaluator-in-Charge

*** End of document. ***