Federal Downsizing: Controls Needed to Ensure Compliance With Buyout
Repayment Provisions (Letter Report, 01/26/98, GAO/GGD-98-12).
Pursuant to a congressional request, GAO reviewed whether: (1) the 23
buyout recipients returned to federal employment and, if so, whether
they repaid the buyout or met the Department of Defense (DOD)
reemployment policy; and (2) the 9 agencies that were identified as
employing these 23 buyout recipients and other selected agencies, which
may have buyout recipients under contract, had internal procedures in
place to help ensure that buyout recipients repay buyouts when required
to do so.
GAO noted that: (1) the information provided to GAO by the appropriate
agencies' Office of Inspector General (OIG) and personnel office showed
that a violation of the Federal Workforce Restructuring Act (FWRA)
repayment provision or the DOD reemployment policy occurred in 11 of 23
cases; (2) the FWRA repayment provision was violated in 9 of the 11
cases, and the DOD reemployment policy was violated in the 2 other
cases; (3) the remaining 12 cases were not violations, although they had
originally appeared to be questionable because of discrepancies between
agency reports and data in the Office of Personnel Management's (OPM)
Central Personnel Data File (CPDF), which GAO used as a source of
information; (4) in addition, while researching 1 of 23 cases, an agency
OIG found that the agency employed an additional buyout recipient who
had not repaid the buyout; (5) regarding internal control procedures,
none of the 9 agencies that GAO contacted for information on the 23
buyout recipient cases had adequate internal control procedures in place
to provide reasonable assurance that the FWRA repayment provision was
met; (6) two other agencies notified their personnel officers of the
FWRA repayment provision; however, only one component of each agency
developed additional procedures to help ensure compliance with the
provision; (7) in addition to buyout recipients who return directly to
federal employment, some buyout recipients work under contract for the
federal government; (8) some of these contract personnel are employed
under contracts that are expressly identified as personal services
contracts and, thus, are subject to the FWRA repayment provision; and
(9) in addition to these personnel, other contract personnel who are
subject to relatively continuous supervision and control by agency
officials are, in effect, working under personal services contracts and
are subject to the FWRA repayment provision.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: GGD-98-12
TITLE: Federal Downsizing: Controls Needed to Ensure Compliance
With Buyout Repayment Provisions
DATE: 01/26/98
SUBJECT: Employee buyouts
Federal downsizing
Federal employees
Prohibited employment
Hiring policies
Internal controls
Service contracts
Government collections
IDENTIFIER: OPM Central Personnel Data File
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Cover
================================================================ COVER
Report to the Honorable
Frank R. Wolf,
House of Representatives
January 1998
FEDERAL DOWNSIZING - CONTROLS
NEEDED TO ENSURE COMPLIANCE WITH
BUYOUT REPAYMENT PROVISIONS
GAO/GGD-98-12
Buyout Repayment Provisions
(410092)
Abbreviations
=============================================================== ABBREV
APHIS - Animal and Plant Health Inspection Service
CPDF - Central Personnel Data File
DOD - Department of Defense
DOT - Department of Transportation
FAA - Federal Aviation Administration
FAR - Federal Acquisition Regulation
FWRA - Federal Workforce Restructuring Act
GSA - General Services Administration
IRS - Internal Revenue Service
OIG - Office of Inspector General
OPM - Office of Personnel Management
USDA - U.S. Department of Agriculture
VA - Department of Veterans Affairs
Letter
=============================================================== LETTER
B-277085
January 26, 1998
The Honorable Frank R. Wolf
House of Representatives
Dear Mr. Wolf:
As part of its downsizing efforts over the last several years, the
federal government has offered employees of various federal agencies
incentive payments, or buyouts, to leave federal employment through
voluntary separations. Employees who accept buyouts are not
prohibited from later returning directly to federal employment or
working under contract for the government. However, under a
provision of the Federal Workforce Restructuring Act (FWRA),\1 unless
a waiver is granted, buyout recipients generally must repay the
buyout if they return to federal employment or if they are employed
under a personal services contract within 5 years of their
separation.\2
During the period we reviewed, January 1993 through June 1995, two
different buyout rules were in effect for the Department of Defense
(DOD). From January 1993 to March 29, 1994, DOD employees could
receive buyouts, and these buyout recipients were not required to
repay the buyouts if they returned to federal employment. However,
DOD's policy during this period was that it would not rehire its
buyout recipients until 1 year after their separation. As of March
30, 1994, under the FWRA, employees from DOD as well as other federal
agencies could receive buyouts, but the buyout recipients generally
had to repay the buyout if they returned directly to federal
employment within 5 years of their separation.\3
In an October 1996 letter\4 to you on compliance with reemployment
requirements, we reported that there were 23 cases of buyout
recipients (1) who appeared to have violated the FWRA repayment
provision or the DOD reemployment policy or (2) about whom we could
not determine whether they had returned to federal employment because
of inconsistent source data.
As agreed with your office, this report provides information on (1)
whether the 23 buyout recipients returned to federal employment and,
if so, whether they repaid the buyout or met the DOD reemployment
policy and (2) whether the 9 agencies\5 that were identified as
employing these 23 buyout recipients and other selected agencies,
which may have buyout recipients under contract, had internal control
procedures\6 in place to help ensure that buyout recipients repay
buyouts when required to do so.
--------------------
\1 Public Law 103-226, March 30, 1994.
\2 Under the Federal Acquisition Regulation (FAR) a personal services
contract is one that, by its express terms or as administered, makes
the contract personnel in effect, government employees. (See the
Background section for the elements of a personal services contract.)
Contract personnel who are employed under nonpersonal services
contracts are not required to repay the buyout. Under a nonpersonal
services contract, personnel providing the services are not subject,
either by the contract's terms or by the manner of its
administration, to the supervision and control usually prevailing in
relationships between the government and its employees, as is the
case in personal services contracts.
\3 The FWRA amended the DOD buyout authority so that DOD employees
who received a buyout on or after March 30, 1994, were subject to the
same reemployment provisions as non-DOD employees with the exception
that--unlike their non-DOD colleagues--DOD buyout recipients were not
required to repay the buyout if they returned to federal employment
under a personal services contract.
\4 Buyout Recipients' Compliance With Reemployment Provisions
(GAO/GGD-97-7R, Oct. 3, 1996).
\5 The 9 agencies that were identified as employing the 23 buyout
recipients were the Departments of the Air Force, the Army, the Navy,
Defense, Justice, State, the Treasury, Agriculture, and Veterans
Affairs. The agencies we selected to understand the experiences
agencies have had with buyout recipients' returning as employees
under contract were the General Services Administration and the
Department of Transportation. For details on how we selected these
agencies, see our Scope and Methodology section.
\6 Internal control procedures are the specific steps established by
management to provide reasonable assurance that control objectives
are met.
RESULTS IN BRIEF
------------------------------------------------------------ Letter :1
The information provided to us by the appropriate agencies' Office of
Inspector General (OIG) and personnel office showed that a violation
of the FWRA repayment provision or the DOD reemployment policy
occurred in 11 of the 23 cases. The FWRA repayment provision was
violated in 9 of the 11 cases, and the DOD reemployment policy was
violated in the 2 other cases. The remaining 12 cases were not
violations, although they had originally appeared to be questionable
to us because of discrepancies between agency reports and data in the
Office of Personnel Management's (OPM) Central Personnel Data File
(CPDF), which we used as the source of our information. For example,
although the CPDF showed that certain buyout recipients were
reemployed at federal agencies, subsequent checks found that the
agencies had no records of rehiring them.
In addition, while researching 1 of the 23 cases, an agency OIG found
that the agency employed an additional buyout recipient who had not
repaid the buyout. This brought our total of confirmed violations of
the repayment provision to 10. OPM undertook two research efforts in
which it found violations of the FWRA repayment provision, but it
could not verify the total number of violations because one of the
efforts did not collect names and social security numbers, which
could have been used to verify the CPDF data used in its other effort
and in our review.
Regarding internal control procedures, none of the 9 agencies that we
contacted for information on the 23 buyout recipient cases had
adequate internal control procedures in place to provide reasonable
assurance that the FWRA repayment provision was met. This was the
case despite OPM's 1994 and 1996 guidance to agencies on the FWRA
repayment provision as well as OPM's list of options explaining steps
agencies could take to identify returning buyout recipients, steps
that OPM said were inexpensive to implement (see app. III).
However, to help ensure compliance with the FWRA repayment provision,
one agency created a form for job applicants to complete (and sign
and date) indicating whether they had received a buyout within the
previous 5 years. By having an applicant certify his or her buyout
status in writing, the agency would have documented evidence of the
applicant's response to the question of receiving a buyout should a
question arise after the applicant was hired. However, according to
officials of this agency, if an applicant indicated that he or she
were a buyout recipient, the agency had no personnel procedures in
place to ensure that the appropriate repayment provision was
satisfied. Such certification was not required by the other eight
agencies.
Two other agencies notified their personnel officers of the FWRA
repayment provision; however, only one component of each agency
developed additional procedures to help ensure compliance with the
provision. The two components developed these procedures as a result
of our inquiry into apparent violations, and one component's
procedures were optional. Also, four other agencies, according to
their DOD spokesperson, had programs in place that addressed some of
OPM's optional procedures, such as to notify agency personnel of the
FWRA repayment provision, or had programs in place to periodically
detect financial fraud. But none of the nine agencies had procedures
to help ensure compliance with the FWRA repayment provision at the
time of application for employment.
In addition to buyout recipients who return directly to federal
employment, some buyout recipients work under contract for the
federal government. Some of these contract personnel are employed
under contracts that are expressly identified as personal services
contracts and, thus, are subject to the FWRA repayment provision. In
addition to these personnel, other contract personnel who are subject
to relatively continuous supervision and control by agency officials
are, in effect, working under personal services contracts and are
subject to the FWRA repayment provision. However, sometimes it is
difficult to determine if a contract is a personal services contract,
particularly when it is not identified as such. The OIGs of two
agencies--the Department of Transportation (DOT) and the General
Services Administration (GSA)-- audited their contractor employees
and reported their results in February and September, 1996,
respectively. They found a combined total of 27 buyout recipients in
their agencies who, in effect, were working under personal services
contracts and who had not repaid their buyouts. The OIGs concluded
that one of DOT's components and GSA had ineffective control
procedures concerning buyout recipients who worked under personal
services contracts for the government. OPM's 1996 guidance for
identifying returning buyout recipients includes steps for ensuring
compliance with the FWRA repayment provision when buyout recipients
are employed under personal services contracts for the government.
BACKGROUND
------------------------------------------------------------ Letter :2
In 1992, DOD was the first federal agency authorized to offer buyouts
to its employees, and it has been using buyouts since January 1993 to
reduce the size of its workforce.\7 On March 30, 1994, the FWRA
authorized buyouts for other executive agencies and amended DOD's
authority. For both DOD and other executive agencies, employees
generally were offered a buyout payment that was the lesser of
$25,000 or their severance pay entitlement. According to OPM, in
fiscal year 1996, $24,833 was the average buyout amount for regular
optional retirements; $24,949 was the average for early retirements;
and $14,499 was the average for resignations.
The legislation granting DOD its initial buyout authority in 1992 did
not impose any buyout-related conditions or repayment provision on
buyout recipients who were reemployed by the federal government.
However, DOD's policy was that it would not rehire DOD buyout
recipients within 1 year of their separation, unless an exception was
approved by a high-level DOD official.
In 1994, the FWRA required buyout recipients from federal agencies
that were under the act's authority, including DOD, to repay their
buyouts if they returned to federal employment within 5 years of
their separation. DOD buyout recipients had to repay their buyouts
if they were reemployed as civil servants, but not if they were
reemployed under personal services contracts. Non-DOD buyout
recipients had to repay their buyouts if they returned directly to
federal employment or if they were employed under a contract that was
expressly identified or administered as a personal services contract.
Also, under the FWRA, buyout recipients who were obligated to repay
their buyouts could do so after an agency hired them. However, the
agency rehiring the buyout recipient could seek a repayment provision
waiver for the employee from OPM, in certain situations.\8
Under new buyout authority enacted in 1996, the repayment provision
was changed.\9
Among other things, employees who accept buyouts under the 1996
authority must repay the entire buyout before their first day of
federal reemployment, and there is no authority for waivers.
Congress also passed other laws providing specific statutory
authority for repaying buyouts for employees in selected agencies.
The agency-specific buyout authorizations generally require that
recipients repay their buyouts if they rejoin the federal workforce.
In addition, under the time frames of the current buyout laws,
agencies will need to verify buyout recipients' compliance with
repayment provisions through 2006.\10 (See app. I for additional
information on selected buyout laws enacted from 1992 to 1997.)
Concerning contract employees, under the FAR, an agency may not award
a personal services contract unless specifically authorized to do so
by statute. Although each contract arrangement must be judged by its
own facts and circumstances, the FAR lists six elements that should
be considered when assessing whether a contract is personal in
nature. These six elements are as follows:
"(1) performance on site; (2) the principal tools and equipment
are furnished by the government; (3) the services are applied
directly to the integral effort of agencies or agency components
to further their assigned function or mission; (4) the
performance of comparable services and the meeting of comparable
needs in the same or similar agencies using civil service
personnel; (5) the need for the type of service provided can
reasonably be expected to last beyond 1 year; (6) the
requirement of government direction or supervision of contractor
employees because of the inherent nature of the service, or the
manner in which it is provided, in order to adequately protect
the government's interest, retain control of the function
involved, or retain full personal responsibility for the
function supported in a duly authorized federal officer or
employee."\11
The FAR also states that the key question to consider in determining
whether a personal services contract exists is the following: Will
the government exercise relatively continuous supervision and control
over the contract personnel performing the contract?\12
From January 1993 to June 1995, OPM's CPDF data showed that 87,743
federal employees took buyouts and that federal agencies reemployed
394 of the buyout recipients as civil servants.\13 However, according
to CPDF data as of September 1996, the number of employees who had
accepted buyouts grew to 128,467, or an additional 40,724 employees.
The number of buyout recipients who are working as contractors to
federal agencies or as contractor employees is unknown because no
governmentwide data are available.
--------------------
\7 National Defense Authorization Act for Fiscal Year 1993, October
23, 1992. National Defense Authorization Act for Fiscal Year 1995,
October 5, 1994.
\8 Both the FWRA and 5 C.F.R. 576, Waiver of Repayment of Voluntary
Separation Incentive Payments, state that OPM may waive repayment if
the individual involved possesses unique abilities and is the only
qualified applicant available for the position.
\9 The Treasury, Postal Service, and General Government
Appropriations Act for Fiscal Year 1997, which was enacted on
September 30, 1996 (P.L. 104-208, sec. 663).
\10 National Defense Authorization Act for Fiscal Year 1998, Public
Law 105-85, November 18, 1997.
\11 48 C.F.R. 37.104 (d).
\12 48 C.F.R. 37.104 (c) (2).
\13 Reemployment of Buyout Recipients (GAO/GGD-96-102R, June 14,
1996).
SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3
To gather information concerning the 23 buyout recipients who were
discussed in our October 1996 letter, we sent letters on November 8,
1996, to the OIGs of the 9 federal agencies identified in OPM's CPDF
data as employing these individuals. We asked the OIGs whether the
buyout recipients had returned to federal employment and, if so,
whether they had repaid the buyout or met DOD's reemployment policy.
We limited the scope of our work to the buyout recipients who were
reemployed as federal employees between January 1993 and June 1995.
Among other things, our letters to the OIGs identified the buyout
recipients by name and social security number and asked specific
questions concerning their reemployment. We asked the OIGs to review
the 23 buyout recipient cases, provide us with information concerning
the clarification of conflicting data and apparent violations, and
take any needed action, as appropriate. In cooperation with the OIG
offices, we contacted selected federal agencies' personnel officials
about the status of some cases. We also followed up with the OIGs
and agency personnel officials by providing them with additional
information, such as detailed case information and OPM documentation.
To determine if the 9 federal agencies that were identified in the
CPDF data as employing the 23 buyout recipients had internal control
procedures in place to provide a reasonable assurance of compliance
with buyout reemployment requirements, we asked the agencies to
provide us with copies of these procedures. Specifically, we asked
the agencies for copies of their internal control procedures on the
reemployment of buyout recipients either as members of the civil
service or as personal services contract employees.
To determine whether other selected agencies had internal control
procedures for the reemployment of buyout recipients under personal
services contracts, we first had to decide which agencies to select
for the review. To do so, we reviewed OPM's August 1996 interim
report to Congress on the reemployment of buyout recipients.\14 In
that report, OPM said that none of the agencies in its review
reported cases involving buyout recipients' returning to work under
personal services contracts, but that several agencies reported
having completed or having begun reviews and follow-ups of their
contracting arrangements.
In its report, OPM identified DOD and DOT as having conducted reviews
of their contracting arrangements and GSA as having a review under
way. DOD reported to OPM that it had not reemployed any buyout
recipients under personal services contracts. However, OPM asked DOD
to provide an updated report because DOD had looked only at DOD
buyout recipients and not recipients from other agencies. As a
result, we excluded DOD from our review of this matter. We decided
to review the OIG audit reports of DOT\15 and GSA to (1) gain an
understanding of the experiences agencies have had with buyout
recipients' being hired under personal services contracts and (2)
learn what kind of internal control procedures may be applicable.
Because governmentwide data on buyout recipients hired under personal
services contracts do not exist and because of time constraints, we
limited the part of our review concerning internal controls for
personal services contracts to the agencies that had the two OIG
audits. We also obtained OPM's 1994 and 1996 written guidance as
well as OPM's list of possible options that agencies could take to
help ensure compliance with the buyout repayment provision, and we
discussed this guidance with OPM officials.
We did our review in Washington, D.C., from October 1996 to October
1997 in accordance with generally accepted government auditing
standards. We provided a draft of this report to the Director of OPM
and to the heads of the 9 agencies identified as employing the 23
buyout recipients in our review and requested their comments. These
comments are discussed at the end of this report.
--------------------
\14 Interim Status Report, OPM, Washington, D.C.: August 1996. In
December 1997, OPM issued its final reports to Congress entitled
Voluntary Separation Incentive Payments: Buyouts Under the Federal
Workforce Restructuring Act of 1994 (WRO 97-103, Dec. 1997) and
Voluntary Separation Incentive Payments: A Report on Reemployment
and Repayment Activity. Our report was already in final processing
at the time that OPM's final reports were issued.
\15 The DOT OIG's audit report concerned the Federal Aviation
Administration, which was previously identified in our June 1996
letter (GAO/GGD-96-102R).
ELEVEN VIOLATIONS WERE FOUND IN
THE 23 BUYOUT CASES, AND MORE
VIOLATIONS WERE FOUND BY OTHER
AGENCIES
------------------------------------------------------------ Letter :4
Of the 23 cases that we asked the OIGs to examine, the agencies
confirmed that 9 cases violated FWRA's repayment provision and that 2
cases violated DOD's reemployment policy. The remaining 12 cases
were not violations, but they were identified in the CPDF because of
inaccurate data. Also, one additional case of reemployment of a
buyout recipient without repayment was found by the U.S. Department
of Agriculture's (USDA) OIG while researching the case about which we
asked. In addition, OPM found FWRA repayment provision violations in
two other research efforts it undertook, but it is unclear whether
these violations are in addition to the violations that we found.
SELECTED AGENCIES FOUND NINE
CASES VIOLATED THE REPAYMENT
PROVISION, AND TWO CASES
VIOLATED DOD'S REEMPLOYMENT
POLICY
---------------------------------------------------------- Letter :4.1
The 9 federal agencies identified in the CPDF data as employing the
23 buyout recipients provided information showing that a violation of
FWRA's repayment provision or DOD's policy had occurred in 11 of the
23 cases. (See app. II for the employment status of the 23 buyout
recipient cases, by federal agency.) The agencies reported that in 9
of the 11 cases, FWRA's repayment provision was violated. These
agencies also reported that they hired the nine buyout recipients
without seeking repayment of the buyout. The remaining two cases
were violations of DOD's reemployment policy, which did not require
buyout repayment.
After determining that a violation had occurred, the agencies varied
in how they responded. In general, they based their actions on
whether they still employed the buyout recipient. For example, of
the nine cases with violations of FWRA's repayment provision, six
cases involved individuals who were still employed, and the hiring
agencies arranged for the buyout recipients to make repayments.\16 In
the three cases where the buyout recipients were no longer in their
employ, the hiring agencies billed the recipient in one case, and
took no action in the other two cases.\17 Although the agencies did
not seek repayment in these two cases, the law requires that if a
buyout recipient accepts reemployment within 5 years of the
separation, he or she is required to repay the buyout unless a waiver
is granted by OPM. Therefore, if a buyout recipient is reemployed
without repaying the buyout, the hiring agency is to seek recovery of
the debt. The hiring agency has this obligation even though any
money it recovers must go to the agency that originally paid the
buyout, which may not be the agency rehiring the buyout recipient.
OPM has instructed agencies that when a buyout recipient is
reemployed by another agency, the two agencies should coordinate
efforts to collect the buyout amount.
In the two cases that violated DOD's reemployment policy, DOD's OIG
reported that the Department had rehired both buyout recipients in
violation of its policy not to rehire such individuals within 1 year
of their separation unless a high-level DOD official grants an
exception. DOD subsequently waived its policy for one buyout
recipient; the other recipient resigned. Both of the buyout
recipients received their buyouts before FWRA was enacted; therefore,
the repayment provision did not apply.
--------------------
\16 In one of the six cases where repayment was arranged, the buyout
recipient filed for bankruptcy. Bankruptcy status was granted by the
court, and the agency was legally barred from recovering the buyout
debt.
\17 The two individuals had resigned from the agency, and it decided
not to pursue the individuals to repay their buyouts.
AGENCIES FOUND THAT THE 12
REMAINING CASES INVOLVED
INACCURATE DATA
---------------------------------------------------------- Letter :4.2
Agency officials told us that 12 of the cases we identified were not
repayment violations. In 6 of the 12 cases, the federal agencies
said that they mistakenly had submitted inaccurate data to OPM's
CPDF, which we used in our previous review to identify potential
violators. The data that the agencies submitted to the CPDF showed
that they had reemployed six buyout recipients. However, the
agencies reported that, in a follow-up review of their records, they
discovered that they had not reemployed these recipients. For
example, DOD said that three buyout recipient cases it reported
involved individuals who had retired after receiving the buyouts but
that the recipients were identified in Department data as employees,
even though they were never rehired. DOD explained that the
positions the three individuals once held were part of a large
transfer of positions within the Department and that an error was
made in recording the transfer.
For the remaining 6 of the 12 cases, the agency officials said that
they had no record of ever employing the buyout recipients. At the
time of our previous review, the CPDF erroneously listed these
agencies as the recipients' employers.
USDA FOUND ANOTHER VIOLATION
OF THE FWRA REPAYMENT
PROVISION
---------------------------------------------------------- Letter :4.3
While researching the case we inquired about, USDA's OIG reported
finding another buyout recipient that USDA had employed who was
required to repay the buyout as a condition of reemployment but who
had not done so. According to the OIG, USDA planned to bill the
buyout recipient to recover the buyout debt. USDA had hired this
buyout recipient after the review period covered in our October 1996
letter (i.e., Jan. 1993 through June 1995).
OPM FOUND FWRA REPAYMENT
PROVISION VIOLATIONS IN TWO
OTHER RESEARCH EFFORTS
---------------------------------------------------------- Letter :4.4
OPM conducted two research efforts on reemployed buyout recipients;
one collected data using a survey, and the other used an analysis of
CPDF data. The results of the two research efforts are summarized in
OPM's 1996 interim report.\18 OPM's survey, which was conducted from
March 30, 1994, through May 20, 1996, and included the heads of all
of the cabinet-level agencies and most smaller independent agencies,
reported that 46 of the 80 buyout recipients whom the agencies
reemployed had possibly not repaid their buyouts. According to OPM's
survey, 40 of the possible 46 violations were in Defense agencies
(see app. IV for details), and the remaining 6 possible violations
were in non-Defense agencies. OPM said that 34 of the 80 cases were
in compliance with the FWRA repayment provision. Although 58
agencies responded to the survey, according to OPM, 10 agencies that
had used buyouts did not respond in time for OPM to include them in
the interim report.
OPM also did a study of possible buyout recipients who may have been
reemployed during March 30, 1994, through June 30, 1995. This study,
which used CPDF data, found a possible 49 reemployed buyout
recipients, 9 of whom had violated the FWRA's repayment provision.\19
For the remaining 40 cases, OPM determined that 38 cases had complied
with the provision, and that 2 cases needed further resolution.
As of October 1997, OPM officials said that they were still verifying
the number of possible buyout violations in both of its research
efforts, and that there was no way to be certain of the differences
between the number of reemployed buyout recipients identified under
OPM's two research efforts or with our review. This uncertainty is
because the OPM survey effort did not collect names and social
security numbers, which could have been compared with the CPDF data
in either OPM's effort or our review for verification. Our review
and OPM's study both were based on CPDF data, and the time frame of
OPM's study was encompassed in our review. However, the
methodologies used to extract the data were not the same, which
provided different results. For instance, although OPM's study
confirmed 10 FWRA repayment provision violations and we confirmed 9,
only 5 of the violations we confirmed were also confirmed by OPM;
consequently, 5 of the violations OPM confirmed were not confirmed by
our review.
--------------------
\18 Interim Status Report, OPM.
\19 In its study as well as in its written comments on our draft
report, OPM identified nine violations of the FWRA repayment
provision. However, in subsequent documentation, OPM identified an
additional violation, which increased the total of CPDF-based
violations for this period to 10.
SELECTED AGENCIES LACKED
ADEQUATE INTERNAL CONTROL
PROCEDURES TO HELP ENSURE
COMPLIANCE WITH THE FWRA
REPAYMENT PROVISION
------------------------------------------------------------ Letter :5
Federal agencies have an obligation to ensure that the FWRA repayment
provision is met when buyout recipients are reemployed as civil
servants, or when they work under contract expressly identified or
administered as personal services contracts for the government.
Agency management is responsible for establishing effective internal
controls to help ensure compliance with laws and regulations.
Internal controls consist of policies and procedures used to provide
reasonable assurance that (1) goals and objectives are met; (2)
resources are adequately safeguarded, efficiently used, and reliably
accounted for; and (3) laws and regulations are being followed.
However, none of the 9 agencies that we asked to provide the status
of the 23 buyout recipient cases had adequate internal control
procedures in place to provide reasonable assurance that the FWRA
repayment provision was met. This was the case despite OPM's 1994
and 1996 guidance to agencies on the FWRA repayment provision as well
as OPM's list of options explaining steps agencies could take to
identify returning buyout recipients, steps that OPM said were
inexpensive to implement.
In GSA and DOT, which entered into contracts involving buyout
recipients, the OIGs reported that GSA and DOT's Federal Aviation
Administration (FAA) did not have adequate procedures to prevent
violations of the FWRA repayment provision. According to both OIGs,
the internal control procedures of those agencies could not be used
to determine whether contracts were administered as personal services
contracts and, therefore, whether the contract personnel who were
buyout recipients were subject to the FWRA repayment provision.
THE DEPARTMENT OF STATE
CREATED A FORM REQUIRING
CERTIFICATION OF BUYOUT
STATUS, AND OPM BELIEVES
THAT IDENTIFYING BUYOUT
RECIPIENTS IS IMPORTANT
---------------------------------------------------------- Letter :5.1
To help ensure compliance with the FWRA repayment provision, the
Department of State created a form for job applicants to complete
(and sign and date) indicating whether they had received a buyout
within the previous 5 years. By having an applicant certify his or
her buyout status in writing, the State Department would have
documented evidence of the applicant's response to the question of
receiving a buyout should a question arise after the applicant was
hired. However, according to a State Department official, if an
applicant indicated that he or she were a buyout recipient, the
agency had no personnel procedures in place to ensure that the
appropriate buyout repayment provision was satisfied. Such
certification was not required by the other 8 agencies from which we
requested information on the 23 buyout recipient cases.
According to OPM, a fundamental step for agencies to help ensure
compliance with the repayment provisions of the various buyout
authorities is for the agencies to identify whether job applicants
are former federal employees and, if so, whether they had received a
buyout. OPM's instructional pamphlet for job applicants, which is
entitled Applying for a Federal Job, states that individuals may
apply for federal employment using either of two documents.
Applicants may use a r�sum� or the Optional Application for Federal
Employment - Optional Form 612,\20 which asks individuals to provide
information about their work history, including dates of employment,
and to certify if they had ever been a civilian employee with the
federal government. According to OPM, when applicants indicate on
any of these applications for employment that they have prior federal
service, hiring officials are to ask the applicant whether he or she
received a buyout.
Job applicants who submit r�sum�s are to provide the same information
that is requested on the Optional Application For Employment--that
is, work history and whether they had ever been federal employees.
Of course, federal agencies must depend on job applicants' truthfully
reporting such information. However, the Optional Application For
Employment and the instructional pamphlet for r�sum�s state that
providing false information is grounds for not hiring the applicant,
for firing the applicant after he or she is employed, and for
imposing a fine or prison sentence on the applicant.
In our discussions with OPM officials, they said that having job
applicants complete a certification form, like the one developed by
the State Department, would help agencies identify applicants who
were buyout recipients. The officials explained that information on
whether an applicant had received a buyout may not be readily
available to the hiring agency. For example, the information may be
in the individual's official personnel folder, which the hiring
agency may not receive for several weeks, or in a computer system
that is located at the agency that paid the buyout. In addition,
such certification would assist agencies that were hiring individuals
who had received buyouts from other agencies, especially those
agencies that do not participate in the CPDF, such as those in the
judicial and legislative branches of government. For agencies
covered by 5 C.F.R. 7.2, it is mandatory that they provide OPM with
personnel information for use in the CPDF, among other things, unless
specifically exempted by statute.
The need for hiring officials to readily know whether a job applicant
is a former federal employee who took a buyout was made even more
important by the enactment of the 1996 legislation. As previously
mentioned, this legislation requires buyout recipients under its
authority to repay the full buyout amount before the employee's first
day of work.
--------------------
\20 OPM abolished the Application for Federal Employment - Standard
Form 171; however, applicants can use it until the supply is
exhausted.
USDA AND THE DEPARTMENT OF
THE TREASURY ISSUED FWRA
NOTIFICATION GUIDANCE TO ITS
COMPONENTS, BUT ONLY ONE IN
EACH AGENCY DEVELOPED
INTERNAL CONTROL PROCEDURES
---------------------------------------------------------- Letter :5.2
Of the nine agencies, our review showed that only USDA and the
Department of the Treasury had issued guidance notifying component
heads of the FWRA repayment provision. In addition, as a result of
our inquiry into apparent FWRA buyout repayment violations at these
components, one component in each of these agencies--USDA's Animal
and Plant Health Inspection Service (APHIS) and Treasury's Internal
Revenue Service (IRS)--developed and issued procedures that could be
used to help prevent future buyout violations, according to agency
officials.
USDA issued notification of the FWRA repayment provision on July 18,
1996, and Treasury issued its notification on February 10, 1997.
Each agency's notification primarily consisted of OPM's guidance
entitled Reemployment, Personal Services Contracts, and the Repayment
of Voluntary Separation Incentives, which was dated March 1996. In
addition, Treasury's procedures included OPM's list of possible
options for agencies but did not establish procedures to implement
the options.
According to its officials, APHIS developed internal control
procedures, which were adopted on November 21, 1996, that require its
personnel officials to screen job applicants and check new employees
to help ensure that APHIS and its employees are in compliance with
FWRA's and other buyout authorities' repayment provisions. However,
although the procedures APHIS officials provided to us require
personnel officials to review job applications to identify whether
individuals had previous federal service and, if so, took voluntary
buyouts, APHIS did not have procedures that personnel officials
should follow if they identified such service or receipt of a buyout.
In addition, APHIS did not have the applicants certify their buyout
status.
IRS issued optional procedures on December 24, 1996, to help ensure
that rehired buyout recipients comply with the repayment provision
under a particular buyout authority. These procedures were based, in
part, on OPM's list of options. However, IRS' procedures are not
required and, therefore, cannot ensure that the IRS is in compliance
with FWRA's and other buyout authorities' repayment provision.
DOD HAD PROGRAMS IN PLACE TO
ADDRESS SOME OF OPM'S
OPTIONAL PROCEDURES
---------------------------------------------------------- Letter :5.3
According to a DOD spokesperson, who also represented the Departments
of the Army, Navy, and Air Force, DOD had programs in place that
addressed some of OPM's optional procedures to help ensure compliance
with the FWRA repayment provision. One of these programs was
"Operation Mongoose," which was created to prevent and detect
financial fraud in DOD. The program, which was implemented in June
1994, compares DOD's automated data with those of other agencies to
point out probable fraud and ensure that erroneous payments are not
being made. In March 1995, DOD first used the program to detect DOD
buyout takers who had returned to work in the federal government. In
addition, DOD mailed two publications to its personnel directors,
which are also available via the Internet and E-mail, to notify them
of various personnel matters, including their responsibilities for
buyout repayment provisions. Although DOD's efforts to identify
financial fraud and to notify personnel directors are useful steps,
DOD did not have procedures in place during the employment
application process to (1) identify whether job applicants were
buyout recipients and (2) help ensure buyout repayment as required by
the FWRA repayment provision and the more recent buyout authorities.
THE DEPARTMENT OF JUSTICE
AND TREASURY DID NOT HAVE
INTERNAL CONTROL PROCEDURES
---------------------------------------------------------- Letter :5.4
Neither the Department of Justice nor Treasury had internal control
procedures to help ensure that buyout recipients who return to
federal employment comply with the FWRA repayment provision. A
Department of Veterans Affairs (VA) official said that the Department
had no written guidance that focused on buyout recipients, and that
the only way that VA determines whether an individual is a buyout
recipient is to review the individual's Notification of Personnel
Action (Standard Form 50) form, which was generated from his or her
personnel office. A Justice official also said that the Department
had no written procedures concerning buyout recipients who return to
federal reemployment.
DOT'S FAA AND GSA HAD
INEFFECTIVE INTERNAL CONTROL
PROCEDURES TO DETERMINE IF
BUYOUT RECIPIENTS WERE
EMPLOYED UNDER PERSONNEL
SERVICES CONTRACTS
---------------------------------------------------------- Letter :5.5
At DOT, several former FAA employees who had received buyouts
returned to work at FAA as employees of DOT contractors. Because of
telephone "hot line" complaints relating to the legality of those
employees' return, the DOT OIG examined and reported on whether FAA
and the rest of DOT were complying with the FWRA repayment
provision.\21 Partly as a result of the DOT OIG's report, GSA's OIG
examined and reported on whether any former GSA employees who had
received buyouts had returned to GSA as employees of contractors.\22
The two audits found that (1) 27 former DOT and GSA employees were
working under contracts that, although not identified as personal
services contracts, were being administered as such and (2) these
employees had not repaid or arranged to repay their buyouts, as
required by the FWRA.\23
The DOT OIG examined 260 cases of buyout recipients--20 former FAA
employees and 240 former employees of other DOT agencies--who had
returned to work for DOT contractors.\24 The OIG reported violations
in some of the FAA cases but did not find any problems with the other
DOT cases. According to the OIG's 1996 report, FAA allowed 17 of the
20 former employees to return to work under contracts, which were
administered as personal services contracts, without meeting the FWRA
buyout repayment provision. The OIG's report attributed these 17
violations to inadequate internal control procedures at FAA and
inadequate enforcement of FAA's guidance by its contracting officers.
The report also stated that buyout payments totaling $425,000 for the
17 employees should be recouped, and that the OIG had referred these
violations to DOT's Office of Investigations for coordination with
the United States Attorneys to begin the process of seeking buyout
repayments.
The GSA OIG reviewed the cases of 39 former GSA employees who had
received buyouts and were employed by contractors working for GSA.\25
Of the 39 cases, the OIG determined that 10 employees were, in
effect, working under personal services contracts without meeting the
FWRA buyout repayment provision. As in the case of the 17 employees
at FAA, these 10 employees were hired under contracts that were
actually being administered as personal services contracts. The OIG
attributed these violations to GSA's lack of adequate policy guidance
for defining a personal services contract. The OIG said that program
managers, buyout recipients, and contracting officers did not fully
understand what a personal services contract was or under what
conditions a buyout recipient could return to federal employment
without repaying the buyout.
The GSA OIG also said the risk was increasing that more GSA buyout
recipients may return to work for GSA under personal services
contracts without repaying their buyouts. The OIG said that a number
of additional buyout recipients had already returned to work under
various contracts, some of which were being administered as personal
services contracts. The OIG explained that GSA staffing had
decreased 21 percent overall from its 1993 level, which would require
GSA program offices to reduce program services, contract out work to
maintain workload, or do both.
Increased contracting, according to the GSA OIG, heightens the risk
of buyout recipients' returning under personal services contracts.
However, the OIG did not believe that action should be taken against
the 10 buyout recipients it found in violation because the OIG did
not find that any of the instances appeared to be willful or
deliberate attempts to circumvent the FWRA repayment provision. In
fact, the OIG added, the buyout recipients took specific steps to try
to comply with the FWRA, such as not performing the same functions,
not working in their former offices, and not working as a contractor
directly for the government. Although we did not attempt to
determine whether any of the GSA contracts were, in effect, personal
services contracts, if in fact they were, then the FWRA repayment
provision would have been violated and the buyout debt would have to
be recovered.
The DOT and GSA OIG audits determined that violations of the FWRA
repayment provision have occurred under agency contracts. However,
the audits might have uncovered more violations if they had looked
for all buyout recipients that were employed at the two agencies
under service contracts and had not limited their search to their
agency's buyout recipients.
As illustrated by the DOT and GSA audits, violations of the FWRA
repayment provision may occur not only under contracts expressly
identified as personal services contracts but also in connection with
contracts that are administered as personal services contracts. As
previously mentioned, OPM provided optional guidance to agencies on
ways to help ensure compliance with the buyout repayment provision,
and some of these suggestions pertained specifically to contracting.
In its guidance, OPM suggested that agencies
-- issue their own guidance to personnel involved in the oversight
and management of contracts (e.g., contracting officers) and
have them monitor compliance with the buyout repayment
provisions,
-- require contractors to identify and certify that contract
employees who have received buyouts are not working in violation
of the law, and
-- require periodic spot checks of contracting personnel to help
ensure compliance.
These OPM suggestions were also recommended to some extent by the DOT
and GSA OIGs in their reports. For example, the DOT OIG recommended
that (1) FAA identify all of its employees who took buyouts and
returned to work for FAA as employees of contractors and (2) the
circumstances of each case be evaluated to determine whether FAA and
the employees who took buyouts complied with the FWRA. The GSA OIG
said that GSA's policies and procedures for implementing the FWRA
should be clarified, and that the clarification should include
information explaining how a contract that is not intended to be a
personal services contract can become one and what key actions to
take if that happens. According to the GSA OIG, the clarified
policies and procedures should be distributed to all employees who
are scheduled to leave under the buyout program, all program
managers, and all contracting officers.
--------------------
\21 Voluntary Separation Incentive Payments, Department of
Transportation, R6-FA-6-009, Washington, D.C.: February 9, 1996.
\22 GSA Needs To Take Additional Actions to Implement the Federal
Workforce Restructuring Act of 1994, A63317/O/H/F96026, Washington,
D.C.: September 30, 1996.
\23 Section 5 (g) of the FWRA also states that "appropriate action
[shall be taken] to ensure that there is no increase in the
procurement of service contracts by reason of the enactment of the
act, except in cases in which a cost comparison demonstrates such
contracts would be to the financial advantage of the federal
government." However, both the DOT and GSA OIG audits found that few,
if any, cost comparisons were done and those that were done
understated the cost of the contract to the federal government and
did not follow the Office of Management and Budget's guidance in this
matter. The DOT audit determined that an annual increase in the
government's cost exceeded $1 million in reemploying buyout
recipients who returned as employees of FAA contractors compared with
the cost of federal employees.
\24 The scope of the DOT OIG's audit was limited to (1) the 20 former
FAA employees who had taken buyouts in fiscal year 1994 and (2) the
240 other former DOT employees who had taken buyouts in fiscal year
1994 and through March of fiscal year 1995.
\25 The scope of the GSA OIG's audit was limited to the 39 employees
who had accepted buyouts from GSA between March 1994 and February
1996.
CONCLUSIONS
------------------------------------------------------------ Letter :6
Our review found violations of the FWRA repayment provision and DOD's
reemployment policy as well as a lack of internal controls to help
prevent such violations. OPM's list of possible options that
agencies could take to help ensure compliance with buyout repayment
provisions generally was not implemented by the agencies we studied,
even though OPM officials believe that doing so would not be costly
to agencies. Because agency management is responsible for ensuring
its compliance with laws and regulations, it is also responsible for
establishing effective internal controls to avoid violations of such
laws and regulations, including the FWRA repayment provision. Under
the time frames of the current buyout laws, every federal agency will
need to verify buyout recipients' compliance with repayment
provisions of the various buyout authorities through 2006.
According to OPM, a fundamental step for agencies to help ensure
compliance with the repayment provisions of the various buyout
authorities is for the agencies to identify whether job applicants
are former federal employees and, if so, whether they had received a
buyout. Identifying buyout recipients who work under contracts with
the government that are not expressly identified as personal services
contracts, but are administered as such, appears to be more difficult
than identifying buyout recipients who return directly to federal
service. In the cases of DOT and GSA, their OIGs found that the
agencies' controls did not adequately identify contracts administered
as personal services contracts. Thus, DOT and GSA found it difficult
to identify buyout recipients who had returned under personal
services contracts. For an agency to determine that a contract
employee must comply with a repayment provision, it must first
determine that the employee's contract is expressly identified as, or
is being administered as, a personal services contract.
The need for agencies to be able to better recognize the
administration of contracts as personal services contracts was
pointed out by the audit report of GSA's OIG. The audit report said
that, as downsizing occurs, agencies are turning to contractors to
accomplish tasks, and that some employees who leave agencies because
of downsizing are working for those contractors. As a result, the
DOT and GSA OIGs made recommendations in their reports to help ensure
that their employees and contractors know what constitutes a personal
services contract and how the identification of buyout recipients
under such contracts could help prevent future repayment provision
violations.
RECOMMENDATIONS TO THE DIRECTOR
OF OPM
------------------------------------------------------------ Letter :7
To help ensure that agencies establish procedures to comply with the
buyout repayment provisions of the FWRA and other buyout authorities,
we recommend that the Director of the Office of Personnel Management
(OPM) take the following actions to establish steps to identify
potential violations of the provisions.
-- Promulgate regulations requiring agencies to identify buyout
recipients who (1) are applying to return or have returned
directly to federal employment or (2) are applying to work for
or already work for the federal government under a contract that
is, by its terms, a personal services contract, or administered
as such, and require them to repay their buyouts. In doing so,
the Director may want to consider OPM's list of possible options
(see app. III) that agencies could take to help ensure
compliance with the buyout repayment provisions.
-- Create a form that job applicants would be required to complete
to certify whether they were buyout recipients and, if so, from
which agency they received the buyout. The Director may want to
consider requiring that the form (1) be attached to employment
r�sum�s or to the Optional Application for Employment\26
or (2) be completed only by those applicants to which agencies are
considering making job offers.
--------------------
\26 Some applicants may use the Standard Form 171 because it is still
an accepted form of application and may be used until the supply of
the form is exhausted.
AGENCY COMMENTS AND OUR
EVALUATION
------------------------------------------------------------ Letter :8
We provided a draft of this report for review and comment to the
Director of OPM and the heads of the 9 agencies from which we had
requested information on the 23 buyout recipient cases.
In a letter dated August 15, 1997, the Director of OPM said that OPM
does not oppose our recommendations but that it does question the
need for these actions, because of the extent of the cooperation it
has with the federal agencies. The Director said agencies have been
extremely cooperative in responding to OPM's requests for information
regarding reemployed buyout recipients, regardless of whether the
recipient is in violation of the FWRA repayment provision. The
Director also said that we overestimated the scale of the FWRA
repayment provision problem because we double-counted the number of
violations by adding the number of violations we identified to those
of OPM's research efforts, although both of us very likely identified
the same violations.
We also received cooperation from agencies in tracking down the
status of the 23 cases we reviewed. However, we contacted these
agencies after the buyout recipients were rehired. Although the
information the agencies provided may serve to assist in identifying
violations after they have occurred, it does not prevent violations
from occurring. Preventing violations is especially important for
the more recent buyout laws, which require buyout recipients to repay
their buyouts before their first day of reemployment with the federal
government or employment under a personal services contract.
Therefore, we continue to believe that agencies are obligated to have
internal controls that are adequate to reasonably ensure compliance
with the buyout provisions. In addition, we agree that our draft
report included some instances of apparent double-counting, and we
have made the appropriate changes in this report. Our review and one
of OPM's studies in its interim report were based on CPDF data, and
the time frame of OPM's study was encompassed in the period we
reviewed. However, the methodologies used to extract the data were
not the same, which provided different results. For instance,
although OPM's CPDF-based study confirmed 10 FWRA repayment provision
violations\27 and we confirmed 9, only 5 of the violations we
confirmed were the same as those confirmed by OPM. Consequently,
five of the violations that OPM confirmed were not confirmed by our
review.
In addition, the Director made a number of technical comments
regarding accuracy or context in the draft report; we made these
changes in this report where appropriate. See appendix V for a
reprint of the OPM letter and our additional comments.
On August 7, 1997, we met with the Director of Staffing and Career
Development, Office of the Deputy Assistant Secretary of Defense
(Civilian Personnel Policy), who provided oral comments on a draft of
this report for the Department of Defense (DOD) and the Departments
of the Army, Navy, and Air Force. The Director believed it would not
be cost effective to comply with OPM's suggested option to contact
the approximately 95,000 buyout recipients who had left DOD and to
remind them of the FWRA repayment provision, given the very small
numbers of detected violations. However, she agreed that before
prospective employees are hired, they should be required to certify
whether they have received a buyout from a previous federal employer.
Although we believe OPM's suggested options are useful indicators of
the steps that can be taken to help ensure compliance with buyout
repayment provisions, we do not suggest that all of OPM's options
should be implemented by every agency. We believe that documenting
whether prospective employees have received buyouts is a sound step
to help ensure compliance, but it must be linked to procedures to
help ensure that those who have received such payments repay them to
satisfy the appropriate buyout provision.
We received written comments on a draft of this report from the U.S.
Department of Agriculture (USDA) in a letter dated August 8, 1997,
from the Director of its Office of Human Resources Management. The
Director provided no specific comments on our recommendations.
However, he did express concern regarding what he perceived as an
overemphasis on USDA in the draft report and an underemphasis on
difficulties that the Department faced. Changes were made to this
report to address these concerns as appropriate. See appendix VI for
a reprint of USDA's letter and our response to specific comments.
We met with the Associate Deputy Assistant Secretary for Human
Resources Management of the Department of Veterans Affairs (VA) on
August 14, 1997, to obtain oral comments on the draft report. She
said that VA was not against regulations as long as they are not
prescriptive and inflexible. VA also agreed that a certification
form could be useful.
The Department of Justice's Assistant Attorney General for
Administration said, in a letter dated August 7, 1997, that Justice
agreed with the recommendations in the draft report. The Assistant
Attorney General added that Justice will continue to provide guidance
to its organizational components on the need to exercise caution in
rehiring buyout recipients. He said that Justice also intends to
work closely with the Department's Justice Management Division's
Procurement Services Staff to provide components with clear guidance
on the definition of a "personal services contract." See appendix VII
for a reprint of Justice's letter.
In a letter dated August 13, 1997, the Department of the Treasury's
Assistant Director of the Office of Personnel Policy said that
Treasury had no comment on the draft report. See appendix VIII for a
reprint of the Treasury letter.
We spoke with the Department of State's GAO Liaison on August 22,
1997, to obtain oral comments on the draft report. She said that the
State Department wanted us to define the "certain situations" we
referred to when agencies could seek a waiver of repayment from OPM.
We resolved this comment by providing additional information. She
said that the State Department had no other comments.
--------------------
\27 Nine violations were identified by OPM in its study and in its
comments on our draft report. One additional violation was
subsequently identified by OPM staff.
---------------------------------------------------------- Letter :8.1
As arranged with your office, unless you announce the contents of
this report earlier, we plan no further distribution until 15 days
after its issue date. At that time, we will send copies of this
report to the Chairmen and Ranking Minority Members of interested
congressional committees, the Director of OPM, the heads of the nine
agencies included in our review, and other interested parties. Upon
request, we will also make copies available to others.
The major contributors to this report are listed in appendix IX.
Please call me on (202) 512-8676 if you have any questions.
Sincerely yours,
Michael Brostek
Associate Director,
Federal Management
and Workforce Issues
COMPARISON OF SELECTED BUYOUT LAWS
=========================================================== Appendix I
Statutory Federal reemployment
authority Buyout payment Duration requirements
------------------ ------------------ ------------------ --------------------
Department of The lesser of Separations must DOD's initial buyout
Defense (P.L. 102- severance pay or be made by legislation
484, Oct. 23, $25,000. September 30, contained no
1992; P.L. 103- 2001. reemployment
337, Oct. 5, 1994, requirements.
and implementing However, it was DOD
instructions; P.L. policy that
105-85, Nov. 18, employees could not
1997) be reemployed by any
DOD installation in
any capacity for 12
months following
their separation. No
restrictions were
placed on their
ability to return to
non-DOD agencies.
FWRA amended DOD's
buyout authority so
that DOD employees
who received a
buyout on or after
March 30, 1994, must
repay the buyout or
obtain a waiver from
OPM, when they
return to federal
employment within 5
years. DOD employees
do not have to repay
the buyout if they
return to federal
employment under
personal services
contracts.
Federal Workforce The lesser of March 30, 1994, Employees who
Restructuring Act severance pay or through March 31, received buyouts
(P.L. 103-226, $25,000. 1995. Delayed must repay the
Mar. 30, 1994) buyouts were buyout or obtain a
permitted through waiver from OPM when
March 31, 1997. they return to
federal employment
(including
employment under
personal services
contracts) within 5
years.
Treasury, Postal The lesser of October 1, 1996, Employees who
Service, and severance pay or through December received buyouts
General Govt. an amount 30, 1997. must repay the
Appropriations Act determined by the buyout prior to the
for FY 1997, Sec. agency head, not first day of federal
663 (P.L. 104- to exceed $25,000. government
208, Sept. 30, reemployment
1996) (including
employment under
personal services
contracts) when they
return to federal
employment within 5
years.
National The lesser of September 26, Employees who
Aeronautics and severance pay or 1996, through received buyouts
Space $25,000. September 30, must repay the
Administration 2000. buyout prior to the
(P.L. 104-204, first day of federal
Sept. 26, 1996) government
reemployment
(including
employment under
personal services
contracts) when they
return within 5
years. Repayment may
be waived if the
individual possesses
unique abilities and
is the only
qualified applicant
available for the
position.
U.S. Department of The lesser of October 1, 1996, Employees who
Agriculture, FY severance pay or through September received buyouts
1997 Appropriation (1) $25,000 from 30, 2000. must repay the
(P.L. 104-180, enactment through buyout prior to the
Aug. 6, 1996) FY 1997, (2) first day of federal
$20,000 in FY government
1998, (3) $15,000 reemployment
in FY 1999, or (4) (including
$10,000 in FY employment under
2000. personal services
contracts) when they
return within 5
years. No provision
to waive repayment
is provided.
Agency for The lesser of August 20, 1996, Employees who
International severance pay or through January received buyouts
Development (P.L. an amount 31, 1997. must repay the
104-190, Aug. 20, determined by the buyout prior to the
1996) agency head, not first day of federal
to exceed $25,000. government
reemployment
(including
employment under
personal services
contracts) when they
return within 5
years.
Smithsonian Determination to April 26, 1996, Employees who
Institution (P.L. be made by the through October 1, received buyouts
104-134, Apr. 26, Secretary, but 1996. must repay the
1996) shall not exceed buyout upon
$25,000. reemployment with
the federal
government within 5
years. Repayment may
be waived by the
Secretary of the
Smithsonian.
Repayment is not
required if employee
returns under a
personal services
contract.
--------------------------------------------------------------------------------
Source: GAO.
EMPLOYMENT STATUS OF THE 23 BUYOUT
RECIPIENT CASES, BY FEDERAL AGENCY
========================================================== Appendix II
Status of buyout recipient cases
----------------------------------------------------------
Individual
employed in
violation of Agency had no
legislative or Individual record of ever
DOD policy mistakenly coded employing the Tota
Hiring agency provisions as reemployed individual l
-------------------- ---------------- ---------------- ---------------- ----
Department of the 1\a 0 2 3
Air Force
Department of the 1 1 1 3
Army
Department of the 0 0 3 3
Navy
Department of 1\a 3 0 4
Defense
Department of 1 0 0 1
Justice
Department of State 0 2 0 2
Department of the 4 0 0 4
Treasury
Department of 1 0 0 1
Agriculture
Department of 2 0 0 2
Veterans
Affairs
================================================================================
Total 11 6 6 23
--------------------------------------------------------------------------------
Note: This table does not include the additional violation that the
Department of Agriculture identified because it was outside the scope
of our initial review.
\a DOD policy violations.
Sources: Selected federal agencies.
OPM'S LIST OF POSSIBLE OPTIONS
AGENCIES COULD TAKE TO ENSURE
COMPLIANCE WITH BUYOUT REPAYMENT
PROVISIONS
========================================================= Appendix III
Listed below are the possible options that the Office of Personnel
Management (OPM) developed and encouraged agencies to use to help
them comply with buyout repayment provisions. We have reordered and
categorized the options on the basis of their application; however,
the text of each option is quoted directly from OPM's original list.
FOR BUYOUT RECIPIENTS RETURNING
DIRECTLY TO FEDERAL SERVICE
------------------------------------------------------- Appendix III:1
"Alert agency hiring officials. Some existing buyout
authorities (i.e., Agriculture and NASA) provide for the payment
of buyouts through as late as September 30, 2000. Thus, some
buyout takers will be covered under the repayment requirement
through at least September 30, 2005. Agency hiring officials
are advised to judiciously review applicants for Federal jobs at
least through September 30, 2005, to insure that employees
covered by the repayment requirements are repaying the entire
amount of the incentive or that they are not being
reemployed.\28
"Scrub agency payroll and/or personnel records. Agencies may
conduct periodic checks to identify employees who have received
buyouts and who are now reemployed by a Federal agency. The
Nature of Action Code (NOAC) for separation incentives is 825.
OPM is also conducting these checks through the Central
Personnel Data File."
--------------------
\28 This option does not reflect the effect of the National Defense
Authorization Act for Fiscal Year 1998, Public Law 105-85, November
18, 1997, which extends DOD's buyout authority to September 30, 2001,
which would require hiring officials to judiciously review applicants
for federal jobs at least through September 30, 2006, to ensure that
employees covered by the repayment requirements are repaying the
entire amount of the incentive or that they are not being reemployed.
FOR BUYOUT RECIPIENTS RETURNING
AS CONTRACT EMPLOYEES
------------------------------------------------------- Appendix III:2
"Review agency's contract agreements. Structure contractual
agreements involving personal services contracting to address
contractors' use of former Federal employees who have received
buyouts. Additional options include requiring contractors to
identify and certify that contract employees who have received
buyouts are not working in violation of the law.
"Alert agency contract management personnel. Issue guidance to
personnel involved in contracting oversight and management for
use in monitoring compliance.
"Require periodic spot checks of contracting personnel to ensure
compliance."
FOR BUYOUT RECIPIENTS RETURNING
AS EITHER FEDERAL OR CONTRACT
EMPLOYEES
------------------------------------------------------- Appendix III:3
"Remind each agency manager and/or supervisor of the repayment
requirement and provide guidelines for identifying violations.
"Post reminders in agency benefits or retirement office. This
is a good location to reach employees who have retired with
incentives.
"Contact buyout recipients and remind them of repayment
requirements. Agencies may opt to send informational mailers to
employees to remind them of applicable repayment rules."
STATUS OF THE 40 OPEN DEPARTMENT
OF DEFENSE CASES OF POSSIBLE
VIOLATIONS
========================================================== Appendix IV
According to the Department of Defense (DOD), the Office of Personnel
Management (OPM) identified potential DOD violations of the Federal
Workforce Restructuring Act (FWRA) repayment provision in two lists.
The March 15, 1996, list identified 51 possible violations that were
based on a survey completed by DOD for OPM, and its January 3, 1997,
list, which was based on OPM's Central Personnel Data File research
effort, identified 11.
Of the 51 potential violations in the March 1996 list, OPM and DOD
determined that 11 had either repaid their buyouts or were
inappropriately identified as DOD personnel subject to the FWRA
repayment provision. Table IV.1 shows the results of DOD's
investigation of the 40 remaining cases. Some of these cases were
violations of the repayment provision, but it is not clear exactly
how many were violations. For instance, to the extent that the 17
"collections in progress" were initiated at the time the individual
applied for the job, they may not represent violations.
Table IV.1
DOD's 40 Open Cases of Possible
Violations
Type of action Number of cases
---------------------------------------- ----------------------------
Operation Mongoose:
----------------------------------------------------------------------
No debt owed 3
Collection initiated 13
Repaid 3
Collection in progress 17
Under investigation 4
======================================================================
Total 40
----------------------------------------------------------------------
Source: DOD.
Of the 11 potential violations that DOD said OPM identified in its
January 1997 list, DOD reemployed two buyout recipients. One had
made the repayment; the other was making repayment.
(See figure in printed edition.)Appendix V
COMMENTS FROM THE OFFICE OF
PERSONNEL MANAGEMENT
========================================================== Appendix IV
(See figure in printed edition.)
See p. 19.
See comment 1.
See comment 2.
(See figure in printed edition.)
See p. 19
and comment 2.
(See figure in printed edition.)
See comment 2.
The following are GAO's comments on the Office of Personnel
Management's letter dated August 15, 1997.
GAO COMMENTS
-------------------------------------------------------- Appendix IV:1
1.OPM said that we should refer to 5 C.F.R. 576 in our report. This
regulation on buyouts, repayments, and waivers of repayment was
published on November 9, 1994. We had not specifically referred to
OPM's regulation 5 C.F.R. 576 in our draft report because it was not
pertinent to our focus on agencies' internal controls. Section
576.101 of the regulation provides guidance on who is covered by the
buyout conditions, what is covered, what is required (the buyout
recipient must repay the entire amount of the buyout to the agency
that gave the buyout), and exceptions under the repayment provisions.
However, the section is stated generally and does not address what
agencies should do to help ensure that returning buyout recipients
comply with the law. Section 576.102 deals with buyout recipients'
requests for OPM's approval for waivers of the repayment provision,
and, while it does not deal with what agencies should do to help
ensure compliance with the provision, this section is an example of
the instructional approach OPM could use in regulations requiring
agencies to adopt internal control procedures. We have added a
reference to 5 C.F.R. 576 to the report to provide additional
information on waivers of the repayment provision in accordance with
OPM's and another agency's suggestion.
2.OPM said that the draft report needed to more accurately reflect
its analysis and findings regarding buyout recipients who were
reemployed in violation of the repayment requirement, particularly
the differences in the methodologies used in the two analyses OPM
conducted and the most current data available from OPM. We had not
distinguished between OPM's two research methodologies because it did
not make that distinction in its interim report, which we cited in
the draft. On the basis of information OPM provided in its comments,
we made changes to make that distinction clear in the final report.
In addition, our draft report had contained the most current data OPM
had said was available prior to providing us its comments. OPM
provided, subsequent to our receiving its comments on our draft
report, a more current list of confirmed repayment provision
violators, which we used in the final report. On the basis of
clarifying information OPM provided in, and subsequent to, its
comments, we also made changes to the report to recognize that the
repayment violations found by OPM could overlap with those we found.
In addition, we clarified in the report the time frames for our
effort and OPM's two research efforts. Although the time frames
overlapped, they were not identical.
(See figure in printed edition.)Appendix VI
COMMENTS FROM THE U.S. DEPARTMENT
OF AGRICULTURE
========================================================== Appendix IV
See comment 1.
See comment 2.
See comment 3.
(See figure in printed edition.)
See comment 4.
The following are GAO's comments on the U.S. Department of
Agriculture's letter dated August 8, 1997.
GAO COMMENTS
-------------------------------------------------------- Appendix IV:2
1.USDA did not believe that our draft report sufficiently recognized
the difficulty agencies face in enforcing the buyout repayment
requirements in cases where buyout recipients do not reveal that they
have received buyout payments. We believe that our draft report did
recognize the responsibility of buyout recipients to reveal their
buyout status; our recommendation that a form be created on which job
applicants would certify their buyout status explicitly recognizes
this responsibility of buyout recipients. However, although any
failure of buyout recipients to acknowledge their status when
reapplying for federal employment can make enforcing the law more
difficult, agencies nevertheless retain responsibility for ensuring
compliance. We recommended that OPM promulgate regulations requiring
that agencies take steps to identify buyout recipients who need to
repay their buyout because the agencies we reviewed had not
established procedures that provided a reasonable assurance of
compliance with the repayment requirement.
2.USDA said it was important to note that discrepancies in OPM's CPDF
data compared with data in agency reports can contribute to the
difficulty that agencies may have in identifying repayment violations
and observed that such discrepancies explained some of the possible
violations we had found. We agree that discrepancies between the
CPDF and agency reports can make use of the CPDF an imperfect
mechanism for identifying possible buyout repayment violations.
However, we did not recommend that agencies rely on the CPDF to
identify possible violations. Use of the CPDF could be but one of
several options for identifying possible violations. To the extent
that the CPDF is used, discrepancies in CPDF data can, at least in
part, be reduced by the agencies themselves--many of the
inconsistencies between CPDF data and agency reports were due to
agencies' not having provided updated, accurate data to OPM.
3.USDA was concerned that the description and placement of references
to USDA violations at the beginning of the draft report implied that
USDA was the first and most significant violator. Our use of the
USDA example was intended to show the proactive response of this
agency to the situation, which distinguished it from the other
agencies, and to show its recognition of the importance of compliance
with the law. However, due to USDA's concerns, we modified the
report to lessen the emphasis on USDA's experiences.
4.USDA expressed concern about us not mentioning that it had issued
repayment provision procedures to the entire Department on July 18,
1996. Although we requested that agencies provide us with copies of
their procedures, we only received a copy of APHIS' procedures from
USDA officials and were told that they were not aware of any other
USDA procedures. We have changed the report to reflect that USDA had
issued notification of the FWRA repayment provision to its components
and that APHIS subsequently developed internal control procedures.
(See figure in printed edition.)Appendix VII
COMMENTS FROM THE DEPARTMENT OF
JUSTICE
========================================================== Appendix IV
(See figure in printed edition.)Appendix VIII
COMMENTS FROM THE DEPARTMENT OF
THE TREASURY
========================================================== Appendix IV
MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix IX
GENERAL GOVERNMENT DIVISION,
WASHINGTON, D.C.
Steven J. Wozny, Assistant Director,
Federal Management and Workforce Issues
Robert Goldenkoff, Assignment Manager
Walter E. Reed, Jr., Evaluator-in-Charge
Gregory Wilmoth, Senior Social Science Analyst
OFFICE OF THE GENERAL COUNSEL,
WASHINGTON, D.C.
Alan Belkin, Assistant General Counsel
Victor B. Goddard, Senior Attorney
*** End of document. ***