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entitled 'Posthearing Questions Related to Proposed Department of 
Homeland Security (DHS) Human Capital Regulations' which was released 
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March 22, 2004:

The Honorable George V. Voinovich:

Chairman:

The Honorable Richard Durbin:

Ranking Minority Member:

Subcommittee on Oversight of Government Management, the Federal 
Workforce, and the District of Columbia:

Committee on Governmental Affairs:

United States Senate:

The Honorable Jo Ann Davis:

Chairwoman:

The Honorable Danny Davis:

Ranking Minority Member:

Subcommittee on Civil Service and Agency Organization:

Committee on Government Reform:

United States House of Representatives:

Subject: Posthearing Questions Related to Proposed Department of 
Homeland Security (DHS) Human Capital Regulations:

On February 25, 2004, I testified before your subcommittees at a 
hearing entitled "The Key to Homeland Security: The New Human Resources 
System."[Footnote 1] This letter responds to your request that I 
provide answers to posthearing questions. The questions and responses 
follow.

1. In your testimony, you indicated that there were safeguards 
recommended for the personnel system at the Department of Defense that 
were not included in the Homeland Security Act. What safeguards do you 
think should be included in the regulations for the DHS personnel 
system that are not included currently?

We have proposed an initial list of safeguards based on our extensive 
body of work looking at the performance management practices used by 
leading public sector organizations both in the United States and in 
other countries, as well as our own experiences at GAO in implementing 
a modern performance management system. These safeguards include:

* Assure that the agency's performance management systems (1) link to 
the agency's strategic plan, related goals, and desired outcomes, and 
(2) result in meaningful distinctions in individual employee 
performance. This should include consideration of critical competencies 
and achievement of concrete results. As I noted in my testimony, DHS 
plans to align individual performance management with organizational 
goals.

* Involve employees, their representatives, and other stakeholders in 
the design of the system, including having employees directly involved 
in validating any related competencies, as appropriate. In September 
2003 we reported that DHS's personnel system design effort provided for 
collaboration and employee participation.[Footnote 2] Employees were 
provided multiple opportunities to be included in the design process, 
including participation in the Core Design Team, the Town Hall 
meetings, the field team, the focus groups, an e-mail mailbox for 
employee comments, and now through the public comment period on the 
proposed system.

* Assure that certain predecisional internal safeguards exist to help 
achieve the consistency, equity, nondiscrimination, and 
nonpoliticization of the performance management process (e.g., 
independent reasonableness reviews by Human Capital Offices and/or 
Offices of Opportunity and Inclusiveness or their equivalent in 
connection with the establishment and implementation of a performance 
appraisal system, as well as reviews of performance rating decisions, 
pay determinations, and promotion actions before they are finalized to 
ensure that they are merit-based; internal grievance processes to 
address employee complaints; and pay panels whose membership is 
predominately made up of career officials who would consider the 
results of the performance appraisal process and other information in 
connection with final pay decisions). DHS is proposing Performance 
Review Boards (PRBs) to review ratings in order to promote consistency 
and provide general oversight of the performance management system to 
ensure it is administered in a fair, credible, and transparent manner. 
While much remains to be determined about how the DHS PRBs will 
operate, we believe that the effective implementation of such a board 
is important to assuring that predecisional internal safeguards exist 
to help achieve consistency and equity, and assure nondiscrimination 
and nonpolitization of the performance management process.

* Assure reasonable transparency and appropriate accountability 
mechanisms in connection with the results of the performance management 
process. This can include reporting periodically on internal 
assessments and employee survey results relating to the performance 
management system and publishing overall results of performance 
management and individual pay decisions while protecting individual 
confidentiality. Publishing the results in a manner that protects 
individual confidentiality can provide employees with the information 
they need to better understand the performance management system. As we 
recently reported, several of OPM's personnel demonstration projects 
publish information for employees on internal Web sites about the 
results of performance appraisal and pay decisions, such as the average 
performance rating, the average pay increase, and the average award for 
the organization and for each individual unit.[Footnote 3]

There are also important safeguards in areas other than performance 
management. For example, I noted in my testimony that, as an additional 
safeguard, DHS should consider identifying mandatory removal offenses 
in regulations as a means to ensure appropriate due process. I also 
believe that the independence of the panel to hear appeals of 
violations of the mandatory removal offenses could be strengthened. As 
we note in the response to question 4 below, the independence of the 
DHS labor relations board deserves serious consideration.

2. The regulations don't allow collective bargaining on matters that do 
not "significantly affect a substantial portion of the bargaining 
unit." What do you think would be a reasonable percentage or number to 
be considered a "substantial portion?":

As I noted in my testimony, leading organizations involve employees and 
unions in major changes such as redesigning work processes, changing 
work rules, or developing new job descriptions. Such involvement can 
avoid misunderstandings, speed implementation, and more expeditiously 
resolve problems that occur. I also noted that DHS employees suggested 
having informal mechanisms in place to resolve issues before escalating 
them to the formal process. However we do not have a specific 
percentage to recommend for this provision.

3. In your testimony you stated concern for the Department of Defense's 
intention to implement a personnel system by the Fall of 2004. What do 
you believe would be an appropriate implementation timetable for the 
Department of Homeland Security?

We have found that a key practice for successful transformations is to 
set implementation goals and establish a timeline to build momentum and 
show progress from day one.[Footnote 4] A transformation, such as the 
one being undertaken by DHS, is a substantial commitment that could 
take years before it is completed, and therefore must be carefully and 
closely managed. As a result, it is essential to establish and track 
implementation goals and establish a timeline to pinpoint performance 
shortfalls and gaps so that midcourse corrections can be made.

According to DHS's proposed regulations, the labor relations, adverse 
actions, and appeals provisions will be effective 30 days after 
issuance of the interim final regulations later this year. DHS plans to 
implement the job evaluation, pay, and performance management system in 
phases to allow time for final design, training, and careful 
implementation. Although we do not recommend a specific implementation 
timetable for DHS, we strongly support a phased approach to 
implementing major management reforms. A phased implementation approach 
recognizes that different organizations will have different levels of 
readiness and different capabilities to implement new authorities. 
Moreover, a phased approach allows for learning so that appropriate 
adjustments and midcourse corrections can be made before the 
regulations are fully implemented organizationwide. However, it is 
important to note that the proposed regulations do not apply to nearly 
half of all DHS civilian employees, including more than 50,000 
screeners in the Transportation Security Administration (TSA). Based on 
the department's progress in implementing the system and any 
appropriate modifications made based on their experience, DHS should 
consider moving all of its employees under the new human capital 
system.

4. Would you characterize the proposed Labor Relations Board in these 
regulations as "independent"?

I did not directly comment on this matter in my statement. However, in 
my statement I did raise independence concerns about a separate panel 
to be created to hear appeals for mandatory removal offenses. Members 
of that panel are appointed by the DHS Secretary for three-year terms 
and may be removed by the Secretary "only for inefficiency, neglect of 
duty, or malfeasance." These appointment and removal procedures are 
identical to the appointment and removal provisions for the members of 
the proposed DHS Labor Relations Board. As I noted in my statement with 
regard to the mandatory removal offense panel, removal of the panel 
members by the Secretary may potentially compromise the real or 
perceived independence of the panel's decisions. We suggested, as an 
alternative, that the Department should consider having members of the 
panel removed only by a majority decision of the panel. We also said 
that DHS might wish to consider staggering the terms of the members to 
ensure a degree of continuity on the board. Such changes might also 
strengthen the independence of the Labor Relations Board.

We are sending copies of this report to the Chair and Ranking Minority 
Member, Senate Committee on Governmental Affairs; the Chairman and 
Ranking Minority Member, House Committee on Government Reform; the 
Chairman and Ranking Minority Member, House Select Committee on 
Homeland Security; and other interested congressional parties. We will 
also send copies to the Secretary of the Department of Homeland 
Security and the Director of the Office of Personnel Management. Copies 
will be made available at no charge on the GAO Web site at http://
www.gao.gov. For additional information on our work on federal agency 
transformation efforts and strategic human capital management, please 
contact me on (202) 512-5500 or J. Christopher Mihm, Managing Director, 
Strategic Issues, on (202) 512-6806 or at mihmj@gao.gov.

Sincerely,

Signed by: 

David M. Walker:

Comptroller General:

of the United States:

(450312):

FOOTNOTES

[1] U.S. General Accounting Office, Human Capital: Preliminary 
Observations on Proposed DHS Human Capital Regulations, GAO-04-479T 
(Washington, D.C.: Feb, 25, 2004).

[2] U.S. General Accounting Office, Human Capital: DHS Personnel System 
Design Effort Provides for Collaboration and Employee Participation, 
GAO-03-1099 (Washington, D.C.: Sept. 30, 2003).

[3] U.S. General Accounting Office, Human Capital: Implementing Pay for 
Performance at Selected Personnel Demonstration Projects, GAO-04-83 
(Washington, D.C.: Jan. 23, 2004).

[4] U.S. General Accounting Office, Results-Oriented Cultures: 
Implementation Steps to Assist Mergers and Organizational 
Transformations, GAO-03-669 (Washington, D.C.: July 2, 2003).