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Report to the Chairman, Subcommittee on Oversight of Government 
Management, the Federal Workforce, and the District of Columbia, 
Committee on Homeland Security and Governmental Affairs, U.S. Senate: 

December 2005: 

International Trade: 

USTR Would Benefit from Greater Use of Strategic Human Capital 
Management Principles: 

GAO-06-167: 

GAO Highlights: 

Highlights of GAO-06-167, a report to the Chairman, Subcommittee on 
Oversight of Government Management, the Federal Workforce, and the 
District of Columbia, Committee on Homeland Security and Governmental 
Affairs, U.S. Senate: 

Why GAO Did This Study: 

The Office of the U.S. Trade Representative (USTR) has a unique role in 
coordinating trade policy, resolving disagreements, and framing issues 
for presidential decision through an interagency trade policy process. 
In recent years, USTR’s increased workload from numerous new regional 
and bilateral free trade agreement negotiations and a new round of 
multilateral negotiations at the World Trade Organization has raised 
concerns about its human capital strategy. 

GAO examined whether USTR is pursuing an effective human capital 
strategy that supports the ability of its workforce to accomplish its 
mission. Specifically, GAO (1) reviewed USTR’s commitment to strategic 
human capital leadership and planning and (2) analyzed to what extent 
USTR has used human capital tools to address its workforce challenges. 

What GAO Found: 

USTR could benefit from greater use of strategic human capital 
management principles in leadership and planning, considering that its 
small size and interagency trade leadership and coordination role give 
it a unique responsibility to lead the trade agenda. First, USTR has 
not sustained the leadership resources for human capital; for example, 
the top human capital management post has not been filled for over 1½ 
years. Second, USTR has not undertaken formal strategic human capital 
planning to mitigate the risks inherent in its dependency—as a 
“networked organization”—on interagency resources to achieve its 
mission. Therefore, it does not have a method to account for changes in 
other agencies’ resources that might impact its ability to achieve its 
mission. Third, USTR has focused its human capital planning efforts 
primarily on short-term responses to trade negotiating needs identified 
in its 2-year budget planning process; it has not conducted ongoing 
parallel efforts to analyze longer-term workforce needs. 

USTR’s efforts to address its specific workforce challenges could 
benefit from greater use of human capital tools. First, USTR could use 
more of the existing federal human capital flexibilities to better 
tailor its human capital approaches to organizational needs. Although 
the agency has used and benefited from some special hiring and pay 
authorities, such as the use of higher-than-minimum salary offers, it 
has yet to take advantage of others, such as retention bonuses. Second, 
while USTR prides itself on being a results-oriented agency, most USTR 
staff are not subject to agencywide performance expectations linked to 
organizational goals. While managers have stressed the importance of 
certain individual skills needed to advance USTR’s mission, most staff 
are held accountable to a range of expectations that vary among 
offices. 

USTR Leads the Interagency Trade Policy Process: 

[See PDF for image] 

[End of figure] 

What GAO Recommends: 

GAO recommends that the U.S. Trade Representative develop a strategic 
human capital management system addressing the areas of strategic human 
capital leadership, planning, recruitment and retention, and 
performance management. USTR said it shared our general observations 
and recommendations regarding the critical importance of human capital 
planning, but believes it is sufficiently performing these functions. 
Other agencies did not provide comments. 

www.gao.gov/cgi-bin/getrpt?GAO-06-167. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Loren Yager, 202-512-
4347, yagerl@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

USTR Could Benefit from Greater Commitment to Strategic Human Capital 
Principles in Its Human Capital Leadership and Planning: 

USTR Makes Limited Use of Human Capital Tools to Mitigate Risk of 
Workforce Challenges: 

Conclusions: 

Recommendation for Executive Action: 

Agency Comments and Our Evaluation: 

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: USTR Staff Profile: 

Appendix III: Human Capital Flexibilities Available to USTR: 

Appendix IV: Comments from the Office of the U.S. Trade Representative: 

GAO Comments: 

Appendix V: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Active USTR Staff by Office: 

Table 2: Flexibilities Available to USTR that Could Address Recruitment 
Risks: 

Table 3: Flexibilities Available to USTR that Could Address Retention 
Risks: 

Figures: 

Figure 1: USTR Organizational Structure, as of July 5, 2005: 

Figure 2: GAO Model of Strategic Human Capital Management: 

Figure 3: USTR FTEs Authorized and Actual, Fiscal Year 2000 through 
First Half of Fiscal Year 2005: 

Figure 4: Number of USTR Staff by Grade Level: 

Figure 5: Percent of USTR Staff Eligible for Retirement in 5 Years or 
Less: 

Figure 6: USTR Staff Occupation Comparison, Attorneys and Economists: 

Figure 7: USTR Active Detailees, by Year Detail Started: 

Abbreviations: 

APEC: Asia-Pacific Economic Cooperation: 

CAFTA: Central American Free Trade Agreement: 

EOP: Executive Office of the President: 

FTA: Free Trade Agreement: 

FTE: Full-time Equivalent staff: 

ITC: U.S. International Trade Commission: 

OMB: Office of Management and Budget: 

OPM: Office of Personnel Management: 

SES: Senior Executive Service: 

TPRG: Trade Policy Review Group: 

TPSC: Trade Policy Staff Committee: 

USTR: Office of the U.S. Trade Representative: 

WTO: World Trade Organization: 

Letter December 6, 2005: 

The Honorable George V. Voinovich: 
Chairman, Subcommittee on Oversight of Government Management, the 
Federal Workforce, and the District of Columbia: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

Dear Mr. Chairman: 

The Office of the U.S. Trade Representative (USTR) plays the lead role 
in developing U.S. trade policy, negotiating trade agreements, and 
monitoring and enforcing those agreements. It leads and coordinates the 
development and implementation of U.S. trade policy through an 
interagency trade policy process, comprised of 19 federal agencies and 
offices. As such, USTR has a unique role within the trade policy arena 
in terms of providing the leadership and coordination to build the 
consensus and marshal the resources to move the interagency process 
forward to achieve the U.S. trade agenda. 

As a small, cabinet-level office within the Executive Office of the 
President (EOP), USTR has about 200 full-time employees and uses 
temporary detailees from other agencies to supplement its core staff. 
In recent years, USTR's workload has grown as the number and complexity 
of trade agreements has increased, with both ambitious negotiations of 
numerous new regional and bilateral free trade agreements and a new 
round of multilateral negotiations in the World Trade Organization 
(WTO). USTR's extensive interagency leadership responsibilities and 
increasing workload have increased the importance of having a sound 
human capital strategy. 

Similarly, human capital planning has taken on increased importance in 
the public sector in recent years. We have established strategic human 
capital principles and standards in recent years in our Model of 
Strategic Human Capital Management and a large body of work addressing 
specific human capital issues, such as strategic workforce planning. 
The Office of Personnel Management (OPM) has also established its Human 
Capital Assessment and Accountability Framework, which is consistent 
with our model, to provide the basis for executive branch agencies to 
meet the human capital goals set out as the first element in the 
President's Management Agenda. All of this guidance stresses the 
importance of tailoring the approaches to the characteristics of each 
organization, such as size and function. 

To examine whether USTR is pursuing an effective human capital strategy 
that supports the ability of its workforce to accomplish its mission, 
we reviewed its human capital planning and implementation efforts. 
Specifically, we (1) reviewed USTR's commitment to strategic human 
capital leadership and planning and (2) analyzed to what extent USTR 
has used human capital tools to address its workforce challenges. 

To determine USTR's commitment to strategic human capital leadership 
and planning, we reviewed internal planning documents and interviewed 
USTR human resources staff, office managers, and senior management. We 
used GAO's Model of Strategic Human Capital Management as our framework 
to assess USTR's human capital efforts.[Footnote 1] We also discussed 
interagency resource planning with four trade agencies: the Departments 
of State, Commerce, and Agriculture, as well as the U.S. International 
Trade Commission. To determine how USTR has addressed its human capital 
challenges, we interviewed officials at USTR and the four trade 
agencies, as well as trade association representatives and former USTR 
officials. We reviewed USTR human capital data for key human capital 
trends in areas such as staff profile, retirement eligibility, and 
retention challenges. We tested USTR data for reliability by comparing 
them with OPM data and with other USTR human capital documents. We 
determined that these data were sufficiently reliable for the purposes 
of this report. We conducted our work from January 2005 to September 
2005 in accordance with generally accepted government auditing 
standards. 

Results in Brief: 

USTR could benefit from greater use of strategic human capital 
management principles in the areas of leadership and planning, 
considering that its small size and interagency trade leadership and 
coordination role give it a unique responsibility to lead the trade 
agenda. While USTR officials state that their human capital efforts are 
sufficient to accomplish USTR's immediate mission, USTR does not 
demonstrate a commitment to managing its human capital strategically. 
First, USTR has not sustained the leadership resources for human 
capital; for example, the top human capital management post has not 
been filled for over 1½ years. USTR also does not conduct formal 
succession planning to fill critical management positions in a timely 
manner. Second, while USTR performs an interagency leadership and 
coordination mission that it cannot achieve without the participation 
and support of other trade agencies, it has not undertaken strategic 
human capital planning to mitigate the risks inherent in its 
dependency--as a "networked organization"--on interagency resources. 
For example, in recent trade negotiations, other trade agencies 
comprised about 75 percent of the total delegation staff. However, USTR 
does not formally conduct any planning for these critical human capital 
resources at the interagency level and, therefore, does not have a 
method to account for changes in other agencies' resources that might 
impact its ability to achieve its mission. Third, USTR's human capital 
planning efforts have been focused primarily on short-term responses to 
trade negotiating needs identified in its 2-year budget planning 
process; it has not conducted ongoing parallel efforts to analyze the 
organization's longer-term workforce needs. For example, USTR does not 
routinely review senior staff's eligibility for retirement to ensure 
the organization's continued capacity to achieve its mission. Moreover, 
USTR does not maintain the kind of up-to-date information on available 
staff and future human capital needs that would be necessary in 
conducting effective strategic workforce planning, reducing its ability 
to make data-driven human capital decisions. 

USTR's efforts to address its specific workforce challenges could 
benefit from greater use of human capital tools. First, USTR could use 
more of the existing federal human capital flexibilities to better 
tailor its human capital approaches to its organizational needs. 
Although the agency has used and benefited from some special hiring and 
pay authorities, such as the use of higher-than-minimum salary offers, 
it has yet to take advantage of others, such as retention bonuses. 
Second, while USTR prides itself on being a results-oriented agency, it 
could do even better if it linked its individual performance 
expectations to organizational goals. Most USTR staff are not subject 
to agencywide performance expectations linked to organizational goals. 
While managers have stressed the importance of certain individual 
skills needed to advance USTR's mission, most staff are held 
accountable to a range of expectations that vary among offices. 

In this report, we make several recommendations to improve USTR's human 
capital management in the areas of strategic human capital leadership 
and planning, recruiting and retention, and performance management. We 
provided a draft of this report to USTR; the Departments of 
Agriculture, Commerce, and State; and the U.S. International Trade 
Commission. USTR provided written comments, which are reproduced in 
appendix IV. The other agencies did not provide comments. USTR stated 
that it shared our general observations and recommendations regarding 
the critical importance of human capital planning and said it would 
take some of the steps suggested by our report. However, in other 
areas, USTR believes it is sufficiently performing its human capital 
functions. USTR also provided technical comments, which we have 
incorporated where appropriate. 

Background: 

USTR Mission and Organizational Structure: 

USTR is responsible for developing and coordinating U.S. international 
trade, commodity, and direct investment policy and for overseeing trade 
negotiations with other countries. The head of USTR is the U.S. Trade 
Representative, a Cabinet member who serves as the president's 
principal trade advisor, negotiator, and spokesperson on trade issues. 
Through an interagency structure, USTR coordinates trade policy, 
resolves disagreements, and frames issues for presidential decision. 

USTR provides trade policy leadership and negotiating expertise in its 
major areas of responsibility, including the following: 

* Bilateral, regional, and multilateral trade and investment issues; 

* Expansion of market access for U.S. goods and services; 

* International commodity agreements; 

* Negotiations affecting U.S. import policies; 

* Oversight of the Generalized System of Preferences and Section 301 
complaints concerning foreign unfair trade practices; 

* Trade, commodity, and direct investment matters managed by 
international institutions such as the Organization for Economic 
Cooperation and Development and the United Nations Conference on Trade 
and Development; 

* Trade-related intellectual property protection issues; and: 

* WTO issues. 

USTR has offices in Washington, D.C., and Geneva, Switzerland, where 
the WTO is located. The Geneva Deputy USTR is the U.S. Ambassador to 
the WTO and to the United Nations Conference on Trade and Development 
on commodity matters. Figure 1 shows USTR's organizational structure as 
of July 5, 2005. 

Figure 1: USTR Organizational Structure, as of July 5, 2005: 

[See PDF for image] 

[End of figure] 

Interagency Trade Policy Process: 

USTR leads and coordinates the development and implementation of U.S. 
trade policy through an interagency process. It consults with other 
government agencies on trade policy matters through the Trade Policy 
Review Group (TPRG) and the Trade Policy Staff Committee (TPSC). USTR 
administers and chairs these groups, which are composed of 19 federal 
agencies and offices. TPSC is the primary operating group, with 
representation at the senior civil service level. If agreement is not 
reached in TPSC, or if significant policy questions are being 
considered, then issues are taken up by TPRG (Deputy USTR/Under 
Secretary level). The final tier of the interagency trade policy 
mechanism is the National Economic Council, chaired by the President. 
The National Economic Council Deputies' committee considers memorandums 
from TPRG, as well as important or controversial trade-related issues. 
The current administration operates the National Economic Council 
jointly with the National Security Council, according to a senior USTR 
official. 

Strategic Human Capital Management Principles: 

We have developed a Model of Strategic Human Capital 
Management[Footnote 2] to help agency leaders effectively use their 
people, or human capital, and determine how well they integrate human 
capital considerations into daily decision making and planning for the 
program results they seek to achieve. It highlights the importance of a 
sustained commitment by agency leaders to maximize the value of their 
agencies' human capital and manage related risks. 

As shown in figure 2, the model has four human capital cornerstones: 
(1) leadership; (2) strategic human capital planning; (3) acquiring, 
developing, and retaining talent; and (4) results-oriented 
organizational cultures. Each of these cornerstones, in turn, is 
characterized by two critical success factors. 

Figure 2: GAO Model of Strategic Human Capital Management: 

[See PDF for image] 

[End of figure] 

Our human capital model is consistent with similar efforts by the 
Office of Management and Budget (OMB) and OPM to develop federal human 
capital standards. In the summer of 2001, OMB announced the President's 
Management Agenda, designed to address management weakness across the 
government. To this end, the agenda highlighted five governmentwide 
initiatives for management reform. The first of these was the Strategic 
Management of Human Capital Initiative, which is being led by OPM. As 
part of this initiative, in October 2002, OPM released a Human Capital 
Assessment and Accountability Framework that built on its prior 
guidance for workforce planning. OPM has also developed Human Capital 
Standards for Success, which incorporates the GAO model's critical 
success factors.[Footnote 3] 

USTR Could Benefit from Greater Commitment to Strategic Human Capital 
Principles in Its Human Capital Leadership and Planning: 

USTR does not follow key strategic human capital principles in its 
human capital leadership and planning. While USTR officials state that 
their human capital efforts are sufficient to accomplish USTR's 
immediate mission, USTR does not demonstrate a commitment to strategic 
human capital management. First, the commitment of USTR to providing 
the leadership resources of human capital has not been sustained. 
Second, while USTR performs an interagency leadership and coordination 
mission that it cannot achieve without the participation and support of 
other trade agencies, it has not undertaken formal strategic human 
capital planning to mitigate the risks inherent in its dependency on 
interagency resources. Third, USTR's human capital planning efforts 
have been primarily focused on short-term responses to trade 
negotiating needs identified in its 2-year budget planning process; it 
has not conducted ongoing parallel efforts to analyze the 
organization's longer term workforce needs to ensure its continued 
capacity to achieve its mission. 

USTR Does Not Address Human Capital Leadership Strategically Despite 
the Importance of Each Position: 

Despite being the lead U.S. trade agency and having the responsibility 
to coordinate the U.S. government trade agenda, which places a 
significant responsibility on each individual, USTR does not manage 
human capital strategically. USTR's commitment to provide leadership 
resources for human capital has not been sustained. For example, USTR 
does not have the human capital management resources in place to ensure 
that critical human capital management tasks--such as succession 
planning--are carried out, which places its interagency leadership role 
at risk when key vacancies occur within a short period of time. In 
fact, the senior human capital management post has not been filled for 
over 1½ years. USTR has relied on one person to act as senior manager 
for administration, thus assuming all senior human capital and 
administrative duties. 

Although a key element of strategic human capital leadership principles 
is the use of succession planning to ensure a smooth transition of 
knowledge from incumbents to successors to strengthen organizational 
capacity,[Footnote 4] USTR does not conduct formal succession planning. 
Federal agencies that manage succession well do so with active 
leadership support for identifying critical talent throughout the 
organization and linking succession efforts to the agency's overall 
long-term goals.[Footnote 5] Our analysis of USTR's human capital data 
found substantial risk of future leadership and knowledge loss due to 
retirement. Five of 22 senior executive service (SES) staff are 
currently eligible to retire, representing 23 percent of USTR's SES 
staff. Another 4 SES staff are eligible to retire in five years or 
less, for a total of 41 percent either currently eligible to retire or 
eligible in 5 years or less. Along with the SES posts, USTR also faces 
the potential retirement of several experienced trade experts and 
attorneys who also have roles coordinating U.S. trade policy. Just over 
10 percent of GS-15 trade analysts, attorneys, or economists are 
eligible to retire in 5 years or less.[Footnote 6] USTR has not 
undertaken formal succession planning to fill these eventual vacancies, 
even though the staff USTR risks losing to retirement are critical to 
managing the interagency process. Instead, senior managers reexamine 
the staffing balance as vacancies occur, and office managers may look 
for good candidates as replacements from other agencies in the 
interagency process or from the private sector. According to a senior 
manager, USTR receives an occasional list of staff eligible to retire 
in the next year or two from the EOP. However, USTR senior management 
staffing discussions are limited to short-term contingency plans for 
particular posts and are not part of any systematic agencywide 
succession planning effort. Likewise, when office managers look outside 
the agency to find potential USTR staff, their efforts also are not 
part of any formal succession strategy. As we have previously 
reported,[Footnote 7] without careful planning, an organization's 
retirement eligibility rate can suggest that it will experience an 
eventual loss in institutional knowledge, expertise, and leadership 
continuity. Moreover, leading organizations go beyond a succession 
approach that simply replaces individuals. Rather, they instead 
identify and develop successors for leadership and other key positions. 

USTR also faces periodic management transitions, which illustrates the 
risk to its interagency leadership role of facing multiple senior 
vacancies within a short period of time. The turnover in key positions 
that can result from such management transitions is particularly 
critical for a small agency such as USTR, at which each position is 
vitally important and staff are not easily replaced. For instance, a 
recent transition in early 2005 resulted in vacancies of five key posts 
within a 2-month period, including the offices of China Affairs, Europe 
and Mediterranean, and Labor.[Footnote 8] While USTR generally managed 
to fill these positions in a timely manner,[Footnote 9] the risks 
inherent in suddenly having large gaps to fill in the government trade 
leadership underscore the importance of USTR having the human capital 
leadership in place to prepare the agency for transitional vacancies 
with minimal disruption to the interagency trade process. 

USTR Operates as a Networked Organization Performing an Interagency 
Leadership and Coordination Mission, but Without Formal Interagency 
Resource Planning: 

USTR's lack of commitment to strategic human capital principles in its 
human capital leadership and planning also has implications for the 
interagency trade process. USTR is a highly networked 
organization[Footnote 10] that performs an interagency leadership and 
coordination mission. It administers and chairs TPRG and TPSC, which 
make up the subcabinet-level mechanism for developing and coordinating 
U.S. government positions on international trade and trade-related 
investment issues. Supporting TPSC are more than 90 subcommittees 
responsible for specialized areas and several task forces that work on 
particular issues. USTR works with other agencies to carry out its 
mission, including obtaining approval for initiatives in the 
interagency process. Through interviews with current and former USTR 
officials, other trade agency officials, and trade association 
representatives, we found that USTR, a small trade agency that receives 
support from other larger agencies (e.g., Commerce, State, and 
Agriculture) in doing its work, operates more like an elite core staff 
that provides leadership and coordination in working in concert with 
others in the interagency trade policy process. USTR's networked 
operational mode is a defining characteristic. 

In developing trade policy and conducting trade negotiations, the USTR 
office directors (Assistant USTRs) whom we spoke with described working 
with an extended interagency group comprised of other subject experts 
at USTR and at a range of agencies. One Assistant USTR for a geographic 
office described working with a "virtual team" that crossed agency 
boundaries but was instantaneously connected by e-mail. Another 
Assistant USTR stressed that she had also developed a close working 
relationship with embassy staff in her primary countries of interest, 
whom she described as a critical resource. An Assistant USTR for a 
functional office added that USTR was not only interacting with the 
major trade agencies in the interagency process but also on many issues 
with the relevant regulatory agencies in order to gain their 
perspective. One example would be USTR's Agricultural Affairs office 
working not just with the Foreign Agricultural Service at the 
Department of Agriculture but also with the Animal and Plant Health 
Inspection Service for scientific assessment and analysis on 
sanitary/phytosanitary issues such as mad cow disease. 

In explaining how USTR works to marshal interagency support, the 
Assistant USTR for the Americas gave the example of the recently 
concluded Central American Free Trade Agreement (CAFTA), for which she 
had the negotiating lead. She said her negotiating team included 
members of her office staff working with Central American desk officers 
at a range of agencies, such as State and Commerce. However, it also 
included subject experts from other USTR offices, for issues such as 
financial services, agriculture, intellectual property, 
pharmaceuticals, market access, and labor; and they all worked with 
their counterparts at a range of agencies, such as Treasury, 
Agriculture, the Patent and Trademark Office, the Food and Drug 
Administration, Commerce, and Labor, respectively. In addition to their 
interagency interactions, the Office of the Americas also coordinated 
and received input from USTR's private sector advisory committees as 
well as trade associations. 

USTR can operate as a small elite agency precisely because of the 
extensive support it receives from the other trade agencies. This 
support can be characterized as falling into three main categories of 
assistance: 

* Participation in the interagency process--As other trade agencies 
participate in the interagency trade process, their staff contribute to 
the work of the Trade Policy Staff Committee and its approximately 90 
subcommittees. These staff assist in trade policy development in their 
areas of expertise. When USTR forms trade negotiating teams, the USTR 
negotiating lead generally draws the team largely from this core group 
of experts and supplements with others, as necessary. Generally, even 
though USTR has the lead, its staff are a small minority, averaging 
about 24 percent of the total delegation staff.[Footnote 11] 

* Technical assistance--USTR receives extensive technical assistance 
from subject experts at the other agencies through formal and informal 
requests for information. For instance, U.S. International Trade 
Commission staff may provide data analyses on the impact of tariff 
reductions or eliminations in prospective free trade agreements. USDA 
Foreign Agricultural Service staff may provide commodity expertise on 
issues related to Brazilian cotton or Japanese beef, or Health and 
Human Services staff may provide information on pharmaceutical pricing. 

* Detailees - USTR also benefits from temporary staff on detail from 
other agencies that continue to pay their salaries; USTR provides 
office space and travel expenses. This is an important avenue for 
supplementing USTR's core staff with specific subject expertise on a 
temporary basis. For example, as of July 5, 2005, USTR supplemented its 
core staff of 206 permanent employees with 26 detailees in its 
Washington, D.C., office and 9 in its Geneva, Switzerland, office. 

This extensive assistance underlies USTR's ability to operate as a 
networked organization. USTR officials stressed that it would not make 
sense to try to duplicate this expertise within USTR and is unnecessary 
because they can tap governmentwide expertise, when needed, without 
bringing on staff they might not need permanently. USTR only adds core 
staff for the most critical, long-term issues. For example, USTR added 
intellectual property rights staff when it became clear it was a long- 
term issue important to U.S. industry, according to a senior USTR 
official. In addition, USTR also added staff with expertise on labor 
issues in recent years. 

However, USTR does not formally discuss or plan human capital resources 
at the interagency level, even though it must depend on the 
availability of these critical resources to achieve its mission, 
according to USTR officials. Interagency discussions focus on the 
substance of trade policy; USTR does not formally discuss or plan the 
resources needed to implement policies. In two recent reports, we have 
addressed the need for USTR to conduct interagency resource planning 
related to specific trade issues,making specific recommendations for 
improvements.[Footnote 12] Such interagency resource planning would 
also facilitate human capital planning by the other agencies that work 
with USTR. For example, USTR undertakes resource planning when forming 
actual trade negotiating teams rather than at times when this would 
contribute to agency resource planning. USTR officials told us that 
their view is that when agencies reach formal TPRG agreement on a trade 
policy or trade agreement, it carries a commitment by the agencies to 
provide resources. In addition, they said that assisting USTR is a part 
of the other trade agencies' missions to support the U.S. government 
trade agenda. While officials we interviewed at other agencies 
generally agreed with this perspective, some of them also said that 
potential budget cuts could result in fewer resources being available 
for USTR. For example, officials at the Foreign Agricultural Service 
expressed concern that the expanding trade agenda has been a strain on 
its resources, and it was facing serious budget cuts. As a result, 
since USTR does not provide the other agencies with specific resource 
requirements when the agencies are performing their planning, it is 
shifting the risk to the agencies of having to later ensure the 
availability of staff in support of the trade agenda, potentially 
straining their ability to achieve other agency missions. 

A fundamental principle of strategic human capital management is that 
high-performing organizations manage risk based on strategic planning 
supported by reliable and current information. One result of USTR's 
lack of strategic planning for these critical interagency resources is 
that it does not have a systematic method to account for potential 
changes in other agencies' resources that might impact its ability to 
achieve its mission. The absence of this method also affects the other 
agencies' ability to account for changes that could affect their 
ability to provide resources to support the trade agenda. 

USTR Is Not Conducting Ongoing Strategic Human Capital Planning: 

USTR's human capital planning efforts have been focused primarily on 
short-term responses to trade negotiating needs; it has not conducted 
ongoing long-term analyses of its workforce needs. USTR conducts human 
capital planning primarily in its centrally administered annual budget 
process that looks forward 2 fiscal years. For instance, in the summer 
of 2005, USTR planned needed adjustments for the fiscal year 2006 
budget and made projections for fiscal year 2007. The organization 
plans the resources--including staff or funding for travel--it will 
need for specific trade activities in that time frame, whether free 
trade agreement negotiations, WTO meetings, or trade conferences. 

USTR Conducts Short-Term Planning through Its Budget Process: 

Each summer the USTR budget office sends a budget call to the 
negotiation offices and requests a time table of expected expenditures, 
such as negotiations rounds. Support offices review negotiation office 
estimates and complete their own estimates, accordingly. The USTR 
budget office uses the office-level information to compile a total 
budget estimate and set the level of staffing and other budgetary 
allowances across the agency. For instance, when the CAFTA negotiations 
were launched, the Assistant USTR for the Americas--whose office had 
the lead responsibility for the negotiations--estimated what additional 
staff might be needed, how many rounds of negotiations might take place 
over the next 2 fiscal years, and how much money would be needed for 
travel, translations, conferences, or other needed expenses. She also 
indicated the assistance her office would likely need from other 
functional offices (such as Agricultural Affairs or Services, 
Investment, and Intellectual Property) and from staff offices (such as 
General Counsel or Economic Affairs). In turn, these functional and 
staff offices could then also factor this information, as well as the 
requests for assistance from the other geographic offices, into their 
own office planning. In addition, the budget office also monitors the 
need for resources throughout the year through its mid-year adjustment 
reviews, generally in the form of monthly resource checks and quarterly 
revised budget calls. 

USTR Does Not Conduct Ongoing Strategic Workforce Planning: 

While USTR uses its annual budget planning process to meet its short- 
term human capital needs, it has not conducted ongoing parallel efforts 
to analyze the organization's longer term workforce needs. Although 
USTR's human capital planning is directly linked to the organization's 
mission and objectives in the budget process, this is essentially a 
short-term tactical process to meet immediate needs. USTR does not 
conduct ongoing strategic planning or routinely analyze the 
organization's longer term workforce needs, for example, such as 
routinely reviewing eligibility for retirement of senior staff and 
conducting formal succession planning, as discussed above, so that it 
ensures the organization's continued capacity to achieve its mission. 
USTR also does not conduct ongoing analysis of workforce composition 
and skills. (For information related to USTR's staff profile, see app. 
II.) While USTR conducted a workforce analysis required by OMB of all 
executive branch agencies in mid-2001, which incorporated many of these 
elements, it has not followed up on this analysis in a systematic, 
ongoing manner, or used it as the basis for strategic workforce 
planning. 

In addition, USTR management does not maintain the kind of up-to-date 
information on available staff and future human capital needs that 
would be necessary in conducting effective strategic workforce 
planning. USTR's personnel data files are maintained in EOP's Office of 
Administration; USTR itself maintains little human capital data. USTR's 
Office of Administration did not have the internal human capital 
information available that would be required for workforce analyses. 
For instance, it did not have a personnel roster associated with 
information such as employees' retirement eligibility or their specific 
knowledge and skills, such as language ability. 

USTR officials said that USTR is such a small organization that 
managers know the professional and skill backgrounds of the staff, 
therefore such a data system would not be needed. This means that, 
rather than establishing information systems, institutional knowledge 
at USTR depends on individuals. However, as we have previously 
reported, it is crucial that human capital leadership and planning be 
based on a data-driven decision-making process. The absence of such 
data can seriously undermine efforts to identify and respond to current 
and emerging human capital challenges, particularly in a small 
organization where turnover or unfilled positions could quickly deplete 
the institutional memory. 

USTR Makes Limited Use of Human Capital Tools to Mitigate Risk of 
Workforce Challenges: 

USTR does not make full use of available human capital tools, despite 
facing recruitment and retention challenges; and it does not link most 
employees' performance standards with organizational needs. While USTR 
can generally recruit staff with requisite skills, competitive 
pressures and postemployment restrictions on foreign representation 
could place limitations on USTR's ability to hire from the private 
sector. More use of available human capital flexibilities could help to 
better ensure consistent success in recruitment and retention. In 
addition, USTR risks inconsistent attainment of its strategic goals if 
it does not link individual performance expectations to its needs. 

USTR Uses Some Human Capital Tools but Could Benefit from Adding 
Others: 

USTR faces risks from recruitment and retention challenges, which in 
turn could hamper its interagency leadership role. USTR addresses these 
risks in part through limited use of human capital flexibilities, and 
USTR office managers said they do not have difficulties recruiting 
needed staff. However, senior managers said that the recruitment 
environment for staff with critical skills needed for USTR's 
interagency leadership role, such as trade attorneys, is becoming more 
competitive. Not only can people with these skills find higher-paying 
positions outside the federal government, they also face restrictions 
on representing foreign clients after service with USTR, according to 
senior managers. USTR often seeks interagency trade experts for 
recruitment, according to USTR and other trade agency 
management.[Footnote 13] Other trade agency officials have confirmed 
that USTR targets their high-performing staff and that several current 
USTR employees were hired from their agencies. However, USTR has 
benefited from the hiring flexibility to hire private sector attorneys 
at a "higher-than-minimum step," which, according to a senior manager 
in USTR's Office of General Counsel, helps attract experienced private 
sector attorneys who may be reluctant to start federal service at the 
minimum pay step. USTR also uses its authority to hire and pay 
administratively determined positions without regard to the civil 
service laws, but this authority restricts the agency to 20 such 
positions.[Footnote 14] 

USTR does not take advantage of other available human capital 
flexibilities, most of which are expanded and more targeted versions of 
those it now uses. As we have previously reported, hiring flexibilities 
could help agencies in expediting and controlling their hiring 
processes.[Footnote 15] Moreover, insufficient and ineffective use of 
flexibilities can significantly hinder the ability of federal agencies 
to recruit, hire, retain, and manage their human capital.[Footnote 16] 
Examples of expanded human capital flexibilities for which USTR has 
authority, but does not use, include the following: 

* Expanded direct hire authority, which would streamline hiring for 
critical needs, such as trade experts; 

* Recruitment and retention authorities, both of which would allow USTR 
to offer bonuses of 25 to 50 percent for new hires and highly qualified 
employees; and: 

* Enhanced annual leave authority, which would allow nonfederal staff, 
such as private sector attorneys, to enter federal service with higher- 
than-minimum annual leave rates. 

See appendix III for a more detailed description of federal human 
capital flexibilities available to USTR. 

Closely aligned with USTR's recruiting efforts is how well it can 
retain staff, but USTR's efforts to minimize its retention risks have 
also been limited. Retention concerns are especially relevant given 
that, according to senior officials, USTR employees have highly 
marketable skills. In addition, USTR staff have an important role in 
leading and coordinating the interagency trade policy process. To 
illustrate the potential for retention risks, from March 2000 through 
March 2005, 158 USTR employees separated from the agency, according to 
our calculations of EOP data.[Footnote 17] USTR has also experienced 
turnover among its recently hired staff during this time period. For 
instance, 25 professional staff (defined in this report as GS-13 
through SES staff) hired in the last 5 years have already left USTR. 
While USTR is in the process of taking steps to increase compensation 
for senior executives to help keep pay competitive, which would allow 
for bonuses of 5 to 20 percent, officials could not provide a specific 
time frame for implementation. In addition, a senior USTR official told 
us that the loss of senior GS-level trade experts can create a loss of 
institutional knowledge. According to a Commerce official, familiarity 
with the details of negotiated agreements is critical for subsequent 
enforcement of trade agreements. Finally, USTR has had challenges 
retaining security administrators (e.g., three of five hired in the 
past 5 years have left).[Footnote 18] 

USTR Does Not Link All Staff Performance Appraisals to Agency Goals: 

USTR does not link the performance of most of its staff to agencywide 
goals, risking the loss of consistency in its implementation of agency 
goals, even though USTR's small size and leadership role mean that all 
employees have a critical role in maintaining the agency's trade policy 
coordination mission. Only SES staff, making up just over 10 percent of 
USTR employees, are subject to agencywide performance competencies. In 
addition, attorneys in the Office of General Counsel and its Monitoring 
and Enforcement Unit have performance competencies that are linked to 
agency goals, accounting for another 12 percent of staff. USTR managers 
have stressed the importance of certain individual skills needed to 
advance USTR's mission, such as the ability to effectively interact 
within the interagency trade policy framework. However, USTR employees 
not subject to agencywide standards are instead held accountable for a 
range of expectations that vary among USTR offices according to 
specific assignments. As we have previously reported,[Footnote 19] 
linking performance expectations to organizational goals is important 
because strategic goals should guide job responsibilities. In this way, 
an agency can ensure that staff performance supports agency goals. 
Moreover, high-performing organizations use their performance 
management systems to help provide continuity during transition by 
maintaining a consistent focus on a broad set of mission priorities. In 
USTR's case, without a performance management system that ties 
individual performance to USTR's goals, it does not have a mechanism to 
translate its strategic goals into individual performance. Without 
agencywide goals, USTR is at risk of having its mission guided by 
office-level goals, which would not be conducive to meeting agency 
goals, given that USTR has over 15 separate mission-related offices. In 
addition, USTR could help mitigate the potentially disruptive effects 
of periodic management transitions, such as it experienced this year, 
with a concrete set of performance expectations that guide staff 
performance throughout such periods and ensure consistency in mission 
priorities. 

Conclusions: 

USTR needs to place more emphasis on strategic human capital 
principles, otherwise it leaves itself open to human capital risks that 
could otherwise be mitigated. While USTR often cites its small size as 
a reason it can afford to sidestep requirements that are often applied 
to larger bureaucracies, in the case of human capital management, it is 
precisely because every individual is important that effective human 
capital leadership is critical. Yet our review has found that USTR is 
focused on achieving trade results but has overlooked the substantial 
additional value it could gain from strategic human capital management. 
For example, without a senior manager acting as its chief human capital 
officer, USTR cannot ensure that critical human capital leadership 
tasks, such as succession planning, are accomplished in a way that 
maximizes USTR's ability to achieve its mission with minimal risk of 
interagency disruption due to management transitions. Given the number 
of SES staff who will be eligible to retire within the next 5 years, it 
is important that USTR address these issues strategically rather than 
reactively. Further, although USTR seems to be making effective use of 
its networked structure to marshal the relevant expertise across the 
government in support of the trade agenda, it has not taken additional 
steps to mitigate the risk inherent in its dependency on interagency 
resources. Without a method to plan interagency resources devoted to 
the trade agenda, USTR has no way to account for potential changes in 
other agencies' resources. Given the prospect of a tightening federal 
budget environment, lack of a formal interagency resource planning 
method means USTR is in no position to evaluate how budget reductions 
could impact USTR's ability to achieve its mission. In addition, USTR 
has not conducted ongoing strategic human capital planning for its own 
longer-term organizational workforce needs and does not maintain the 
information systems required for such analysis. While USTR primarily 
uses its 2-year budget planning process to focus its human capital 
planning efforts, this approach limits it to planning how it can best 
achieve its trade mission with the resources available to it in the 
short term. USTR has not taken steps to strategically identify and 
respond to current and emerging human capital risks in its workforce. 
As a result, by not conducting ongoing strategic workforce planning, 
USTR is opening itself up to human capital risks that it could be 
taking steps to mitigate. 

USTR could also better meet some of its key workforce challenges by 
making better use of available human capital tools. In an increasingly 
competitive recruitment environment, USTR could benefit from using the 
additional hiring and pay flexibilities available to it. In addition, 
USTR has not ensured that its performance standards support its 
organizational goals by extending agencywide performance criteria to 
its entire staff. As a result, USTR is missing an opportunity to 
translate its strategic goals into individual performance. 

Recommendation for Executive Action: 

To improve USTR's human capital management, we recommend that the U.S. 
Trade Representative develop a strategic human capital management 
system. The system should include the following elements, tailored to 
its small size and unique role: 

* filling its senior human capital management positions with human 
capital professionals who will significantly contribute to strategic 
planning and decision making, 

* developing an interagency resource planning method with appropriate 
participation from key agency stakeholders, 

* undertaking strategic workforce planning in order to optimize its 
workforce's continued capacity to achieve its mission, 

* improving its ability to utilize data for measuring the effectiveness 
of human capital approaches in support of its mission and goals, 

* determining if additional use of available pay and hiring 
flexibilities would better position USTR to hire and retain experts, 
and: 

* developing agencywide performance criteria for staff to align 
management expectations with critical organizational goals. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to USTR; the Departments of 
Agriculture, Commerce, and State; and the U.S. International Trade 
Commission. USTR provided written comments, which are reproduced in 
appendix IV. The other agencies did not provide comments. 

USTR stated that the insights provided by our study were a valuable 
contribution to its ongoing internal efforts to effectively manage its 
human capital. USTR said it shared our general observations and 
recommendations regarding the critical role of human capital planning. 
USTR also noted that it (1) has recently hired a new Assistant U.S. 
Trade Representative for Administration, (2) will examine the 
additional human capital flexibilities available to it, and (3) is 
committed to linking performance evaluations to its strategic planning. 

USTR stated that it believed we had not adequately factored into our 
analysis how it had tailored its human capital planning to its size and 
networked organizational structure. While we have modified our report 
language in several places to clarify our discussion of USTR's human 
capital planning, we do not agree, however, that USTR's human capital 
planning activities, which primarily focus on meeting short-term 
negotiating needs, have to this point demonstrated a commitment to long-
term strategic human capital planning. 

USTR also stated that our report suggests that it should extend its 
interagency coordinating role to formally overseeing the human capital 
planning activities of these agencies. Our recommendation that USTR 
develop an interagency resource planning method with appropriate 
participation from key agency stakeholders is not intended to suggest 
that USTR should formally oversee the human capital planning activities 
of the agencies involved, but rather envisions an extension of USTR's 
interagency coordination role to better anticipate and plan resource 
needs devoted to the U.S. trade agenda. This recommendation is 
consistent with several of our recent reports. 

USTR also provided technical comments, which we have incorporated where 
appropriate. 

As agreed with your office, unless you publicly announce its contents 
earlier, we plan no further distribution of this report until 30 days 
from the date of its issuance. At that time, we will send copies of 
this report to appropriate congressional committees. We will also send 
copies to the U.S. Trade Representative, the Secretaries of 
Agriculture, Commerce, and State, and the Chairman of the U.S. 
International Trade Commission. We will also make copies available to 
others upon request. In addition, this report will be available at no 
charge on the GAO Web site at [Hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-4347 or [Hyperlink, yagerl@gao.gov]. Contact 
points for our Offices of Congressional Relations and Public Affairs 
may be found on the last page of this report. GAO staff who made major 
contributions to this report are listed in appendix V. 

Sincerely yours, 

Signed by:  

Loren Yager: 
Director, International Affairs and Trade: 

[End of section] 

Appendixes: 

Appendix I: Objectives, Scope, and Methodology: 

To determine whether the Office of the U.S. Trade Representative (USTR) 
is pursuing an effective human capital strategy that adequately 
supports the ability of its workforce to accomplish its mission, we 
reviewed its human capital planning and implementation efforts and 
compared them with U.S. government best practices. We used our Model of 
Strategic Human Capital Management as the framework in assessing USTR's 
human capital efforts. Specifically, we (1) reviewed USTR's commitment 
to strategic human capital leadership and planning and (2) analyzed to 
what extent USTR has used human capital tools to address its workforce 
challenges. 

To determine USTR's commitment to strategic human capital leadership 
and planning, we reviewed USTR's available human capital planning 
documents, including annual performance planning required by the 
Government Performance Results Act for the past 5 years, the most 
recent annual USTR budget call, and agency budget justifications for 
the past 5 years. We also reviewed Office of Personnel Management (OPM) 
and Office of Management and Budget (OMB) human capital guidance and 
our previous human capital reports to determine how government best 
practices could be best applied to USTR. We augmented our documentation 
review with interviews with USTR human resources staff, office 
managers, and senior management at the Washington, D.C., and Geneva, 
Switzerland, offices. We spoke with the Geneva senior manager by 
telephone. We further discussed interagency planning and commitment of 
resources with officials of four trade agencies: the Departments of 
State, Commerce, and Agriculture, as well as the U.S. International 
Trade Commission (ITC). 

To determine to what extent USTR has used human capital tools to 
address its workforce challenges, we obtained USTR human capital data 
from the Executive Office of the President (EOP) for key human capital 
trends, such as retirement eligibility, time in service, and dates of 
separation. We also reviewed these data for certain routine human 
capital categories to better understand the agency's overall staff 
profile, such as office level and aggregate staffing levels, grade 
levels, and occupation types. Finally, we used these data to determine 
the extent to which USTR fills its job announcements, as well as the 
number of staff who received training. We tested USTR data for 
reliability by comparing them with OPM data from the central personnel 
data file and with USTR organizational documents. We determined that 
these data were sufficiently reliable for the purposes of this report. 
We used USTR's pending senior executive service (SES) performance 
management guidance as part of our review of the agency's efforts to 
address performance management. Along with the data review, we 
interviewed office managers and senior management officials at USTR to 
determine the workforce challenges they faced and how they were 
addressing those challenges. We also met with officials from the 
Departments of State, Commerce, Agriculture, and ITC, as well as with 
trade association representatives and former USTR officials, to get 
their perspectives on USTR's workforce challenges. Finally, to 
determine which human capital flexibilities USTR was eligible for, and 
which could benefit USTR, we reviewed existing human capital statutes. 
We compared these statutory authorities with those that USTR currently 
uses, accounting for workforce challenges identified through USTR human 
capital data obtained from EOP and interviews. We conducted our work 
from January 2005 to September 2005 in accordance with generally 
accepted government auditing standards. 

[End of section] 

Appendix II: USTR Staff Profile: 

EOP provided us with recent USTR human capital data. We analyzed data 
in the following categories: (1) active staff, by office; (2) 
agencywide, full-time equivalent staff (FTE) over recent years; (3) 
grades; (4) retirement eligibility; (5) length of service; (6) 
occupations;[Footnote 20] (7) active detailees; (8) position 
announcement fill rates; and (9) training.[Footnote 21] 

These data spanned 5 years, from January 2000 to April 2005, with the 
exception of detailees, the reliability of which was limited to active 
detailees; position announcements, available back to March 2003; and 
training data, which USTR could only provide back to May 2001, but up 
to June 2005. 

Active USTR Staff by Office: 

As of April 2005,[Footnote 22] USTR had 212 active staff. USTR offices 
average about 8 staff, but some, such as Administration, have over 20 
while others, such South Asia, Labor, and Trade Capacity, have 2 staff 
each. SES or political appointees head most offices. Exceptions include 
one office that is headed by a staff member under special hiring 
authority and another office headed by a staff member at the GS-15 
level. The South Asia and the Europe and Mediterranean offices are both 
currently headed by temporary detailees. 

Table 1: Active USTR Staff by Office: 

Office: Office of the Ambassador; 
Active staff: 4. 

Office: Deputies[A]; 
Active staff: 7. 

Office: Geneva; 
Active staff: 13. 

Office: Chief Agriculture Negotiator; 
Active staff: 2. 

Office: Administration; 
Active staff: 21. 

Office: Agriculture; 
Active staff: 8. 

Office: Africa; 
Active staff: 6. 

Office: China Affairs; 
Active staff: 9. 

Office: Congressional Affairs; 
Active staff: 3. 

Office: Economic Affairs; 
Active staff: 4. 

Office: Environment and Natural Resources; 
Active staff: 7. 

Office: Europe and Mediterranean; 
Active staff: 11. 

Office: General Counsel; 
Active staff: 13. 

Office: Monitoring and Enforcement[B]; 
Active staff: 17. 

Office: Industry, Market Access, and Telecommunications; 
Active staff: 12. 

Office: Intergovernmental Affairs and Public Liaison; 
Active staff: 4. 

Office: Japan, Korea, and APEC[C]; 
Active staff: 6. 

Office: Labor; 
Active staff: 2. 

Office: Policy Coordination and Information; 
Active staff: 5. 

Office: Public Media Affairs; 
Active staff: 3. 

Office: SE Asia and the Pacific; 
Active staff: 5. 

Office: Services, Investment, and Intellectual Property[D]; 
Active staff: 16. 

Office: Special Textile Negotiator; 
Active staff: 4. 

Office: South Asia Affairs; 
Active staff: 2. 

Office: The Americas; 
Active staff: 13. 

Office: Trade Capacity Building; 
Active staff: 2. 

Office: WTO and Multilateral Affairs; 
Active staff: 13. 

Office: Total; 
Active staff: 212. 

Source: GAO analysis of EOP data. 

Note: Active staff as of April 2005, not including temporary detailees 
from other agencies. 

[A] Deputies includes both Washington, D.C.-based deputy offices. 

[B] The Monitoring and Enforcement Unit is part of the Office of 
General Counsel. 

[C] APEC is Asia-Pacific Economic Cooperation. 

[D] Since we received these data, the Services, Investment, and 
Intellectual Property office has been reorganized into a Services 
office and an Intellectual Property office, both headed by GS-15 level 
staff acting as office heads. 

[End of table] 

USTR Agencywide FTEs in Recent Years: 

USTR's use of FTEs has been guided by the number Congress has 
authorized.[Footnote 23] USTR's FTE authorization has increased over 
the past 5 years, from 185 in fiscal year 2000 to 225 in fiscal years 
2004 and 2005. In those years, USTR has actually used 171 FTEs in 
fiscal year 2000 and 212 FTEs by fiscal year 2005, as shown in figure 
3. While there was a slight decrease in FTEs used between fiscal years 
2001 and 2002, the number of FTEs USTR has used has risen steadily, 
along with its authorization. However, as of the middle of fiscal year 
2005, the number of FTEs used has not changed significantly from fiscal 
year 2004. 

Figure 3: USTR FTEs Authorized and Actual, Fiscal Year 2000 through 
First Half of Fiscal Year 2005: 

[See PDF for image] 

Note: Actual FTEs are 4th quarter data except for fiscal year 2005, 
which are 2nd quarter data. 

[End of figure] 

Grades: 

USTR's interagency leadership role is evident in its high number of 
middle and senior grade levels. About half of USTR career staff are at 
the GS-15 level,[Footnote 24] about one-sixth are GS-13 and GS-14 
levels, and slightly over one-tenth are SES level. Another fifth of 
USTR personnel are GS-12 and below, which are primarily support staff. 

Figure 4: Number of USTR Staff by Grade Level: 

[See PDF for image] 

Note: Does not include 13 special employees, including presidential 
appointees or student employees and those classified under special 
hiring authority. 

[End of figure] 

Retirement Eligibility: 

About 18 percent of all USTR staff are eligible for retirement within 
the next 5 years. Within individual grades, political appointees and 
SES have the highest percent of staff who are eligible for retirement. 
Among other grades, the GS-15 level, made up mostly of trade analysts 
and attorneys, make up the bulk of USTR staff and have one of the 
lowest percent of staff eligible for retirement within the next 5 years 
or less. (See fig. 5.) 

Figure 5: Percent of USTR Staff Eligible for Retirement in 5 Years or 
Less: 

[See PDF for image] 

Note: Does not show political appointees or those classified under 
special hiring authority. 

[End of figure] 

Length of Service: 

The median length of agency service at USTR for active staff is just 
under 4 years. About 30 percent of active staff have been at the agency 
for less than 2 years. However, given USTR's interagency ties, some 
USTR staff have longer experience within the interagency structure 
through service with other trade agencies. 

Occupations: 

According to information from OPM's central personnel data file, most 
USTR FTEs are classified as miscellaneous administration and program 
occupation. This particular occupation reflects the overall FTE gains 
at USTR in the past 5 years. However, certain occupations, such as 
economists, attorneys, and support staff, illustrate different trends. 
For instance, in the past 10 years, the number of attorneys has 
increased substantially, from 18 to 45, or 150 percent, as USTR has 
added attorneys to address an increased litigation caseload (see fig. 
6). However, during that same time period, the number of economists 
decreased from 46 to 17, a decrease of about 63 percent. From fiscal 
year 2000 through 2004, support occupations such as clerks and 
secretaries also decreased. USTR officials told us that as agency 
functions have become more automated, the need for previous numbers of 
support staff decreased. 

Figure 6: USTR Staff Occupation Comparison, Attorneys and Economists: 

[See PDF for image] 

[End of figure] 

Active Detailees: 

USTR had 30 active temporary detailees from other trade agencies, as of 
April 2005.[Footnote 25] USTR has a formal detailee program with the 
Department of State, and less formal agreements with other trade 
agencies, such as the U.S. International Trade Commission, Agriculture, 
and Commerce. However, USTR also currently uses temporary detailees 
from a variety of other agencies and entities, including the 
Congressional Research Service, the Central Intelligence Agency, the 
Small Business Administration, and the White House. 

Out of the 30 temporary detailees assigned to USTR, most began service 
in 2004, as shown in figure 7. However, several current detailees were 
assigned to USTR before 2003, and 1 active detailee, from USDA, has 
been at the USTR Washington, D.C., office longer than 5 years, 
according to data from EOP. 

Figure 7: USTR Active Detailees, by Year Detail Started: 

[See PDF for image] 

Notes: As of April 2005; includes 7 detailees assigned to Geneva, 4 of 
whom started in 2002 or before. 

[End of figure] 

USTR Job Announcements: 

Most job announcements that USTR has advertised in recent years have 
been filled, according to EOP data. Of 79 USTR announcements EOP posted 
from October 2002 through March 2005, 45 announcements, or 57 percent, 
were filled. Of the job announcements USTR did not fill, most were 
trade analysts or support staff and Information Technology positions, 
but three unfilled positions were attorney slots, and four were budget 
or human resources positions. USTR did not fill one senior human 
capital position, Assistant USTR for Administration, in Spring 2004, 
and that position remains unfilled as of October 1, 2005. 

A USTR human resources official told us that the reason the agency does 
not fill certain announcements may vary. For instance, the agency may 
decide to pull announcements before they are filled, announcements may 
not receive qualified applications, or job offers may not be accepted. 
If a job announcement was not filled, USTR might post it again under a 
separate announcement. As a result, according to the USTR human 
resources official, USTR's data did not allow us to identify that 
multiple announcements had been made for a specific job and to link 
them to the position being filled on a specific date. 

Training: 

USTR employees do not receive very much formal training. In a 4-year 
period from May 2001 to June 2005, 51 USTR staff took part in 76 
training courses, according to USTR human resource data. A little over 
80 percent of the courses USTR staff received were mission related; the 
rest were for personal enrichment, such as retirement seminars. Most 
staff who received training were GS-12 and under, and GS-15 levels. 
USTR staff from the offices of Administration, Americas, Agriculture 
Affairs, and Environment and Natural Resources received the most 
mission-related training over the 4-year period, while staff from other 
offices, such as Services, Investment, and Intellectual Property, South 
East Asia and the Pacific, and Europe and Mediterranean, received no 
mission-related training. 

[End of section] 

Appendix III: Human Capital Flexibilities Available to USTR: 

USTR is eligible to use a variety of human capital flexibilities to 
address its risk of future workforce challenges. Tables 2 and 3 show 
specific authorities that USTR is eligible to use that could address 
its recruitment and retention challenges. 

Table 2: Flexibilities Available to USTR that Could Address Recruitment 
Risks: 

Authority: Direct Hire Authority; 
Statutory basis: Homeland Security Act of 2002 [P.L. 107-296, § 1312]. 
Found at 5 U.S.C. § 3304(a)(3); 
OPM regulations: 5 C.F.R. §§ 337.201-337.206; 
Description: Authority to directly hire employees (without using the 
competitive service process) for positions for which OPM has determined 
there is a critical hiring need or a severe shortage of candidates. 

Authority: Recruitment and Relocation Bonus Authority; 
Statutory basis: Federal Workforce Flexibility Act of 2004 [P.L. 108-
411, § 101]. Found at 5 U.S.C. § 5753; 
OPM regulations: 70 F.R. 25732 (Interim rule); 
Description: Expanded authority to pay bonuses to a new hire or a 
current employee moving to a new position or geographic location of up 
to 25 percent of base pay multiplied by the years the employee has 
agreed to serve in a written service agreement. OPM may authorize up to 
50 percent of base pay if there is a critical agency need. 

Authority: Enhanced Annual Leave Authority; 
Statutory basis: Federal Workforce Flexibility Act of 2004 [P.L. 108-
411, § 202]. Found at 5 U.S.C. § 6303(e); 
OPM regulations: 70 F.R. 22245 (Interim rule); 
Description: Authority to credit relevant nonfederal service for 
purposes of determining annual leave accrual rates if an agency 
determines it is necessary for its mission or a performance goal. 

Source: GAO analysis of human capital statute. 

[End of table] 

Table 3: Flexibilities Available to USTR that Could Address Retention 
Risks: 

Authority: Retention Bonus Authority; 
Statutory basis: Federal Workforce Flexibility Act of 2004 [P.L. 108-
411, § 101]. Found at 5 U.S.C. § 5754; 
OPM regulations: 70 F.R. 25732 (Interim rule); 
Description: Expanded authority to pay bonuses to employees with 
unusually high or unique qualifications or to a group of employees if 
there is a high risk that a significant portion would likely leave. The 
bonus may be up to 25 percent of basic pay (50 percent for a critical 
agency need with OPM approval) or 10 percent for a group of employees 
and is subject to a written service agreement. 

Authority: Senior Executive Service Compensation Increase[A]; 
Statutory basis: Homeland Security Act of 2002 [P.L. 107-296, § 1322]; 
FY04 Defense Authorization Act [P.L. 108-136, § 1125]. Found at 5 
U.S.C. §§ 5307(d), 5382(b); 
OPM regulations: 5 C.F.R. §§ 430.401- 430.405, 530.203, 534.403; 
Description: Increased maximum rate of base pay for the SES to 
Executive Schedule Level II and increased cap on total annual 
compensation (base salary plus bonuses, awards, etc.) to the Vice 
President's salary for agencies certified by OPM and OMB as having a 
performance appraisal system which makes meaningful distinctions based 
on relative performance. 

Source: GAO analysis of human capital statute. 

[A] USTR officials told us they are planning to eventually implement 
this flexibility, but they do not have a specific time frame. 

[End of table] 

[End of section] 

Appendix IV: Comments from the Office of the U.S. Trade Representative: 

EXECUTIVE OFFICE OF THE PRESIDENT: 
OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE: 
WASHINGTON, D.C. 20508: 

November 10, 2005: 

Mr. Loren Yager: 
Director, International Affairs and Trade Issues: 
U.S. Government and Accountability Office: 
Washington, D.C. 20548: 

Dear Mr. Yager: 

Thank you for the opportunity to submit comments from the Office of the 
United States Trade Representative (USTR) on the draft Government 
Accountability Office (GAO) report regarding USTR's human capital 
planning and practices. According to the draft, the GAO conducted the 
study to examine whether USTR is pursuing an effective human capital 
strategy that supports the ability of its workforce to accomplish its 
mission. 

As GAO recognizes in its draft, USTR has a unique role in developing 
trade policy, resolving disagreements, and coordinating trade-related 
issues for presidential consideration through an interagency trade 
policy process. As a result, GAO, over the course of its nine-month 
study, went to great lengths to examine and understand all of the 
dimensions of that unique role, conducting over 30 hours of interviews 
with senior USTR managers and examining in exhaustive detail the 
extensive information supplied by USTR in response to requests from GAO 
staff. USTR dedicated all of the resources necessary to respond to this 
extensive investigation so as to ensure that GAO could properly 
evaluate the implications of its efforts with as complete an 
understanding as possible about USTR and its staff. 

USTR agrees with GAO that its human capital is the agency's single 
greatest asset. As such, we invest more resources in our people than 
any other area. Ambassador Portman fully appreciates the direct 
correlation between the performance of USTR's staff and the ability of 
USTR to accomplish its mission. That imperative dictates that the 
agency carefully consider how to most effectively manage its human 
capital to advance its mission. We view the insights provided by this 
GAO study as a valuable contribution to that ongoing internal effort. 
However, we are disappointed that the GAO report fails to adequately 
recognize USTR's integration of human capital planning and development 
into the accomplishment of its mission. 

The Proper Model: GAO uses the framework it created in its Model of 
Strategic Human Capital Management as the template against which it 
evaluated all components of existing USTR human capital policies, 
efforts, and successes. The report notes that the Office of Personnel 
Management (OPM) and the Office of Management and Budget (OMB) have 
also developed federal human capital standards. What we believe GAO 
failed to adequately factor into its analysis is that all of these 
models recognize one key principle: each human capital plan must be 
tailored to the mission, characteristics, and workforce of each agency. 

USTR does its human capital planning in an integrated fashion which is 
tailored to its size and tightly networked organizational structure. 
USTR engages its detailee program and the interagency process to 
develop and identify potential future employees. USTR staff work 
closely with negotiating teams from other agencies and through their 
work together develop and build relationships with colleagues who may 
join USTR in the future. As we explained in several interviews, we 
develop talent within USTR on an employee by employee basis by 
assigning employees greater responsibilities as they demonstrate 
greater abilities. Finally, we integrate human capital planning into 
our strategic planning two year budget cycle as well as through the 5- 
year workforce analysis reports we provide OMB. We believe our 
tremendous results in accomplishing our mission speak to the success of 
our planning. 

Interagency Human Capital Planning: The GAO report suggests that USTR 
should extend its coordinating role through the interagency trade 
policy process to formally overseeing the human capital planning 
activities of the agencies with whom we coordinate. The interagency 
process is very robust in the trade area. That process includes 
establishing long-range strategic priorities through sharing strategic 
plans. As explained in the interviews, USTR is in continuous discussion 
with the other agencies. These discussions cover support, human 
capital, and resources needs for each agreement and all aspects of the 
U.S. Trade Agenda. In addition, our interagency colleagues each have a 
trade component within their own respective agency missions. As such, 
we work together to advance the U.S. Trade Agenda and accomplish our 
missions together. 

Commitment Moving Forward: We share GAO's general observations and 
recommendations regarding the critical importance of human capital 
planning. USTR has recently hired a new Assistant United States Trade 
Representative for Administration - retired Rear Admiral Fred Ames who 
has extensive experience with human capital development. He is a 
critical addition to our staff and will contribute greatly to our 
ongoing human capital planning efforts. 

USTR's human capital is its most valuable asset, and we are constantly 
looking for new and more effective ways to reward, retain, recruit, and 
recognize the efforts of our staff. As the GAO report acknowledges, 
USTR has adopted a number of workforce flexibilities. Based on our 
conversations with the GAO, and our own internal discussions, we are 
committed to examine each of the flexibilities available to USTR and to 
take advantage of those that might strengthen our human capital and 
advance our mission. We are also committed to linking performance 
evaluations to our strategic planning to better develop and improve our 
workforce. 

USTR's reputation and success arise from the quality of our staff, and 
Ambassador Portman is committed to examining and adapting our human 
capital planning to best serve our staff and advance our mission. 

Thank you for the opportunity to give our perspectives on your report. 

Sincerely, 

Signed by: 

Rob Lehman: 
Chief of Staff: 

The following are GAO's comments on USTR's letter dated November 10, 
2005. 

GAO Comments: 

1. We agree that human capital planning must be tailored to the mission 
and characteristics of each agency and, in fact, had stressed this 
critical idea at several points in the report, including the 
recommendations. We acknowledge the steps USTR has taken in its human 
capital planning and have added clarifications where appropriate to 
further reflect USTR's human capital planning activities and actions. 
However, we do not believe that these steps demonstrate a commitment to 
long-term strategic human capital planning. USTR's human capital 
planning focuses primarily on short-term responses to trade negotiating 
needs identified through the budget process, such as shifting staff and 
resources to meet the increased needs associated with particular trade 
negotiations. This kind of planning, while valuable, is not the same as 
strategic, ongoing analysis and planning for long-term agencywide 
workforce needs, such as retirement eligibility of senior staff or 
changing workforce composition and skills needs. Further, while at the 
conclusion of our study USTR provided us with a 5-year workforce 
analysis it had been required to conduct in 2001 by OMB, it was not 
able to show us that it had used this analysis in an ongoing manner as 
the basis of strategic workforce planning. 

2. Our recommendation to USTR to conduct formal interagency resource 
planning is consistent with several of our recent reports that came to 
the same basic conclusion. We do not state that USTR should formally 
oversee the human capital planning activities of the agencies involved. 
Rather, we said that USTR should mitigate the risks inherent in its 
dependency on interagency resources by developing an interagency 
resource planning method with appropriate participation from key agency 
stakeholders. This would envision an extension of USTR's coordination 
role, not increased oversight over agency human capital planning 
activities. 

[End of section] 

Appendix V: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Loren Yager, (202) 512-4347: 

Staff Acknowledgments: 

In addition, Anthony Moran, Assistant Director; as well as Leyla Kazaz; 
Donald Morrison; and Paul Revesz made key contributions to this report. 
Other contributors include Martin DeAlteriis, William Doherty, Etana 
Finkler, Ernie Jackson, Jeffrey McDermott, Jamie McDonald, Lisa Shames, 
Sarah Veale, Michael Volpe, and Gregory Wilmoth. 

(320304): 

FOOTNOTES 

[1] GAO, A Model of Strategic Human Capital Management, GAO-02-373SP 
(Washington, D.C.: Mar. 15, 2002). 

[2] GAO, A Model of Strategic Human Capital Management, GAO-02-373SP 
(Washington, D.C.: Mar. 15, 2002). See also, GAO, Human Capital: Key 
Principles for Effective Strategic Workforce Planning, GAO-04-39 
(Washington, D.C.: Dec. 11, 2003). 

[3] OPM's Human Capital Assessment and Accountability Framework and 
Human Capital Standards for Success can be found at its Web site at 
www.opm.gov. OPM's Web site also provides a link to the President's 
Management Agenda and the Strategic Management of Human Capital 
Initiative, or this document can be accessed through OMB's Web site at 
www.whitehouse.gov/omb. 

[4] GAO, Human Capital Succession Planning and Management Is Critical 
Driver of Organizational Transformation, GAO-04-127T (Washington, D.C.: 
Oct. 1, 2003); GAO, Human Capital: Selected Agencies Have Opportunities 
to Enhance Existing Succession Planning and Management Efforts, GAO-05-
585 (Washington, D.C.: June 30, 2005). 

[5] GAO-04-127T. 

[6] About half of USTR career staff are at the GS-15 level. For more 
information on USTR grade distribution, see appendix II. 

[7] GAO, Results-Oriented Cultures: Creating a Clear Linkage between 
Individual Performance and Organizational Success, GAO-03-488 
(Washington, D.C.: Mar. 14, 2003.); GAO-04-127T. 

[8] In addition, in a 6-month period, USTR had vacancies for General 
Counsel, as well as chief of staff and three presidential appointments 
requiring Senate confirmation. 

[9] USTR filled the Europe and Mediterranean office vacancy with a 
temporary detailee from the Department of State. 

[10] There are various types of network structures ranging from 
coordination and collaboration to high-performing partnerships, which 
can involve federal agencies, state and local governments, and 
nongovernmental organizations to achieve a particular outcome or 
result. Recently, there has been an increased focus on the role of 
networks in public sector governance, in studies by Stephen Goldsmith 
and William Eggers (Goldsmith, Stephen and Eggers, William D., 
Governing by Network: The New Shape of the Public Sector, Brookings 
Institution Press (Washington, D.C.: 2004)); the IBM Center for the 
Business of Government (Kamensky, John M., and Burlin, Thomas J., 
Collaboration: Using Networks and Partnerships, Rowman & Littlefield 
Publishers, Inc. (Lanham, MD: 2004)); and the National Academy of 
Public Administration (National Academy of Public Administration, 
Powering the Future: High-Performance Partnership (Washington, D.C.: 
2003)). In October 2005, we reported on practices that can help enhance 
and sustain one type of network, collaboration among federal agencies, 
in GAO, Results-Oriented Government: Practices that Can Help Enhance 
and Sustain Collaboration among Federal Agencies, GAO-06-15 
(Washington, D.C.: Oct. 21, 2005). 

[11] GAO, International Trade: Intensifying Free Trade Negotiating 
Agenda Calls for Better Allocation of Staff and Resources, GAO-04-233 
(Washington, D.C.: Jan. 12, 2004). This percentage was based on 
estimated agency staff on U.S. negotiating teams for completed rounds 
of free trade agreement (FTA) negotiations, as of October 2003. The six 
FTA negotiations examined were Australia, Central American Free Trade 
Agreement, Chile, Morocco, Southern African Customs Union, and 
Singapore. 

[12] These issues related to selection of FTA partners and monitoring 
and enforcement implementation. See GAO, International Trade: 
Intensifying Free Trade Negotiating Agenda Calls for Better Allocation 
of Staff and Resources, GAO-04-233 (Washington, D.C.: Jan. 12, 2004); 
and GAO, International Trade: Further Improvements Needed to Handle 
Growing Workload for Monitoring and Enforcing Trade Agreements, GAO-05- 
537 (Washington, D.C.: June 30, 2005). 

[13] USTR officials said they actively recruit staff from their 
interagency partners because of the knowledge of the interagency 
process, as well as demonstrated performance, that such hires bring. 

[14] See 19 U.S.C. § 2171(e)(1). 

[15] GAO, Human Capital: Increasing Agencies' Use of New Hiring 
Flexibilities, GAO-04-959T (Washington, D.C.: July 13, 2004). 

[16] GAO, Human Capital: Effective Use of Flexibilities Can Assist 
Agencies' in Managing Their Workforces, GAO-03-2 (Washington, D.C.: 
Dec. 6, 2002). 

[17] Of the 158 employees who separated during this time period, 71 
held temporary positions, of which 17 were students and 54 were 
political appointees. 

[18] Two of the three security administrators who left were responsible 
for a variety of duties for both the Washington and Geneva offices, 
including emergency preparedness and building security, and the third 
worked on information technology security in Washington. 

[19] GAO-03-488, p. 17 and 29. 

[20] We analyzed occupation data from OPM's central personnel data file 
to obtain occupation data back to 1995. 

[21] USTR's human resources office maintains training data. 

[22] These are more detailed April 2005 data from EOP and differ 
slightly from staff numbers discussed above and earlier in this report, 
which came from a more recent July 5, 2005, USTR organizational chart. 

[23] A limit on the level of authorized FTEs that USTR requests from 
Congress is a ceiling set within the executive branch by OMB, which 
reviews USTR's initial budget request, according to USTR officials. 

[24] About 3 percent of the federal workforce was at the GS-15 level, 
as of 2004. 

[25] According to EOP data, as of April 2005. These data are more 
detailed and differ slightly from staff numbers discussed above and 
earlier in this report, which came from a more recent July 5, 2005, 
USTR organizational chart. 

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