The Public Service: Veterans' Preference in Hiring and
Reductions-in-Force (Testimony, 03/24/98, GAO/T-GGD-98-88).

GAO discussed the work its done on veterans' hiring preference and on
reductions-in-force (RIF) at selected military installations and at the
United States Geological Survey (USGS).

GAO noted that: (1) preference-eligible veterans represent a larger
portion of the federal workforce than veterans do of the civilian
workforce; (2) from 1993 through 1997, veterans with preference
represented about 21 percent of all new career appointments to federal
service; (3) the assignment of veterans' preference and the placement of
veterans on federal hiring certificates were properly done in nearly all
cases GAO reviewed from July 1990 through June 1991; (4) however, hiring
officials more frequently returned unused those certificates headed by
the names of preference-eligible veterans than those without the names
of preference-eligible veterans at the top; (5) in the three RIFs
conducted at military installations in fiscal year 1991, GAO's review
showed that those without veterans' preference were much more likely to
have lost their jobs than were preference-eligible veterans; (6)
similarly, during an October 1995 RIF at the USGS, those employees
without veterans' preference were much more likely to have lost their
jobs than employees with such preference; (7) GAO found that during
USGS's 1995 RIF, as required by law and Office of Personnel Management
Regulations, employees with veterans' preference were consistently given
higher retention standing than competing employees without such
preference; and (8) GAO also found that preference-eligible veterans
were just as likely to be affected in some manner during the RIF as were
employees without veterans' preference.

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

 REPORTNUM:  T-GGD-98-88
     TITLE:  The Public Service: Veterans' Preference in Hiring and 
             Reductions-in-Force
      DATE:  03/24/98
   SUBJECT:  Civilian employees
             Hiring policies
             Military facilities
             Veterans benefits
             Veterans employment programs
             Labor statistics
             Reductions in force

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


Before the Committee on Veterans' Affairs
U.S.  Senate

For Release
on Delivery
Expected at
2:15 p.m.  EST
Tuesday, March 24, 1998

THE PUBLIC SERVICE - VETERANS'
PREFERENCE IN HIRING AND
REDUCTIONS-IN-FORCE

Statement of Michael Brostek, Associate Director
Federal Management and Workforce Issues
General Government Division

GAO/T-GGD-98-88

GAO/GGD-98-88T


(410309)


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


THE PUBLIC SERVICE:  VETERANS'
PREFERENCE IN HIRING AND
REDUCTIONS- IN-FORCE
====================================================== Chapter SUMMARY

By law, federal agencies are to provide preferential hiring
consideration to veterans and others as a measure of national
gratitude and compensation for their military service.  The proposed
Veterans Employment Opportunities Act of 1997, S.  1021, is to amend
title 5 of the United States Code to provide that consideration may
not be denied to veterans who are eligible for preference when
applying for certain positions in federal service and for other
purposes.  Although GAO is not taking a position on the proposed
legislation, it is providing information that is based on a body of
work it has done since 1990 on veterans' hiring preference and on
reductions-in-force (RIF) at three military installations (in 1991)
and at the U.S.  Geological Survey (in 1995). 

From 1990 through 1997, preference-eligible veterans represented a
larger portion of the federal workforce than veterans did of the
civilian workforce, and from 1993 through 1997, veterans with
preference have represented about 21 percent of all new career
appointments to federal service.  In each year from 1990 through
1997, the percentage of preference-eligible veterans in the federal
workforce was about twice as large as that of veterans in the
civilian workforce. 

For a random sample of hiring certificates from 1990 and 1991 that
GAO reviewed, both the awarding of veterans' preference and the
placement of veterans on hiring certificates were done properly in
nearly all cases.  However, hiring officials more frequently returned
unused those certificates headed by the names of preference-eligible
veterans than those without the names of veterans at the top. 

When agencies reduce their workforces through RIFs, veterans also
have certain retention rights.  For each of three RIFs at military
installations in fiscal year 1991, GAO determined that employees
lacking veterans' preference were from about two to seven times more
likely to have lost their jobs than were employees with veterans'
preference.  GAO found that during the U.S.  Geological Survey's 1995
RIF, as required by law and Office of Personnel Management
regulations, employees with veterans' preference were consistently
given higher retention standing than competing employees without such
preference.  GAO also found that preference-eligible veterans were
just as likely to be affected in some manner during the
RIF--reassigned, moved to another position, or laid off--as were
employees without veterans' preference.  However, those without
veterans' preference were four times as likely to lose their jobs
than were employees who had veterans' preference. 


THE PUBLIC SERVICE:  VETERANS'
PREFERENCE IN HIRING AND
REDUCTIONS-IN-FORCE
==================================================== Chapter STATEMENT

Mr.  Chairman and Members of the Committee: 

I am pleased to be here today to assist the Committee in its
consideration of the proposed Veterans Employment Opportunities Act
of 1997, S.  1021, which is to amend title 5 of the United States
Code to provide that consideration may not be denied to veterans who
are eligible for preference\1 when applying for certain positions in
federal service and for other purposes.  By law, federal agencies are
to provide preferential hiring consideration to veterans and others\2
as a measure of national gratitude and compensation for their
military service. 

As agreed, my comments today are primarily based on our body of work
since 1990 on veterans' hiring preference and work we did on
reductions-in-force (RIF) at selected military installations and at
the U.S.  Geological Survey (USGS) that occurred in 1991 and 1995,
respectively.\3 As requested, we also are providing certain
statistics on the percentage of preference-eligible veterans among
new federal career employees and in the existing federal workforce
from 1990 through 1997.  The information we present today, although
relevant to consideration of S.  1021, does not reflect a current,
complete analysis of whether veterans' preference requirements are
achieving their intended purposes.  We are not taking a position on
the proposed legislation. 

My testimony today will cover the following major points: 

  -- Preference-eligible veterans represent a larger portion of the
     federal workforce than veterans do of the civilian workforce,
     and from 1993 through 1997 veterans with preference represented
     about 21 percent of all new career appointments to federal
     service. 

  -- The assignment of veterans' preference and the placement of
     veterans on federal hiring certificates were properly done in
     nearly all cases we reviewed from July 1990 through June 1991. 
     However, hiring officials more frequently returned unused those
     certificates headed by the names of preference-eligible veterans
     than those without the names of preference-eligible veterans at
     the top. 

  -- In three RIFs conducted at military installations in fiscal year
     1991, our review showed that those without veterans' preference
     were much more likely to have lost their jobs than were
     preference-eligible veterans.  Similarly, during an October 1995
     RIF at the USGS, those employees without veterans' preference
     were much more likely to have lost their jobs than employees
     with such preference. 


--------------------
\1 Preference for veterans is defined in 5 U.S.C.  2108(3). 

\2 Veterans' preference also applies, in certain circumstances, to
veterans' dependents, whose preference is derived from the military
service of veterans who are not using the preference.  This facet of
veterans' preference is not discussed in this testimony. 

\3 Federal Hiring:  Does Veterans' Preference Need Updating? 
(GAO/GGD-92-52, Mar.  20, 1992); Federal Personnel:  The EEO
Implications of Reductions-in-Force (GAO/T-GGD-94-87, Feb.  1, 1994);
Federal Hiring:  Reconciling Managerial Flexibility With Veterans'
Preference (GAO/GGD-95-102, June 16, 1995); Veterans' Preference: 
Data on Employment of Veterans (GAO/GGD-96-13, Feb.  1, 1996); USGS
and OPM RIFs (GAO/GGD-96-83R, Mar.  21, 1996); and USGS Reduction in
Force (GAO/GGD-96-155R, Aug.  1, 1996). 


   VETERANS' REPRESENTATION IN THE
   WORKFORCE AND AMONG TOTAL NEW
   CAREER APPOINTMENTS
-------------------------------------------------- Chapter STATEMENT:1

From 1990 through 1997, preference-eligible veterans represented a
significantly higher percentage of the federal workforce than did
veterans overall in the total civilian workforce.  As figure 1
illustrates, preference-eligible veterans represent a gently
declining portion of the federal workforce, and veterans also
represent a declining portion of the total civilian workforce. 
However, in each year from 1990 through 1997, the percentage of
preference-eligible veterans in the federal workforce was about twice
as high as that of veterans in the civilian workforce. 

   Figure 1:  Percentage of
   Preference-Eligible Veterans in
   the Federal Workforce and
   Veterans in the Civilian
   Workforce

   (See figure in printed
   edition.)

Note 1:  Civilian workforce data are as of December 30 of each year;
federal workforce data are as of September 30 of each year. 

Note 2:  Civilian workforce data are for men and women age 20 years
and over. 

Source:  GAO analysis of Office of Personnel Management data and data
from the Department of Labor's Bureau of Labor Statistics. 

Figure 2 shows that preference-eligible veterans increased as a
portion of those attaining new career appointments\4 in the federal
government between 1990 and 1997.  However, their portion of such
appointments held virtually steady for fiscal years 1993 through
1997. 

   Figure 2:  Preference-Eligible
   Veterans as a Percentage of
   Total New Career Appointments

   (See figure in printed
   edition.)

Note:  New career appointments include new career hires and
conversions to career positions.  Conversions generally entail
temporary or term employees moving to career status. 

Source:  GAO analysis of Office of Personnel Management data. 

Veterans' preference is applied when agencies use competitive hiring
authority\5 to fill positions, as is generally the case for employees
who attain career appointments in the federal government.  The
increase in the portion of new career appointments over this period
who were preference eligible was most significant between fiscal
years 1992 and 1993. 


--------------------
\4 A career appointment in the federal civil service is employment
that leads to career tenure, generally after 3 years of substantially
continuous service. 

\5 Competitive hiring authority is the legal authority to hire after
free and open competition. 


   ADHERENCE TO VETERANS'
   PREFERENCE RULES FOR HIRING
-------------------------------------------------- Chapter STATEMENT:2

Under the Veterans' Preference Act of 1944, as amended, when
qualified veterans apply for federal jobs, they may claim 5 or 10
veterans' preference points, depending on such factors as period of
service; length and place of service; and, in certain instances, the
extent of a service-related disability.  Veterans with
service-related disabilities may generally claim 10 points.  These
points are added to points that veterans and all other candidates for
federal employment receive for education, work experience, and/or the
passing of a written examination.  The preference points they receive
result in veterans being placed higher on federal hiring lists,
giving veterans an advantage over other job applicants. 

In the last several years, we have not done work on agencies'
adherence to veterans' preference during the hiring process. 
However, in nearly all cases we reviewed in the early 1990s, agencies
followed basic veterans' preference requirements leading up to the
actual selection decision.\6 At that point, hiring officials returned
unused hiring certificates that were headed by the names of
preference-eligible veterans more often than they did those headed by
the names of individuals lacking such preference. 


--------------------
\6 Federal Hiring:  Does Veterans' Preference Need Updating? 
(GAO/GGD-92-52, Mar.  20, 1992) and Federal Hiring:  Reconciling
Managerial Flexibility With Veterans' Preference (GAO/GGD-95-102,
June 16, 1995). 


      PREFERENCE PROCEDURES DURING
      HIRING
------------------------------------------------ Chapter STATEMENT:2.1

When agencies want to fill positions, several hiring alternatives are
available.  Agencies can promote, transfer, or reassign a current
federal employee; reinstate a former federal employee who has career
status; make a new appointment from a hiring list, or hiring
certificate (i.e., use competitive authority); or use noncompetitive
appointment authorities.  Of these hiring alternatives, veterans'
preference applies only to competitive hiring.\7 When agencies hire
individuals from outside the federal government through competitive
means, they can use the following methods:  certificates from OPM or
either of two authorities delegated from OPM (i.e., delegated
examining authority or direct hire authority). 

Under the first method, OPM receives and examines applications for
federal employment, which can include reviewing a written test and/or
reviewing qualifications, and determines whether an applicant is
qualified for a specific occupation or related occupations.  If an
applicant is rated as qualified, then the applicant is assigned a
score that is used to place the individual in rank order on a federal
employment register.  As part of this ordering process, OPM is
responsible for ensuring that veterans receive all preference points
that are due them.  When OPM receives and examines applications from
veterans, it is to (1) verify veterans' preference points that are
claimed by applicants, (2) add the preference points to the veterans'
scores, and (3) rank all applicants by score.  Qualified veterans
with service-related disabilities are to be placed at the top of
hiring lists, or certificates. 

Agency hiring officials can then request a certificate from OPM
containing the top-rated candidates from the register.  Agencies are
generally required to select from among the top three available
candidates on a certificate.  However, they cannot select a
nonveteran if a higher placed preference-eligible veteran is
available on the list unless the selecting official obtains approval
for passing over the higher ranked veteran.  Justifications for
passing over a higher ranked preference-eligible veteran must be
based on qualifications or suitability.  Only OPM is authorized to
grant such approvals. 

Under the second method, rather than use certificates developed by
OPM, agencies may receive delegated examining authority from OPM to
prepare their own certificates.  Under such authority, agencies are
to follow the same scoring, ranking, and selection rules that OPM
follows.  In addition, when shortages of qualified candidates exist,
OPM provides agencies with direct hire authority, which permits
agencies to directly receive applications, examine applicants, and
make selections.  Effective January 9, 1992,\8 OPM directed agencies
to apply regular scoring and ranking procedures, including
application of veterans' preference, whenever more than three
candidates apply for a job or whenever both veterans and nonveterans
are available.  Until that date, direct hire authority, which
accounted for almost one-third of all competitive hiring in fiscal
year 1990, did not always provide for qualified veterans to receive
preference. 


--------------------
\7 The Veterans Readjustment Appointment (VRA) authority allows
agencies, at their discretion, to hire an eligible veteran directly,
without competition.  VRA employees are initially hired for a 2-year
period, after which they are eligible for a permanent appointment. 

\8 See 56 Federal Register 64,469 (1991). 


      VETERANS RECEIVED
      APPROPRIATE PREFERENCE
      POINTS AND PLACEMENT ON
      FISCAL YEAR 1990 AND 1991
      HIRING LISTS WE REVIEWED
------------------------------------------------ Chapter STATEMENT:2.2

In 1992, we reported that for nearly all of the federal job
applications that we reviewed for fiscal years 1990 and 1991, the
veterans' preference points due applicants matched the points given
to them on hiring certificates prepared by OPM or other executive
agencies.\9 We randomly selected 1,136 hiring certificates from OPM
and executive agencies, excluding the Postal Service, and examined
the 1,862 available job applications associated with those hiring
certificates.  For the 1,862 applications that we reviewed, 99.7
percent, or for all but 6 applications, agencies had provided the
correct veterans' preference points on hiring certificates.\10 Also,
we reported that the placement of veterans on certificates of
eligible job candidates was also correct.  Veterans were properly
placed on all but 1 of the 1,136 certificates that we reviewed from
OPM and executive agencies. 


--------------------
\9 GAO/GGD-92-52, March 20, 1992. 

\10 In addition, OPM or agency review of candidate applications
resulted in veterans being credited with points they had earned but
not claimed. 


      CERTIFICATES WE REVIEWED
      FROM 1990 AND 1991 THAT WERE
      HEADED BY VETERANS WERE
      RETURNED UNUSED MORE OFTEN
      THAN THOSE HEADED BY
      NONVETERANS
------------------------------------------------ Chapter STATEMENT:2.3

Although veterans may receive additional points because of their
military service and be highly placed on certificates, they are not
assured of selection for jobs.  Under existing civil service laws and
regulations, hiring officials have the option of using a variety of
methods to identify and recruit potential candidates for a position. 
These officials may also leave a position vacant rather than fill it
with a candidate who is qualified for the position but with whom they
are not satisfied.  Therefore, certificates of eligible job
candidates may be requested but not used if federal managers are
dissatisfied with the choices presented to them. 

In our 1992 report on federal hiring, we reported that 57 percent of
all certificates were returned unused.  We found that a greater
chance existed that hiring officials would return certificates unused
to OPM or the personnel office of their agencies when the name of a
preference-eligible veteran was at the top of the hiring list.\11 We
reported that of the 1,136 certificates of eligible job candidates we
reviewed, about 71 percent of certificates had been returned unused
if they were headed by a veteran.  About 51 percent of certificates
were returned unused if they were headed by a nonveteran. 

One explanation for this difference is that managers in executive
agencies may have less flexibility in selecting from a certificate if
the name of a veteran is at the top.  For example, if a certificate
lists nonveterans in the top three positions, a manager can select
any of the three.  However, if a certificate is headed by a
preference-eligible veteran and nonveterans are in the next two
positions, the manager generally has no choice but to select the
veteran or return the certificate unused, unless the manager receives
approval from OPM to pass over the veteran. 

In addition, federal managers may request multiple hiring
certificates for the same job and ultimately not use some or all of
them.  We reported in 1992 that officials from OPM and other agencies
frequently cited managers' desire to maximize the number of
candidates from which to choose as the reason for requesting (1)
multiple hiring certificates if a position could be filled at more
than one grade level or (2) certificates to supplement their internal
lists of candidates.  Although OPM regulations required agencies to
explain why no appointment was made from a certificate, OPM did not
enforce this requirement.  When agencies did provide reasons for not
selecting a candidate, OPM did not collect data on or analyze those
reasons to determine their legitimacy, the possibility of antiveteran
bias, or whether certificates met managers' needs.  In our 1992
report on federal hiring, we recommended that the Director of OPM
establish a tracking system to monitor the use of federal hiring
certificates.  We also recommended that the Director use the data
gathered by this system to analyze veteran hiring patterns.  By
February 1994, according to OPM, OPM developed a tracking system for
evaluating unused certificates and automated portions of it.  We have
not reviewed this tracking system. 


--------------------
\11 GAO/GGD-92-52, March 20, 1992. 


   FEDERAL EMPLOYEES WITH VETERANS
   PREFERENCE DURING RIFS
-------------------------------------------------- Chapter STATEMENT:3

When agencies reduce their workforces through RIFs, veterans also
have certain retention rights that are derived from the 1944
Veterans' Preference Act.  We have reviewed RIFs at three military
installations and at one division within the USGS in sufficient
detail to have statistics on how preference-eligible veterans fared
in the RIF process.  In each of these RIFs, preference-eligible
veterans were more likely to have retained their jobs than were
employees lacking veterans' preference. 


      VETERANS' PREFERENCE DURING
      RIFS
------------------------------------------------ Chapter STATEMENT:3.1

Under OPM regulations, RIFs are accomplished in two phases.  First,
management determines the number and types of positions that are to
be abolished and the "competitive areas" affected by the decision. 
Second, management identifies the employees within a competitive area
and their relative status in the competition for retention. 
Employees' retention status and assignment rights to other positions
are essentially determined by their tenure, veterans' preference, and
length of service, with additional years of service credit provided
based on how well they did on their performance ratings. 

When the identified positions are abolished, incumbents of those
positions may have assignment rights to other positions that are not
being abolished, depending on their retention status and
qualifications.  Once the initial decisions are made that define the
numbers, types, and locations of positions to be abolished,
determining the retention status of employees and their exercise of
assignment rights is a relatively mechanical process with little
flexibility.  During a RIF, employees are separated from federal
employment starting with those having the lowest retention status and
continuing with those having increasingly higher retention status
until RIF separation targets are met. 


      HOW VETERANS FARED DURING
      SELECTED RIFS
------------------------------------------------ Chapter STATEMENT:3.2

In 1994, we testified on the impact on certain groups covered by
equal employment opportunity laws of RIFs that occurred in fiscal
year 1991 at three Department of Defense installations.\12 We
testified that the RIFs resulted in separations of minorities in
numbers disproportionate to their numbers in the workforce at the
three locations reviewed.  Women were separated in disproportionate
numbers at two of the locations.  In some cases, disproportionate
numbers of separations occurred largely because minorities and women
did not have the retention factors--tenure, veterans' preference, or
performance-adjusted seniority--of nonminorities or men.  Our
analysis of the retention factors for civilian workers employed by
the military services at the end of fiscal year 1991 showed that
minorities and women ranked lower than their nonminority counterparts
in all retention factors, including veterans' preference. 

For purposes of this hearing, we analyzed the data from our 1994
testimony to determine how well preference-eligible veterans fared
during the RIFs at the three installations.  Overall, we found that
those without veterans' preference were from about two to seven times
more likely to have lost their jobs during the RIFs than were those
employees with veterans' preference.  At the Alameda, California,
Naval Aviation Depot, those without veterans' preference were seven
times more likely to have lost their jobs in the RIF than were those
who had the preference.  At Kelly Air Force Base in San Antonio,
Texas, those without veterans' preference were about twice as likely
to have lost their jobs.  And at the Watervliet, New York, Army
Arsenal, those without veterans' preference were six times more
likely to have lost their jobs. 

In 1996, we reported on a RIF conducted at the USGS during October
1995.\13 This RIF took place within the U.S.  Geological Survey's
Geologic Division and was somewhat unusual in that the overwhelming
majority of Geologic Division employees were each placed in
competitive levels that included only one employee.  Employees within
a single-person competitive level have less opportunity to move into
another position during a RIF.  Thus, such employees would be more
likely to be separated from an agency. 

We found that during the USGS' RIF, as required by law and OPM
regulations, employees with veterans' preference were consistently
given higher retention standing than competing employees without such
preference.  We also found that preference-eligible veterans were
just as likely to be affected in some manner during the
RIF--reassigned, moved to a lower graded position, or laid off--as
were employees without veterans' preference.  However, those without
veterans' preference were four times as likely to lose their jobs
than were employees who had veterans' preference. 

Although you were interested in our updating and adding to these
RIF-related retention statistics, we were not able to obtain
comparable data on the retention rates for preference-eligible
veterans for a wider number of more recent RIFs in the limited time
we had to prepare for this hearing.  Data are available from OPM's
Central Personnel Data File on the total number of veterans who have
lost their jobs during RIFs over the past several years.  However,
these data alone do not indicate whether preference-eligible veterans
were separated as a result of a RIF at rates disproportionate to
others.  Determining whether veterans have been disproportionately
affected during RIFs would require data on the full population that
was at risk of losing their jobs during a RIF.  This is the
population of the competitive area that would have been established
by agencies for each specific RIF.  Such data are not available from
any central database that we were able to identify. 


--------------------
\12 GAO/T-GGD-94-87, February 1, 1994. 

\13 GAO/GGD-96-83R, March 21, 1996 and GAO/GGD-96-155R, August 1,
1996. 


------------------------------------------------ Chapter STATEMENT:3.3

In summary, Mr.  Chairman, preference-eligible veterans remain a
larger portion of the federal workforce than veterans overall in the
general civilian workforce.  In those job applications we reviewed
for fiscal years 1990 and 1991, agencies properly followed veterans'
preference procedures in the hiring process in virtually all cases. 
However, selecting officials were more likely to return certificates
unused if they were headed by the names of veterans than they were if
veterans did not head those certificates.  Finally, in four specific
RIFs we reviewed, employees who did not have veterans' preference
were much more likely to lose their jobs during a RIF than were their
colleagues who had veterans' preference. 

This concludes my prepared statement.  I would be pleased to respond
to any questions that you or other Members of the Committee may have. 

*** End of document. ***