<DOC>
[109th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:25617.wais]
MOM, APPLE PIE, AND WORKING FOR AMERICA: ACCOUNTABILITY AND REWARDS FOR
THE FEDERAL WORKFORCE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON THE FEDERAL WORKFORCE
AND AGENCY ORGANIZATION
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
FIRST SESSION
__________
OCTOBER 5, 2005
__________
Serial No. 109-112
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
______
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COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut HENRY A. WAXMAN, California
DAN BURTON, Indiana TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee DIANE E. WATSON, California
CANDICE S. MILLER, Michigan STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California LINDA T. SANCHEZ, California
JON C. PORTER, Nevada C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia ELEANOR HOLMES NORTON, District of
PATRICK T. McHENRY, North Carolina Columbia
CHARLES W. DENT, Pennsylvania ------
VIRGINIA FOXX, North Carolina BERNARD SANDERS, Vermont
JEAN SCHMIDT, Ohio (Independent)
------ ------
Melissa Wojciak, Staff Director
David Marin, Deputy Staff Director/Communications Director
Rob Borden, Parliamentarian
Teresa Austin, Chief Clerk
Phil Barnett, Minority Chief of Staff/Chief Counsel
Subcommittee on the Federal Workforce and Agency Organization
JON C. PORTER, Nevada, Chairman
JOHN L. MICA, Florida DANNY K. DAVIS, Illinois
TOM DAVIS, Virginia MAJOR R. OWENS, New York
DARRELL E. ISSA, California ELEANOR HOLMES NORTON, District of
KENNY MARCHANT, Texas Columbia
PATRICK T. McHENRY, North Carolina ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio CHRIS VAN HOLLEN, Maryland
Ex Officio
HENRY A. WAXMAN, California
Ron Martinson, Staff Director
Chad Bungard, Deputy Staff Director/Chief Counsel
Chad Christofferson, Clerk
Tania Shand, Minority Professional Staff Member
C O N T E N T S
----------
Page
Hearing held on October 5, 2005.................................. 1
Statement of:
Shaw, Theresa S., Chief Operating Officer, Office of Federal
Student Aid, U.S. Department of Education; Max Stier,
president and CEO, Partnership for Public Service; W. Scott
Gould, vice president, Public Sector Strategy and Change,
Business and Consulting Service, IBM Global Services;
Michael B. Styles, national president, Federal Managers
Association; John Gage, national president, American
Federation of Government Employees; and Colleen M. Kelley,
national president, National Treasury Employees Union...... 72
Gage, John............................................... 127
Gould, W. Scott.......................................... 96
Kelley, Colleen M........................................ 143
Shaw, Theresa S.......................................... 72
Stier, Max............................................... 81
Styles, Michael B........................................ 108
Springer, Linda M., Director, U.S. Office of Personnel
Management; and David M. Walker, Comptroller General, U.S.
Government Accountability Office........................... 9
Springer, Linda M........................................ 9
Walker, David M.......................................... 16
Letters, statements, etc., submitted for the record by:
Gage, John, national president, American Federation of
Government Employees, prepared statement of................ 130
Gould, W. Scott, vice president, Public Sector Strategy and
Change, Business and Consulting Service, IBM Global
Services, prepared statement of............................ 98
Kelley, Colleen M., national president, National Treasury
Employees Union, prepared statement of..................... 146
Porter, Hon. Jon C., a Representative in Congress from the
State of Nevada, prepared statement of..................... 4
Shaw, Theresa S., Chief Operating Officer, Office of Federal
Student Aid, U.S. Department of Education, prepared
statement of............................................... 75
Stier, Max, president and CEO, Partnership for Public
Service, prepared statement of............................. 83
Styles, Michael B., national president, Federal Managers
Association, prepared statement of......................... 110
Springer, Linda M., Director, U.S. Office of Personnel
Management:
Information concerning performance-based alternative pay
systems................................................ 45
Prepared statement of.................................... 11
Walker, David M., Comptroller General, U.S. Government
Accountability Office, prepared statement of............... 18
MOM, APPLE PIE, AND WORKING FOR AMERICA: ACCOUNTABILITY AND REWARDS FOR
THE FEDERAL WORKFORCE
----------
WEDNESDAY, OCTOBER 5, 2005
House of Representatives,
Subcommittee on Federal Workforce and Agency
Organization,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2154, Rayburn House Office Building, Hon. Jon C. Porter
(chairman of the subcommittee) presiding.
Present: Representatives Porter, Davis of Virginia (ex
officio), Norton, and Van Hollen.
Staff present: Ronald Martinson, staff director; Chad
Bungard, deputy staff director/chief counsel; Christopher
Barkley and Shannon Meade, professional staff members; Patrick
Jennings, OPM detailee/senior counsel; Chad Christofferson, LA/
clerk; Mark Stephenson and Tania Shand, minority professional
staff member; and Teresa Coufal, minority assistant clerk.
Mr. Porter. Good morning. I would like to bring the meeting
to order of the Subcommittee on the Federal Workforce and
Agency Organization. Good morning, everyone. Mr. Gage is
supposed to bring donuts and coffee. John, where are you this
morning? John you are supposed to bring donuts and coffee for
everyone. You were late. Next time.
Welcome, everyone. I appreciate you being here. As I
mentioned, I would like to bring the meeting to order. We do
have a quorum present.
Working for America is a wonderful privilege and a great
responsibility, something that I take very seriously, and I
know that most Federal employees feel the same way.
The work of Federal employees affects almost every aspect
of our daily lives, from sending a timely Social Security check
to protecting our country from terrorist attacks. Each aspect
is important as millions of taxpayers rely on the Federal
Government to provide them with service that is responsive,
efficient and accountable. That is why it is important to
review ways in which improvements can be made to the current
system so the Federal Government can better serve the American
people.
Recently the administration released a discussion draft of
a comprehensive government-wide reform personnel bill titled
the Working for America Act, and I should emphasize that the
Working for America Act is a draft proposal. The proposal has
not been introduced as a bill and that is another reason why we
are here today as we move forward looking at legislation so we
can have everyone's ideas and suggestions before that bill is
introduced.
We are here today to discuss the proposal in its current
form and exchange some ideas about how to improve its
provisions. I believe that a full, open and fair hearing should
be held on this matter before a bill of this magnitude is
introduced. I am hear to listen to all sides and all viewpoints
with an open mind.
I know that we will hear from some groups today that say no
change is needed and that everything is working just fine, but
there are some glaring problems with the current system. For
one, high and low performers get the same annual pay increases.
This is something that does not sit well even with the majority
of Federal employees. According to a 2004 Federal human capital
survey, employees are not satisfied with the recognition they
receive for doing a good job and are not happy with the fact
that steps are not taken to deal with a poor performer who
cannot or will not improve and the differences in performance
are not recognized. Who can be against a fair process that
rewards the star performers and effectively deals with the poor
performers?
Second, we now live in a world where agency performance
matters more than ever, but agency performance always has
mattered. The Katrina disaster itself demonstrated the need for
high performing agencies and leadership in those agencies.
Unfortunately, our current Federal personnel system does not
always encourage efficiency or hard work.
Any proposal that allows agencies to better manage, develop
and reward its employees to better serve the American people
should be seriously considered. Better performing employees
mean a better performing agency, which means that taxpayers are
getting the biggest bang for their buck.
Third, the Federal Government needs to be better able to
attract and retain quality employees, but we need to make sure
that every agency has the same ability to attract and keep
quality employees. The new personnel systems at DHS and DOD
will place over half the government under alternative personnel
systems within a short time. Agencies without modern, flexible
personnel systems are going to be at a competitive disadvantage
in the areas of recruitment and retention in relationship to
the private sector and in relationship with agencies with
flexible personnel systems.
I understand that change can be difficult and that there
are lots of concerns out there about moving into a new
personnel system. I ask that everyone here maintain an open
mind in how we can improve the current system, and when I say
an open mind, I encourage all those that testify today,
although you may have parts of the draft that you support, I
also would like to hear your ideas on what we can do better to
make it better. This is not just about a session to complain
about a draft. It is a session to provide very honest and very
blunt discussion on what we can do to help our Federal
employees but, more importantly, the taxpayers.
As I said, I hope that everyone has an open mind on how we
can improve the system, and I look forward to hearing from the
distinguished group before the subcommittee today. We are
privileged to have some very knowledgeable people here today
who will bring different points of view to this proposed
legislation, and I look forward to our discussion and would
like to move to a few procedural matters at this time.
I ask unanimous consent that all Members have 5 legislative
days to submit statements and written questions for the record,
that any answers to written questions provided by witnesses
also be included in the record. Without objection, so ordered.
I ask unanimous consent that all exhibits, documents and
other materials referred to by the Members and the witnesses
may be included in the hearing record and that all Members be
permitted to revise and extend their remarks. Without
objection, so ordered.
It is the practice of the subcommittee to administer the
oath, which I will do here in a moment, but first I would like
you to recognize my Congresswoman for any opening remarks. Good
morning.
[The prepared statement of Hon. Jon C. Porter follows:]
[GRAPHIC] [TIFF OMITTED] T5617.001
[GRAPHIC] [TIFF OMITTED] T5617.002
Ms. Norton. Thank you very much, Mr. Chairman. I am very
pleased to be of service with you in Washington. I appreciate,
Mr. Chairman, that before this bill is final that you're having
another hearing.
In case its controversial nature was not clear on the face
of it, it should be noted that the--one of our appropriation
committees, the House Transportation-Treasury Appropriation
Committee, withheld funding, the funding requested by OPM, to
continue to overhaul the civil service. Now that is the
appropriation committee, which would have no reason, it seems
to me, to do that, nor would the hesitation of the Senate be so
clear if this were easy.
Mr. Chairman, I am not at odds with what is being
undertaken here. I simply begin with an appreciation for the
uniqueness of the system and how difficult it is. Now, if you
want to change the system so that it looks like your local
largest corporation, we can try to do that. But let me tell you
something. Your local largest corporation,wherever members may
in fact reside, do not operate in the system under the
Constitution of the United States. It requires due process, at
the same time there is collective bargaining.
The size of the work force and the unique strictures under
which it operates presents a fascinating challenge, but we have
to take the challenge and not simply imitate what we see in the
larger community. I served on the board of three Fortune 500
companies. Two are unionized. One was not. They don't have the
same issues, and they don't have the same problems. And they
are able to operate in a way that this committee and that the
Congress of the United States must come to grips with.
We have the problems that have been outlined by this
subcommittee. The fact that there has already been a court
decision overturning a major section of what we have done is
more than a shot across the bow. It is an indication that there
is still a lot of work to do and that we have not grasped the
functional and the intellectual challenge that this presents.
I compare it, Mr. Chairman, to those who approach September
11th not knowing what to do, recognizing we had a specific
challenge, and realizing we had to keep our society safe. And
so their first instinct was to close down everything. Well,
there is a way to do this.
The Constitution of the United States isn't going to let
you do it. There is no wording by the Congress that can
overcome certain problems that are present in the--what do we
call it--this act, the act I want to for the record say it
correct, Working for America Act.
Understand that we have already taken most of the work
force and by statute of the United States passed by both Houses
in fact done what this act would seek to do for the entire work
force. You would think that having done that so recently the
first thing you want to do is look very closely--since you have
the largest section of the work force in the first place, what
better laboratory to look at what you have accomplished to
correct your mistakes?
I chaired a very controversial agency at the time it was on
its knees, the Equal Employment Opportunity Commission, and I
knew that the agency had to be changed from top to bottom.
Well, I didn't do anything like what we do here, which is take
the more than half of the offices and just change them. We took
three offices, tried every single change we were trying to do,
see if those changes worked, and after in fact being informed
by practice, created a system that worked.
I don't see us doing that here. Let's look at Judge
Collier's decision, which focused on collective bargaining.
Well, you can't collective bargain everybody. You can't simply
redefine collective bargaining in the United States of America
today, to quote what the judge said, when good faith bargaining
leads to a contract that one side can disavow. Without remedy,
the right to engage in collective bargaining is illusory.
Now, you can try to abolish collective bargaining but you
can't get around what in fact collective bargaining means in
the law. And we can't get out of what it has come to mean and
what we ourselves have over the decades reinforced as its
meaning in the Federal sector, just to give one aspect, because
we are trying to change everything in this bill: Pay, job
classification, labor-management relations, adverse actions and
appeals. Good luck.
Doing all of that in most of your work force, we have
already done that in the DOD, and now you're facing whether
you're going to appeal or not a decision that has come down.
Very clear, the trial judge left part of the system in place
and was very clear what had been done with the rest of it.
Essentially what we did was to redefine collective
bargaining. We redefined it out of existence. One side could do
what it wanted to do. DOD and HHS, we can do because, we
confront emergencies, what it is we have to do. And yet, in
this bill, Mr. Chairman, there is language, amazing language, a
language that would give agencies, period, we are not even
talking about DOD or HHS, which used the pretext of emergency
perhaps when it sees fit, but we are talking about any agency
that can take action without collective bargaining, in order to
prepare for, practice for or prevent any emergency, which is
very broadly defined.
Well, you know, you know even a king doesn't have that
authority. And I don't think in a democracy we want to give any
agency head the right to decide, ``I said it is an emergency,
it is an emergency. So I am going to do what I want to do and
nobody has any say.''
You can't run the Federal Government that way, and what we
are doing is getting ourselves deeper and deeper into a
situation where everything we do is in fact going to be tested
in the courts.
So I understand that one of the great remedies for all this
is just train everybody and you don't have to care about all
the rest of it. Well, you can't train everybody out of the
right to collective bargaining. You can't train everybody out
of how to make sure that when you give pay increases you do not
in fact engage in discrimination that will not take you to
court. You have to have a system that does that and that
enables people to work it.
We do not have such a system today. I am with you, Mr.
Chairman, in trying to see if we can get our way to such a
system.
Thank you very much.
Mr. Porter. Thank you very much. I like giving my colleague
a hard time because I do live in the District. So it is always
good to have two Members here working together. So I appreciate
that very much.
Just a couple of key points. In my position as chairman, I
look at this very cautiously and I know there is a lot of steps
that have to take place before we make any major changes. There
are many, many steps. We also need to look closely at some of
the successes and some of the failures throughout the system
through the years. But the bottom line is we are looking at a
personnel system that was created in the forties. So for those
that are opposed to the concept of what may well be in this
particular act, and I said in my opening statement, we have to
find a better way to treat our Federal employees, which in turn
can treat our taxpayers--our bosses--more efficiently, with
more accountability, because the expectations are high, as they
should be.
Again, we are looking at a personnel system that was
created in the forties. Whether the draft before us is the
solution is yet to be determined, and that is why we are here
today.
We are in a global economy, a global market, where even in
technology it is dog years. Everybody's computer is obsolete by
the time we plug it in, technology is in dog years, seven for
every one. The same with the way we deliver our services. As
many of you have heard me say before, probably a large share of
the time of every Member of the Congress in their district
offices is trying to provide service to our constituents
because of their frustration with the system. They are
frustrated. Our taxpayers, our bosses, our constituents, our
friends and neighbors are frustrated. They call an 800 number
and no one answers. They get put on hold and it takes them 30
days to get an answer on certain problems.
So as Members of Congress, we see firsthand the challenges
for our constituents, but we also see those Federal employees
that are doing a great job, and we need to find a way to reward
those folks that are doing a great job. So today we have some
experts with us. We are going to talk about better ways to
encourage our personnel so we can keep our personnel as we move
into this global economy and global market with high
expectations, as our bosses should ask for.
Again I thank you all for being here. I would like to first
have all the witnesses stand so we can do the proper protocol
and administer the oath. So actually all witnesses, please.
[Witnesses sworn.]
Mr. Porter. Let the record reflect that the witnesses have
answered in the affirmative and have been seated. I would like
to highlight the fact that we have so many folks here today to
express their perspective and expertise. If we can hold our
comments to the 5 minutes, we will of course have an
opportunity for questions and answers and if time doesn't
permit we will ask for you to submit your answers in writing.
But it is imperative because of limited time and the number of
folks that we limit ourselves to 5 minutes.
So in our first panel we will hear from Director Linda
Springer from the Office of Personnel Management and
Comptroller General David M. Walker of the U.S. Government
Accountability Office.
So Director Springer, we thank you and look forward to your
testimony.
STATEMENTS OF LINDA M. SPRINGER, DIRECTOR, U.S. OFFICE OF
PERSONNEL MANAGEMENT; AND DAVID M. WALKER, COMPTROLLER GENERAL,
U.S. GOVERNMENT ACCOUNTABILITY OFFICE
STATEMENT OF LINDA M. SPRINGER
Ms. Springer. Good morning, Mr. Chairman and members of the
subcommittee, I want to thank you for the opportunity to
discuss the administration's legislative proposal for improving
personnel systems in the Federal Government.
Simply stated, the Working for America Act will require
agencies to better manage, develop and reward employees to
better serve the American people.
This act will establish a government-wide personnel system
that creates an environment where employees have the greatest
opportunity to reach their full potential. Under the proposal,
individual employees will be provided clear performance goals,
managers who can help them to be successful, and performance
and market-based pay.
An employees's career and pay potential should be
determined by achievement, not by the passage of time or
obsolete job classifications. But today it takes employees up
to 18 years to reach the top of a General Schedule pay grade
regardless of how well they perform.
Our proposal establishes a process for implementing a
system that recognizes and rewards performance. Each agency
will design its individual plan for using the flexibilities
once the general authorities are approved. However, no agency
will be able to use the pay features in the bill until OPM
certifies that agency's readiness.
Our proposed legislation recognizes that enhancements to
personnel systems must be made within the context of core
values, principles and protections that characterize our
American Civil Service. Reform can be accomplished while fully
preserving core principles and protections. In fact, the
Working for America Act promotes merit system principles by
putting them into practice more broadly.
Personnel systems that make it more likely that employees
reach their full potential will soon cover more than half of
the Federal work force. The rest should be afforded similar
opportunities. The Working for America Act ensures that the
remaining agencies are not left at a competitive disadvantage.
Let me summarize the central elements of the Working for
America Act. First, the Civil Service system must preserve core
Civil Service principles. The act does just that.
Second, under the Working for America Act provisions OPM
would establish a core compensation system for the Federal
Government, would define broad groups of like occupations, as
well as pay bands within each group that represent clearly
distinct levels of work. In this core system, market-based pay
would constitute a significant portion of pay adjustments with
the balance allocated on the basis of individual performance.
Third, today even poorly performing employees receive a
General Schedule increase across the board and locality pay
increases. The Working for America Act would make those
increases within a particular band performance based in the
sense that only employees who are at least fully successful
would receive those adjustments.
In addition, our proposal would bar pass/fail appraisal
systems for all but entry/developmental jobs but, as is the
case today, would provide agencies with flexibility in
designing their performance appraisal systems and would require
OPM to certify that an agency's performance adjustment plan
meets the high standards that Congress will set before that
agency is permitted to move to a performance-based pay system.
As I noted, Federal pay systems that include performance
based pay are not new at all. They have existed inside the
Federal Government for 25 years and today cover over 90,000
Federal employees. And I would note that does not include the
DHS or DOD legislation. These are other programs that have been
around as long as 25 years.
These systems already apply to the same kinds of work and
workers that the current General Schedule covers. The results
and trends have been positive across those systems and we have
looked to the lessons learned from those systems as we have
developed the Working for America Act.
The Working for America Act ensures that Federal unions
retain core collective bargaining rights. The legislation
modifies Federal labor relations statute to clarify essential
management prerogatives but preserves the important role and
rights of unions in the Federal labor relation system.
These modifications in labor-management are much, much
narrower in their scope than the flexibilities granted to the
Department of Homeland Security, and I want to underscore that.
Let me iterate that an agency will not be able to use pay
flexibilities in the bill until OPM has certified that agency's
readiness. To help agencies in that regard, OPM is leveraging
its leadership of the human capital initiative of the
President's management agenda.
Starting in 2006, agencies will be required to develop and
expand robust performance management systems for a defined
segment within the agency. In other words, agencies must
demonstrate that the site is ready to link pay for performance
appraisal system with the expectation that such improvements
will expand and continue throughout the agency.
We are fully aware that OPM will have a critical role in
ensuring the success of the Working for America Act. We
recognize agencies will look to us for guidance and assurance
from implementation and certification and beyond. You and, very
importantly, the men and women of the Federal work force can be
sure of the Office of Personnel Management's commitment to
being fully prepared to carry out those responsibilities.
Mr. Chairman, that concludes my testimony. I would be glad
to answer any questions.
[The prepared statement of Ms. Springer follows:]
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[GRAPHIC] [TIFF OMITTED] T5617.006
[GRAPHIC] [TIFF OMITTED] T5617.007
Mr. Porter. Thank you very much. You may note that we have
this little beeper going here. It is the alarm clock to let you
know that your time is up. Anyway, welcome, Mr. Walker, we
appreciate you being here.
STATEMENT OF DAVID M. WALKER
Mr. Walker. Thank you, Mr. Chairman, Ms. Norton, Mr. Van
Hollen. It is a pleasure to be back before the subcommittee to
talk about the draft proposed Working for America Act. Somehow
I have been thinking about James Brown and Living in America
all morning. But this is a very serious topic, and I do look
forward to the opportunity to answering your questions as well.
Since you have put my entire statement in the record, if I
can summarize now, I would be pleased to do so.
Mr. Chairman, each Member of Congress received in February
of this year this document that was published by GAO. It is
called, ``21st Century Challenges: Reexamining the Base of the
Federal Government.'' This document is based upon decades of
work by GAO for the Congress, and it provides a clear and
compelling case that a vast majority of the Federal Government
is based upon conditions that existed in the United States and
in the world in the 1950's and in the 1960's, and it includes
over 200 questions that need to be asked and answered to
position us for a more positive future. One of those 200
questions relates to the topic that we are covering in today's
hearing.
Based upon all of the experience that we have in analyzing
the government's efforts in the human capital area as well as
our own internal experience, GAO supports the concept of moving
forward with appropriate human capital reforms and believes
that implementing more market-based and performance-oriented
classification and compensation systems across the entire
Federal Government is both doable and desirable.
Importantly, broad based human capital reform in our view
must be part of a broader change in management strategy and
must involve a number of changes in the performance management
systems that exist in the Federal Government today. This
concept cannot be simply overlaid onto the existing and often
ineffective performance management systems that exist in the
Federal Government today.
In addition, organizations need to buildup their basic
management capacity and must have adequate resources to
properly design and effectively and equitably implement more
market-based and performance-oriented classification
compensation systems.
In our view, before implementing dramatic human capital
reforms, executive branch agencies should follow a phased
approach that meets a ``Show me'' test, the so-called Missouri
test; namely, that they have to demonstrate conclusively to OPM
or some independent qualified third party that they have
achieved all the conditions necessary in order to maximize the
chance that there can be successful implementation before they
would have the authority to implement new classification and
compensation systems.
This is contrary and different than what was done for the
new SES pay ranges. In many cases, agencies were given
conditional approval based upon promises to take actions. That
is not acceptable in our view with regard to broad based work
force changes. The actions must be taken and demonstrated that
they are in place and functioning before the authority should
be operationalized in our view.
We have several observations for your consideration in the
draft proposal. First, in our view there are two major elements
of this proposal. The first deals with classification, pay and
performance management reforms. In our view there is strong
conceptual merit to moving forward with regard to
classification pay and performance management reforms. The
Federal Government has significant prior experience there, and
I think we know what works and what doesn't work and can learn
from those lessons.
We think it is critically important that in making those
reforms that OPM has to play a key leadership and oversight
role to make sure that people deliver on their promises and
they are not abusing their authorities. We also think it is
critically important for the Congress to play an active and
ongoing role in connection with monitoring any of these reforms
efforts.
The second part of the proposal deals with labor-management
relations and adverse actions and appeals. In this area, we
believe that Congress should move slower and possibly
separately from the classification pay and performance
management reforms. We do not have as much experience in this
area and in fact some of the greatest experience that will be
gained relate to the Department of Homeland Security and the
Department of Defense, and it might well be prudent for the
Congress to understand how those are implemented and to learn
from the lessons there before moving forward with broader based
reforms in that area.
A few other quick comments. The definition of emergencies
with regard to this particular section is very broad and is a
matter, I believe, of concern.
Second, there clearly will need to be an adequate pool of
resources available for agencies to be able to modernize their
infrastructure. And that is something that will have to be
addressed.
Furthermore, to the extent that agencies moved to
compensation systems that might provide for additional amounts
being paid in the form of a bonus rather than a base pay
adjustment that otherwise would have been paid in a base pay
adjustment under the old Civil Service system, I think it is
important that they be given credit for CSRS and Federal Thrift
Saving Plan purposes for that. That would require changing the
law.
And last, I think the target date, as I understand it, on
this proposed legislation is that the current system would
expire in 2010. My view is it is fine to have a target date,
but I believe that there should be a conditions based approach,
that people should not be able to implement these new
authorities until they've met the conditions. All these
government agencies may or may not meet the conditions by 2010.
So it is fine to have a target date. But in the final analysis
people shouldn't be able to move forward unless and until they
have met all the conditions whenever that might occur, whether
it be before or after 2010.
Thank you very much.
[The prepared statement of Mr. Walker follows:]
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Mr. Porter. Thank you, Mr. Walker.
I have a question, Ms. Springer, and I am going to read the
question because I think it is important as we frame the
meeting today, because I think there is some misconceptions.
First question, are Working for America Act provisions
identical to the authorities provided DHS and DOD?
Ms. Springer. The answer to that question, Mr. Chairman, is
no. They are not identical, particularly in the labor-
management section.
Those are the parts that are most notably being dealt with
in the courts right now. So I don't want to specifically
address them. But I can say that section is much, much smaller,
much more limited in the Working for America Act draft bill
that we proposed.
The first section is--General Walker has sort of parsed it.
That deals more with performance and pay. It is more similar,
and that is the less controversial part.
Mr Porter. Are we giving OPM authority to waive provisions
in Title 5?
Ms. Springer. No, we are not, and that is an important
question to have clarification. The Congress is the only one
that can change that statute. OPM just carries out what is
there. So OPM would not have any ability to waive any part of
Title 5.
Mr. Davis of Virginia. Will any employee lose pay because
of the conversion to the new pay system established under the
authority of this act?
Ms. Springer. The answer to that is no. No one's pay will
be reduced. This is sort of a forward looking type of
arrangement in the sense that from the point of conversion
forward the pay increases, not the change in the level of pay
preconversion versus post conversion, but the increases
themselves may be at a different pace or a different amount
than they would otherwise have been. But there will not be a
reduction in pay as a result of converting to the new system.
Mr. Porter. Now why should we move forward with this change
prior to having all the results back from DOD and Homeland
Security?
Ms. Springer. I can give you a very good case in point, and
I am going to answer this in two ways. One is as I mentioned,
we have 90,000 employees that we have looked to as we have
crafted this bill and the programs that they are under. These
are programs, they are demonstration projects, they are
programs that span across an entire organization. They have
been functioning, some of them, as long as 25 years. That is
where we've looked to inform the construct of this bill,
particularly the performance and pay part. And we have done a
lot of work there, a lot of surveying. There are things that
are working very well. By and large the employees in those
systems would not turn the clock back to what they were in
beforehand.
Let me give you a case in point. A couple days ago, less
than a week ago, I had an e-mail that said to me, Director, we
are losing someone that we just hired 2 weeks ago to OPM. They
are going to go and take another position at an agency that is
part of that 90,000 group because they could be in a pay band
structure where they had more upside potential for their pay.
And as a matter of fact, that agency right on the spot could
pay them a five figure salary higher than--more in their salary
than we were able to give them because of the constraints in
the General Schedule. It happens time and time again. It is
important for us to move on this thing.
Mr. Porter. One last question for clarification, and I know
since there is a lawsuit pending I want to be cautious in the
question and of course in the answer as you feel is
appropriate.
But it is my understanding that the court injunction is
regarding OPM regulations, DHS and OPM regulations, not the
law, is that correct?
Ms. Springer. I would have to find that answer out.
That is correct.
Mr. Porter. Thank you very much. I appreciate that it.
Ms. Norton.
Ms. Norton. Mr. Chairman, the court found that the
regulations are in violation of the law. That is the problem.
And in light of that problem, I must say, Ms. Springer, I said
to staff to make sure that you get me this testimony. And got
this testimony. It is very thin testimony, and yet you got an
extraordinary opportunity and we have no information about how
this opportunity--at least from you, about how this opportunity
is being used. You have jurisdiction over about 2 million
employees, and if you count DOD and HHS, that is running up
900,000-some, almost a million. This is a kind of laboratory
that frankly should be a perfect setting for you to come back
here and tell us what the most recent experience has been.
Nobody is going to leap into the next million without having
some greater sense of what has happened with respect to the
first million.
Could I ask you, and for that matter, Mr. Walker, who talks
about we have pay and classification experience, you must be
talking about your agency, Mr. Walker. The whole reason that
they are before us is because this is brand new, would be brand
new for every section of the work force, beginning with those
that we have given the authority to, not to mention the rest.
But I would like to know what studies have been done, certainly
by the GAO, and if the studies haven't been done, can you give
us some idea of experience with these two agencies, which must
have been a fertile ground to gather the kind of information an
oversight committee needs before it makes the next leap and
takes the whole work force with it.
I tell you, I don't know about you and faith-based, but
this is too big to put my faith in you or anybody in this
government. And I think we deserve to know what has happened so
far in great detail before you ask us to go the next step of
the way, especially since you're already in litigation and you
didn't even mention that and what you're going to do about
that.
Go ahead, Ms. Springer.
Ms. Springer. Let me respond. There are several parts
there. One thing I do want to say is obviously we are not
trying to hide anything. We are not trying to give you a thin
document. We have in fact had 18 detailed briefings. We have
had 34 hours of briefings and with the House alone we have had
7 hours of detailed briefings.
Ms. Norton. Staff. Which staff?
Ms. Springer. Minority, majority it was open, anybody was
welcome.
Ms. Norton. The purpose of this hearing is for the public
record, to let the Members know what is happening, to let the
public know what is happening. And I appreciate that you have
told the staff what is happening. Can you tell us what is
happening?
Ms. Springer. Sure. I just want to say that it is--for
starters we have not tried to hide anything. We have put this
draft bill up on the Web sites. We have been very accessible to
staff. And as you say, the purpose of the hearing, which we are
very happy to have today, gives us more of a public forum to do
that. But we have been out there--let me just expand on that.
The briefings have been with unions, they have been with
good government groups. They have been with employees that we
have had--it has not just only been with staff but I mentioned
staff specifically because----
Ms. Norton. Ms. Springer, were these briefings about the
studies or results from the changes Congress authorized and
that you have begun to put in place in the two largest agencies
in government? That is my question, not what were your
briefings about.
Ms. Springer. The briefings to a large degree were about
this bill and they were also about the results of the programs
that have been in place over the years. We have not briefed on
the NSPS system because the final regs haven't even been
published on that one yet. That is the DOD. So that is a work
in progress, the final regs are in the process, they will be
out in the Federal Registry. We will be more than happy to do
discussions on that one, and even if there was an interest in a
dedicated hearing on that, that obviously would be something we
would welcome. But that has not been at the point where it has
been--even the final regs have been public on that one.
With respect to the DHS, once that got into court it really
constrained our ability to comment publicly on the portions of
that bill that are in question that are being dealt with in the
court system. So those have not been the focal points of the
briefings that we have done. Briefings have been more on the
particular bill draft that we have submitted for those reasons.
Mr. Porter. Mr. Walker, you had a comment?
Mr. Walker. Ms. Norton, I would like to answer your
question if I may. I would divide this bill into two parts, Ms.
Norton.
The first part would be classification, pay and
performance. It is my understanding at the present point in
time the Federal Government has 90,000 to 100,000 employees
that are covered by broad banding systems and by more market-
based and performance-oriented compensation systems. And some
of those go back, back to the 1980's, and it is not just GAO.
As you know, we have 3,200 employees covered by that. So there
is 90,000 to 100,000. I think there's a considerable amount of
experience with regard to classification.
Ms. Norton. I would like to draw your attention back to the
1980's at the fairly higher levels of the agency involved.
Mr. Walker. You are correct in saying that we need to look
at the nature of the people covered by these and some are very
technical and scientific.
Ms. Norton. That is very important to say that, Mr. Walker.
Mr. Walker. Absolutely, and I don't debate that at all.
Here is my point. We have 90,000 to 100,000 of various levels
and I think the other thing that this concept includes is
conditions that would have to be met. By the way, these
conditions were not in the DOD and the DHS legislation. These
are very stringent conditions that would have to be met before
anybody could move forward.
Ms. Norton. Such as?
Mr. Walker. Such as the conditions that you would have to
be able to demonstrate that you have a modern, effective,
credible, performance appraisal system that provided meaningful
feedback that resulted in meaningful differentiation in
performance, that you had adequate training to conduct to help
people understand how to implement that system.
Ms. Norton. Are you saying those are not in the law and
should be?
Mr. Walker. They are not in DHS or DOD. They are in the
concept for this proposal. Again we don't have a bill. They are
in a concept paper. And we have testified--frankly we have
testified in connection with DOD and DHS that those would have
been good to put in those bills but they weren't. But they are
in this proposal.
Second, in the second half I share your concern. The second
half has to do with labor-management relations and adverse
actions and appeals. And as I testified, we don't have as much
as experience on that. And we believe that it may be prudent
for the Congress to consider what happens as a result of DHS
and DOD before you decide to move forward on that front.
So the first part, classification, pay and performance
management, we think there is enough experience, we think there
is a way forward. And you can include work experience----
Ms. Norton. There is enough experience from employees at
fairly high grades and levels, technical employees, scientists,
many of them professionals that would leave the government if
you mess with them because they have, many, many options. There
is enough experience with 100,000 employees to now jump in and
take 2 million with us all at one time?
Mr. Walker. Not all at one time. That is very, very
important. What is very, very important is--and first I would
be happy to provide for the record information that we have
about the nature of that 90,000 to 100,000. I think it is a
very legitimate question.
But what is important about this is that this basically
would be, as I understand it, conditional authorization. In
other words, it would authorize agencies to move to a broad
banding system. It would authorize agencies to move to a more
market-based, performance-oriented compensation system. But
they could not do it unless and until they demonstrated that
they had met certain conditions--not based on promises--based
on results. And therefore, as I say, I don't think you ought to
have an arbitrary date, 2010 or anything else, for getting rid
of the GS system because you don't know what people are going
to meet those conditions. You're talking about a lot of people,
and a lot of these agencies quite frankly have a lot of work to
do before they would end up meeting those conditions in order
to move forward.
Mr. Porter. Thank you, Mr. Walker. I appreciate it.
Ms. Springer. May I add one other thing as well? We have a
report that we will be glad to provide for the record as well
on the demonstration projects that cover these 90,000 to
100,000. We have just finished it this week and would be glad
to provide that for the record.
[The information referred to follows:]
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Ms. Norton. Thank you. That would be very helpful. Mr.
Chairman, I do want to just note that the testimony that we
received is very important if we are looking at writing a bill
that might get through the Appropriations Committee and for
that matter through the Congress, and that is Mr. Walker's
testimony that a phased approach, a ``Show me'' approach, a
condition-based approach, would be the most prudent.
By the way, would you agree with that, Ms. Springer?
Ms. Springer. Yes, and that is the way this act is set up.
Ms. Norton. Do you think this act is--oh, you have only
seen the concept because we are trying now to find out how to
do it and I think that it is very, very important to make this
palatable.
Mr. Porter. As do I. Very compelling comments. Thank you.
Mr. Van Hollen.
Mr. Van Hollen. Thank you, Mr. Chairman, and let me thank
both of the witnesses here this morning and thank you, Mr.
Chairman, for your continuing oversight in this very, very
important area. It doesn't get a lot of public attention, but I
think it is very important to the public and the quality of
government that we have.
Let me just first begin with breaking it conceptually into
the two parts that Mr. Walker has divided it into, on the one
hand the management reforms and pay for performance issue, on
the other hand labor-management relations and the adverse
action provisions of the bill.
And a note on pay for performance. Again, the concept of
pay for performance--we have been over this ground before--is
something that I don't think anyone can oppose. People should
be rewarded based on their ability to produce. The key is
implementing that kind of system, and especially within the
government context where you have lots of factors that are not
present in the private sector context and you have many
different potential masters. And I don't mean to pick on
anybody but if you're talking about FEMA and Michael Brown and
what that kind of message sends in terms of performance and the
kind of individual needed in the job and the kind of experience
they need in order to carry out their job, what kind of signals
can that send out to their employees and can they really
believe they are going to be evaluated based on a fair judgment
and based on their experience and qualifications to do their
job?
Let me just ask Ms. Springer if you would agree with just
in terms of approaching this major piece of legislation in a
manageable way, one bite at a time, whether you would agree
with Mr. Walker's suggestion that we might be better off taking
this as two separate pieces; in other words, let's examine the
pay for performance part and focus on that issue and not move
forward with the other provisions that are in the bill. What
would you think of that?
Ms. Springer. I think that is an option that could be
considered but having said that, I think that we have crafted
the bill with the thought that the two pieces do go together,
and we think that they both can be accommodated in a much, much
reduced way from DHS.
The one mistake we don't want to make is to say this is DHS
revisited or NSPS revisited because that part is scaled down
considerably. However, I personally, speaking for myself, think
that is an option that you know could be looked at.
Mr. Van Hollen. I just note with regard to labor-management
provisions, I understand there are provisions in this bill that
are not the same as DHS and the Department of Defense. On the
other hand, as I understand, there are some provisions in this
bill that are actually potentially more expansive. Mr. Walker
mentioned the definition of emergency, which is, as I
understand it, is the triggering definition for determining
whether or not you're going to continue to follow the labor-
management provisions of the bill. And the definition of
emergency is broadened to include, ``any situation involving or
potentially involving an adverse effect on agency resources.''
It goes on to talk about increase in agency workload or any
budgetary exigency caused in whole or in part by external
authorities. I can't think of a single department in the
Federal Government today that couldn't claim that they were in
an emergency right now under that definition.
If you could respond to that.
Ms. Springer. Well, there are technical people here who
could probably talk to the specific language better than I can,
but the purpose of this hearing, the purpose of our work with
you, with your staffs, is that we can refine those things in a
way that deals with concerns that you have.
If it is too broad, let's look at it. If it is not
immediate enough--my understanding was that it was really
intended to be for immediate situations where there is a need
for immediate action, there isn't time to deliberate, what have
you. But having said that, I am not the technical expert. But
if there are things we need to refine, let's look at them. The
idea was to get a draft act on the table so we could start to
work together and get this thing refined.
Mr. Van Hollen. I hear you.
Mr. Walker. I agree it is too broad. And second, I think
you have to think about, in coming up with a reasonable
definition of what is an emergency, for what period of time is
there an emergency. Is it envisioned that it is a limited
period of time, or is it something that is defined so broadly
that it could go on indefinitely? I think, you know, that is a
very important area and a very problematic area.
Mr. Van Hollen. And Mrs. Springer, I agree with you that
part of this process is give and take. But the problem is when
you put something in writing on the table like that it does
send signals. You have to build trust to move forward with this
kind of process. You have to build the trust of Federal
employees who are about to be subjected to the new rules. And
when you put on a piece of paper something that is just so
broad it would encompass just about any agency today, it
creates a more difficult environment to move forward.
Mr. Chairman, if I can just ask one last question with
respect to the phased in approach and the fact that you have
the ``Show me'' test. Under the draft, or concept, what is--who
are we showing? In other words, is this a certification that is
going to be made by OPM as to whether or not the criteria had
been met?
Ms. Springer. Yes, that's right. I just want to add one
other thing if I can with that emergency issue, I think
hopefully we would all agree that there are legitimate
emergencies in critical situations, assessable situations. I
hope we're not saying that there is no such situation that
could be addressed should we have a labor-management component
to the bill.
Mr. Van Hollen. I understand. It is this definition, as I
say, it seems to reflect the current condition of every
department in the Federal Government.
Mr. Walker. Can I suggest, Mr. Van Hollen, that you are
correct in noting that under this proposed draft legislation or
proposal that OPM would do the certification. I would fully
expect that the Congress would want GAO to monitor OPM's
efforts and to report periodically with regard to the exercise
of those.
Mr. Van Hollen. I thank you for that. The red light was on
so after the answer I wasn't sure but, Mr. Chairman, just on
that point. Clearly, there's going to be a question about the--
I think from the Congress' perspective given the nature of
this, if we were to move in this direction, it would absolutely
be essential from our perspective to have GAO overseeing or
monitoring the reporting on that.
Mr. Porter. Thank you very much.
Ms. Norton. May I ask one factual question?
Mr. Porter. Yes.
Ms. Norton. Ms. Springer, do you intend to appeal the
Federal court decision striking down major portions of the
Department of Homeland Security provisions on collective
bargaining?
Ms. Springer. I am not at liberty to comment. My counsel
has told me not to comment on that case.
Ms. Norton. I hope at the very least it leads to some
thoughtful--whatever you do. Because now you're on your way to
something that is probably going to just keep going because of
litigation. I hope that you're not depending entirely on
litigation but are looking closely at what the court said to
see if there are things you can to do mitigate the possibility
of future suits like this in the future. Thank you.
Mr. Porter. Thank you. Thank you both very much. I
appreciate you being here today. Just know, Mr. Walker, that
there is a band on the hill with five Congressman, a bipartisan
band. We need to work on that James Brown song.
Mr. Walker. It is a great song.
Mr. Porter. It is a great song. Thank you. Thank you both
very much.
We have six witnesses left to testify. Actually, panel
three and four, and I think for the element of time, I'm going
to try to bring all six up--I know we're a little limited for
space--and possibly share the mics. So if Theresa, Max Stier,
Scott Gould, Mr. Styles, Mr. Gage, and Ms. Kelley--I realize
there are three chairs so that's going to be a real trick.
We're going to bring a couple more chairs up. Maybe we'll take
about a 5-minute recess while we get things situated. Thank
you.
[Recess.]
Mr. Porter. I'd like to bring the meeting back to order.
Some of the witnesses came late. I'd like to ask once again
that we do the witness and the oath. For those who weren't
here, is there anyone that--Colleen, you weren't here. Anyone
else that wasn't here? Please, if you'd raise your right hands.
[Witnesses sworn.]
Mr. Porter. Please be seated. I'd also like to acknowledge
that fellow Member of Congress, Mr. Flake from Arizona, had
planned on being with us today, was unable to be here, and,
without objection, I'd like to enter his comments into the
record. Thank you.
Let's begin with our third and fourth panel.
We'll start with Theresa Shaw, the Chief Operating Officer
of Federal Student Aid, U.S. Department of Education. Welcome.
STATEMENTS OF THERESA S. SHAW, CHIEF OPERATING OFFICER, OFFICE
OF FEDERAL STUDENT AID, U.S. DEPARTMENT OF EDUCATION; MAX
STIER, PRESIDENT AND CEO, PARTNERSHIP FOR PUBLIC SERVICE; W.
SCOTT GOULD, VICE PRESIDENT, PUBLIC SECTOR STRATEGY AND CHANGE,
BUSINESS AND CONSULTING SERVICE, IBM GLOBAL SERVICES; MICHAEL
B. STYLES, NATIONAL PRESIDENT, FEDERAL MANAGERS ASSOCIATION;
JOHN GAGE, NATIONAL PRESIDENT, AMERICAN FEDERATION OF
GOVERNMENT EMPLOYEES; AND COLLEEN M. KELLEY, NATIONAL
PRESIDENT, NATIONAL TREASURY EMPLOYEES UNION
STATEMENT OF THERESA S. SHAW
Ms. Shaw. Good morning. Good morning. Much better.
Good morning, Mr. Chairman, members of the subcommittee.
Thank you for inviting me to testify today. I'm pleased to be
here representing Secretary Spellings, the Department of
Education, and Federal Student Aid, to share some of our
successes in transforming our work force, elevating our
performance, and delivering tangible results.
Federal Student Aid has operational responsibility for
oversight in the administration of all of the Department's
Federal student financial assistance programs, and, as one of
the government's few performance-based organizations, upholds
high standards of operational efficiency, innovation, customer
care and individual and organization performance. We are also
provided certain managerial flexibilities and authorities over
personnel management, budget, and procurement activities.
Prior to our establishment as a performance-based
organization, the Federal Student Aid programs were plagued
with oversight and management challenges, high default rates,
and customers who were not happy with the service they
received.
In 1990 the Government Accountability Office found the
Federal Student Aid programs at high risk to fraud, waste,
abuse, and mismanagement. Financial management and internal
controls on the programs were largely nonexistent, and
unqualified audit opinions were not attainable. In 1990,
students loan default rates had hit a high of 22.4 percent.
Customer satisfaction scores were not even measured. Federal
Student Aid with its specific purposes, authorities, and
flexibilities was created to effect change, and we are
transforming our work force and culture to be highly effective.
Mr. Chairman, I believe that delivery of results is the
true measure of success, and I'd like to share how we have used
our personnel flexibilities and our progress on our work force
and culture transformation. Our hiring flexibilities allow us
to fill critical and time-sensitive resource needs faster and
to pay salaries closer to market rates for similar positions in
the private sector. With this flexibility, our average period
to hire is 34 calendar days versus 200 calendar days for the
most recently Federal hired career staff subject to the usually
competitive processes. We have used our hiring flexibility to
hire staff with needed skill sets obtained in the private
sector, to augment the skill sets of our Federal career staff.
This marriage of private sector and Federal career skills,
experience, and knowledge has been a great success. This hiring
flexibility only applies to a small portion of our work force.
Most positions are filled by General Schedule and Senior
Executive Service staff and subject to the Title 5 competitive
process. We recently worked with the Partnership for Public
Service to identify a better, faster process for recruiting and
hiring qualified Federal career staff.
If you take a look at the chart on the left, the standard
staff hiring process had 114 steps, with more than 45 handoffs.
In comparison, our new streamlined process eliminates nearly 50
percent of the steps. The Working for America Act would provide
even greater efficiencies to this process. We have not focused
on the hiring process alone to transform our work force and
culture. We have strengthened performance management and
aligned individual performance with delivery of results. We
have a process that recognizes and rewards differences in
performance.
The results are in for us. In January 2005, the Government
Accountability Office removed the Federal Student Aid programs
from its high-risk list. In March 2005, we achieved all green
status in improved financial performance on the President's
management agenda score card. The Secretary recently announced
a new all-time low default rate, 4\1/2\ percent, and we have
created innovative contract solutions to optimize the
investment of taxpayer dollars and the return on that
investment, saving taxpayers an estimated $1\1/2\ billion on
two contracts alone.
Independent customer satisfaction scores for our flagship
product, the electronic Free Application for Federal Student
Aid, are comparable to UPS, Mercedes Benz, and Amazon.com. Our
high standards and expectations for performance, our ability to
hire, manage, develop and reward employees, while being
respectful of our collective bargaining obligations, have
enabled us to achieve these and many other accomplishments.
However, we can do more. I envision even greater results
with flexibility such as those described in the Working for
America Act. Competitive market-rate compensation and pay
increases, driven by performance and delivery of results, will
allow agencies to attract and retain the highest caliber staff.
Managers who are equipped to properly set and evaluate job
performance in collaboration with employees will ensure
fairness in the process. Trained managers will deal effectively
with poor performance. This is how the private sector works,
and it works for the private sector.
I'm honored to be part of Secretary Spellings' team. On
behalf of the Secretary, the Department, and Federal Student
Aid, thank you for the opportunity to speak today. And I'd be
happy to answer any questions.
Mr. Porter. Thank you, Ms. Shaw. Congratulations. I'd like
to know what the 40th orange dot is.
Ms. Shaw. One of the handoffs.
Mr. Porter. Thank you very much and congratulations.
Appreciate your comments.
[The prepared statement of Ms. Shaw follows:]
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Mr. Porter. Mr. Stier.
STATEMENT OF MAX STIER
Mr. Stier. Thank you. Thank you very much, Chairman Porter,
Congresswoman Norton, Congressman Van Hollen. It's a great
pleasure to be here. Five minutes go quickly so I will speak
quickly.
I want to recognize the great work FSA is doing under Terri
Shaw's leadership. It's really extraordinary stuff and it's an
honor to work with her.
We start from the proposition that you started with,
Chairman Porter, and that is the status quo is not good enough.
We can and must do better for the Federal work force and for
the American people. And one important piece of evidence--this
I think comes from the employee surveys that you yourself
cited, just to take three quick snapshots. Less than half say
they have a high level of respect for their organization's
leaders and managers. I would point out that this is across the
board, from top to bottom on the management side. Only one-
third believe that the leaders generate high levels of
motivation and commitment in the work force, and less than one-
third agree that differences in performance are recognized in a
meaningful way. I would note that is 25 points lower than the
private sector benchmark we're looking at. This is a big
problem. It's a big problem whether we're looking at this
legislation, a big problem we need to focus on beyond just this
legislation.
We believe that the Working for America Act can be part of
the solution and ultimately needs to be a part of that solution
but that system changes alone will not fix the problem. And our
first order of business needs to be making sure that we focus
on the overall capacity of Federal agencies and Federal
managers to better manage and create performance-oriented
organizations. We believe we need to invest now to create that
management capacity because the consequences are both
significant externally and internally for the Federal
Government itself.
The Working for America Act, as has been pointed out by
Congresswoman Norton's questions and Congressman Van Hollen's
questions, is the right approach. It's very different from the
reforms we saw for DHS and DOD. It is a ``show me''
proposition, as Comptroller General Walker said, and
essentially says that you need to prove that you're ready
before you're enabled to be given these extra flexibilities.
That is the right approach, but it's also a very important
process, we believe, because you can make these changes, get
agencies ready, but ultimately the kinds of flexibilities that
are then available to these agencies will be very valuable. One
of them that is rarely focused on that deserves a little
attention is the issue of market sensitivity. It's not just
performance sensitivity that we're after, but the Federal
Government needs to better compete in the overall marketplace
for talent, it needs to be able to offer the kinds of
compensation levels that are going to be able to attract the
very best talent in different geographic regions around
different occupations at different levels. And that's one of
the provisions the Working for America Act provides for and we
think is critical.
We're taking the committee at its word here, and we're
offering several amendment suggestions as well. We believe that
there are three areas that we can focus most helpfully on in
terms of improving this legislation. First and most
importantly, focusing on that management issue that I just
discussed, we provide some language in our testimony that's
appended that obviously is draft language; but the basic
concept is this legislation would be improved if we understood
better what is it that we are looking for in management and
government. And we asked OPM to essentially create the kind of
core competencies that we believe will be necessary for Federal
managers to succeed and then, very importantly, require
agencies to conduct audits, both of their overall capacity to
manage, but also against individual managers, and then develop
plans that help them identify ways to improve their management
capacity, again, both holistically as an agency and also with
individual managers. We believe that component should be made
part of the certification procedure and would be critical. We
also believe that kind of work can and should be done here and
now even outside the context of this legislation.
Second, we think that there is an increased need for focus
to be paid upon the HR function itself. If you look at the
Clinger-Cohen Act which came out of this committee, one of the
very important provisions was it focused on the capacity of
financial--I'm sorry, IT management staff, to be able to do
their job and do it right. The HR function is facing increasing
pressure today in the Federal environment. We need HR managers
that are HR professionals that are going to be able to provide
service to the rest of the agencies in ways that are much, much
more demanding than previously, and they have faced an enormous
cut over time. If you look at the numbers, you have seen 20
percent reduction in HR professionals during the 1990's and we
believe that therefore the provision we provide there will help
in that regard.
Third and finally, we think looking at employee attitudes
is going to be essential in understanding the consequences of
these changes and whether we're getting them right, and
therefore that the survey requirements that are currently part
of law are very important, that the provision that's provided
in this draft that would limit some of or provide opportunities
for limiting the survey requirements should be itself
restricted to focus on the problem that we believe is
legitimate, and that is the one I'm focusing on in making sure
that small agencies have the option or, rather, that the OPM
Director has the option of limiting their obligation for
surveys on an annual basis.
Thanks; 5 minutes.
Mr. Porter. Good job. I appreciate the fact that you have
provided for us some suggested improvements and/or changes, and
I would encourage all those that are testifying today that as
you have ideas and suggestions, by providing them as you have,
this is very beneficial to the process. Thank you.
[The prepared statement of Mr. Stier follows:]
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Mr. Porter. Mr. Gould.
STATEMENT OF W. SCOTT GOULD
Mr. Gould. Mr. Chairman and members of the subcommittee,
thank you for the opportunity to offer joint testimony today.
I'm a vice president at IBM Corp., and my colleague, Professor
Linda Bilmes, is a member of Harvard University's faculty.
Together we've been working on a book entitled, ``The People
Factor'' for Brookings Institution, to be published next year.
We're happy to be here this morning to share with you some of
our preliminary findings and conclusions at this stage of our
research.
I'd like to offer three main points this morning. First, we
agree with those who advocate major changes to the current
Federal personnel management system. The reasons are
straightforward. It no longer fits much of today's government
work force. It defers managers from bringing in the talents
government needs, it chokes the system with red tape, and in
some cases it creates counterproductive competition between
government agencies for certain personnel.
While we agree with these arguments, in our book we have
tried to put forward a positive rationale for why the Federal
work force will perform better if it is reformed based on our
empirical findings. We have developed a method to calculate the
benefits to government of personnel reform, using a new formula
we call return on taxpayer investment [ROTI]. We have also
developed a method to estimate the cost of implementing a
modernized personnel system and we believe the benefits will
outweigh the costs by a wide margin.
My second major point: For the most part we agree the WAA
contains many necessary changes to the Federal personnel
system. However, these changes alone are not enough. As
discussed more fully in our written testimony, we suggest the
following elements are necessary in the system for managing the
21st century work force: a workable pay-for-performance system,
significant management training and education, a market-
responsive competency-based job classification system to
replace the General Schedule system, improved hiring practices,
a secure and reliable funding source to support successful
implementation, and finally, the means for easier movement of
talented individuals between the public and private sectors.
My third main point: We encourage those responsible for
modernization of the personnel system to anticipate and prepare
for the substantial implementation challenges posed by the
Working for America Act. This is the area that we want to
emphasize most in our remarks this morning, the need to take
reasonable steps in advance to enable government managers to
implement successfully the reforms envisioned by the proposed
legislation.
These steps should include the following: an active
consultation and involvement strategy, two-way dialog. Active
involvement and participation by managers and employees at all
levels in the organization, in my view, are essential.
No. 2, extensive training. Training people on their new
duties and responsibilities is essential to build competence,
and, I would say, instill confidence in the new system.
Three, employing a step-by-step change management process,
including the use of new systems.
Four, dedicated resources to support successful
implementation of a new personnel system. This will require
sufficient dedicated resources from inside government and, in
most cases, guidance from experts who have done this before.
This is not a time for learning on the job or undercapitalized
efforts.
Finally, time to effect the change. In addition to
extensive training and coaching, Federal managers will need
time to adapt, and so will our employees.
In conclusion, Mr. Chairman, I'd like to associate myself
with your introductory remarks. We must remember that public
servants make possible the millions of individual transactions
and relationships that serve the people of our country. They
provide the essential capacity of government to serve its
citizens and they implement largely the laws that Congress
creates.
The change envisioned by this proposed legislation asks a
lot of our government employees. In return, leadership must do
its utmost to earn and keep mutual trust, respect, and
accountability with these employees in order to succeed. This
must include consultation with all the parties, extensive
training, resources to fund the effort, and time to make a
successful adjustment to the new system so that we do not
jeopardize mission performance along the way. Thank you.
Mr. Porter. Thank you very much. When will you your book be
completed?
Mr. Gould. In the summer.
Mr. Porter. Thank you very much.
[The prepared statement of Mr. Gould follows:]
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Mr. Porter. Mr. Styles, president, Federal Managers
Association.
Pardon me. Before you begin, I would exercise caution for
those folks on the labor side in that you have a lot of allies
here today, and you're hearing a lot of comments that probably
concur with some of your thoughts. Having read some of the
backup material, I would encourage you to temper some of those
thoughts because you have a lot of supporters here today, and
just exercise a little bit of caution.
Mr. Styles.
STATEMENT OF MICHAEL B. STYLES
Mr. Styles. Mr. Chairman, Ms. Norton----
Mr. Porter. I don't believe your mic is on just yet.
Mr. Styles. Is that good?
Mr. Porter. That's good. Thank you.
Mr. Styles. Good morning, Mr. Chairman, Ms. Norton,
Congressman Van Hollen. It's an absolute pleasure to be here
with you.
I had remarks that I was going to read that were excerpts
from my testimony, but given the fact that we may not have
enough time to answer questions in the fullest, I'd like to at
least point to some issues that I think are important that
would be part of a question-and-answer period perhaps.
I appreciate the comments that have been made thus far, but
I also think that it should be noted that as we've moved into
this HR modification process in all agencies, as we talk about
the Working for America Act, to continue on with the things in
DHS and DOD, I think we've started out in a negative mode. What
we've started to do is talk about how the managers in the
Federal work force can't manage effectively, how the work force
has an awful lot of nonperforming individuals who get increases
automatically. I think these are fallacies, and I think that we
should readdress our focus and we should start to approach this
process with a positive rationale for the development of a new
system, taking into account those negative aspects of the
systems that we're working under today.
First of all, I believe in the empowerment of managers and
employees so that we can bring about innovative changes within
our work forces. I believe that we have been involved, and you
just watched a cycle time management demonstration right behind
me that I thought was excellent, but those of us who have been
managing in the Federal work force have used cycle time
management and total quality processes for years. So I think
it's important that the reputation and the image of the Federal
employee is recognized for what it is. We touch everything that
happens every day in America, and we do a darn fine job at
that, and I applaud everybody in this audience for their job
and I thank you for your original comments.
We also heard from Congressman Van Hollen. He said that we
have to build trust if we're to move forward. That can only be
done if we have a collaborative effort that's being put forward
by the labor folks, management, the legislature, and the
executive branch.
Certain concerns that we have as we move into this new era.
We have myths that have to be debunked. The private sector does
not manage better than the Federal sector in all instances. We
can learn from each other in very many ways. Each agency can
learn from each other.
Workers are more efficient in the private sector? I don't
think so. I think, once again, we have a balance here that we
have to look at. Our workers are pretty darn good. FMA
represents managers and supervisors across 35 different
agencies, and I've had tremendous pleasure over time, 16 years
of that time as president of the FMA, to go to all of these
agencies and see what we do in America, day in and day out, and
I am very proud of what we accomplish.
Points to bring out before my 5 minutes are up. If we are
going to move forward, obviously funding for training is
essential. When I talk about training, training for bringing
into place new HR systems. And, by the way, we need training
for the HR systems that are in place. We haven't had enough
training, it isn't ongoing, and one of the reasons is because
funding hasn't been provided for us. That funding, in our eyes,
should be fenced. You should not be able to go out and use
training funds as a discretionary fund for some other aspect of
business. Agency oversight of expenditures has to be taken into
account and tracking of training so that we ensure all
personnel are trained. We can't allow those training dollars to
be stolen from--and I have here, Peter to pay Paul.
What we've already seen in demonstration programs across
the country is the fact that we haven't given them extra money
to provide training, we've just given them training dollars.
And now suddenly they don't have the same amount of funding for
safety and security training, for instance.
Pay for performance. We already have pay for performance,
but people don't seem to recognize that. It's kind of an ironic
thing. We do have a process to provide people with--my time is
running here. OK.
In order to be effective in pay for performance, we have to
make sure that we fund for the raises, whether we're in our
system or another system, and I think it's a fallacy, as I said
before, to think that folks automatically get pay raises,
because nonperformers don't have to get a pay raise in our
current system either.
Do I think that there are merits to our proposal, Working
for America Act? I do. I think market-based pay is essential if
we're to move forward and be competitive in the marketplace.
But, just to quickly say this before time goes out here, an
example, what we do now is take a GS-11 and GS-12 and make a
band out of it. We take a 13 and 14, make a band out of it.
I thank you very much. Maybe I'll get a question on that
later to finish that out. Thank you for your time.
Mr. Porter. Thank you, Mr. Styles. I appreciate your
comments. The success of the current system or the future
system rests in your hands as long as it's funded properly and
you have the proper training to work with. So I concur.
[The prepared statement of Mr. Styles follows:]
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Mr. Porter. Mr. Gage is the president of the American
Federation of Government Employees.
STATEMENT OF JOHN GAGE
Mr. Gage. Thank you, Mr. Chairman, and Ms. Norton and Mr.
Van Hollen.
Mr. Chairman, you have entitled today's hearing, ``Mom,
Apple Pie, and Working for America: Accountability and Rewards
for the Federal Workforce,'' and asked me to comment on the
proposals.
Working for America, mom, apple pie--based upon our union's
experience with the congressional debates over personnel
changes in the Departments of Homeland Security and Defense, we
certainly hope that the proponents of this legislation do not
mean to portray those who might oppose it as working against
America in an opposition to mom and apple pie. We certainly
hope that a reasoned discussion of the merits will take place
and that one's position on pay for performance and the
destruction of union rights and due process will not be framed
as yet another measure of loyalty and patriotism.
Should Federal employees be forced to compete against their
co-workers for a salary adjustment? Should Federal employees
have to wonder from year to year whether a supervisor might
decide he or she needs a pay cut?
Mr. Porter. Excuse me, Mr. Gage. If I may interrupt for a
moment. I personally take exception to those comments. And as
an individual that for 20-plus years has worked closely with
the employees of local, State and Federal Government, I take
exception when you would comment that we be against those and
would not believe that they're American. So I take exception to
that. Please understand this committee is here to have a fair
hearing on the proposed structure of pay for performance, or
whatever it is that we conclude at the end of the day. But,
please, I do take exception.
Mr. Gage. Thank, you Mr. Chairman.
Mr. Porter. Excuse me, Mr. Gage. As for the balance of my
committee and this Congress, there are people that are working
very hard, trying to work with you to make sure that
employees--we have the best and brightest that can take care of
our customers, and that's the taxpayers.
Mr. Gage. With all due respect, Mr. Chairman, we've been
through this before with Homeland Security and DOD. I just want
to note that we didn't think those discussions were very fair.
And I do appreciate that this will be different, but I thought
it would be appropriate that we mention that because we have
been through it.
Mr. Porter. Again, Mr. Gage, we have a meeting later on
today, and I think we can finish this discussion at 2 o'clock.
On behalf of this body and this committee I do take exception
to those comments.
Mr. Gage. Thank you.
Should Federal employees be prevented from access to their
union-negotiated agreement procedures when they have evidence
that a supervisor's evaluation of his performance is
inaccurate? Should Federal employees be denied to have an
unfairly imposed penalty overturned after an unbiased third
party has decided the penalty was unwarranted? Should Federal
employees be forced to work as probationary employees for 3
full years, without any rights on the job at all? And should
Federal employees who work for the Federal Government be forced
to trade a pay system that sets their salaries according to
objective factors such as job duties and responsibilities, and
adjust those salaries according to objective market data for
one in which supervisors decide their salaries based on
personal assessments of their personal qualities or
competencies? Should these employees trade salary adjustments
based on data collected by the Department of Labor's Bureau of
Labor Statistics for so-called market surveys conducted at the
discretion of local management by whatever private outfit the
manager chooses? And should Federal employees who vote for
union representation and pay union dues be denied the right to
collective bargaining on anything except issues management
decides are foreseeable, substantial, and significant in terms
of impact and duration, including such issues important to
every employee, as work schedules, travel, overtime, fair
promotions, career development and training?
Our answer to each of these questions is an unequivocal no.
And that is why we urge you to reject the proposed legislation.
The employees AFGE represents want their voices to be heard
in the development of any new pay system, especially on
fundamental issues such as the classification methods, criteria
and systems structure, the way base pay is set and adjusted,
and the rules of pay administration, including policies and
procedures for something as complex as pay for performance.
The administration's draft legislation extinguishes the
voice of workers who would actually be paid under the new
system. There is no provision for any collective bargaining at
all with regard to the development of the new system, despite
the fact that, across the board, participants in demonstration
projects maintain the only way such systems have any degree of
legitimacy, support, or fairness is if these issues are
addressed in collective bargaining and worker protections are
written into a fully enforceable collective bargaining
agreement.
The administration's bill is not about either rewards or
accountability; indeed, it would eliminate several mechanisms
for holding agency managers and political appointees
accountable for how they treat the Federal work force in terms
of the way that work force is selected, retained, disciplined,
terminated, managed, and paid.
Although the administration contends that the merit system
principles will be upheld if its legislation is enacted,
there's almost no way for Federal employees or others to obtain
information to confirm or disprove this.
Mr. Chairman, I think what I'd like to conclude on is that
we think there can be changes in this system. We have suggested
changes in this system. But for this system to have any
credibility and be transparent, taking away union rights,
employee rights, Civil Service protection, starts off on the
wrong foot. And I hope
that in further discussions we can make this a much more
positive experience for Federal employees instead of what it is
being seen out there by Federal employees now. Thank you, sir.
Mr. Porter. Thank you, Mr. Gage.
[The prepared statement of Mr. Gage follows:]
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Mr. Porter. Ms. Kelley. Save the best for last. Appreciate
your being here today.
STATEMENT OF COLLEEN M. KELLEY
Ms. Kelley. Thank you, Mr. Chairman, Ms. Norton, Mr. Van
Hollen.
Mr. Porter. I don't think you're on just yet, your mic.
Ms. Kelley. Does that work?
Mr. Porter. That's working. Thank you.
Ms. Kelley. Can you hear me now?
In anticipation of the proposal from the administration, I
have been talking to NTU members across the country of what we
expected would be in this proposal, and I can tell you that
they are very concerned and opposed to many of the provisions.
In anticipation of this hearing, we conducted a survey of
our members just over the past 2 days, and I wanted to share
with you the results of the survey.
We have a chart over here. Our survey shows conclusively
that mom and apple pie lovers who work for the Federal
Government are overwhelmingly opposed to the proposal that is
being put forward that would change the personnel system across
the government.
NTEU has serious concerns and objections to the
administration's proposed governmentwide changes, and they fall
into two main categories: The first is that despite the
administration's comments to the contrary, the proposal would
make numerous, substantial, and detrimental changes to employee
rights in the areas of collective bargaining and due process.
And, second, the proposed pay system is unacceptable on
several grounds, including the fact that it is not seen as fair
or transparent, nor has it been tested.
Employees who perform superbly will have no reliable
expectation of pay increases. It is excessively complex and
will require huge increases in funding to administer. Its
references to holding managers accountable have no foundation
in the statutory language, and it will thwart rather than
promote the teamwork that is necessary to advance the missions
of the agencies.
With regard to the labor management provisions, there have
been a number of discussions already around the new definition
of emergencies. I would just note that the current law already
provides great latitude to agencies to act without regard to
collective bargaining obligations in emergencies. NTU does not
object to that. What we do object to are the new definitions
that have been discussed that were read from the record by Mr.
Van Hollen, and, I would also add, one other set of language in
here. It talks about the agencies' ability to preclude
bargaining when they are preparing for, practicing for, or
preventing any emergency. Now it seems to me if you are
preparing, preventing, or practicing for, you are not in an
emergency; and therefore, this language should not apply.
The administration's proposal also limits employee due
process rights in a number of significant ways. Just one
example is a new standard that is being proposed for the
mitigation of penalties by the Merit Systems Protection Board.
Today, if the MSPB finds a penalty unreasonable, it can direct
it be changed. This new bill would change the standard to
totally unwarranted, rather than unreasonable, and this
proposal is very similar to language that we see in the DHS
regulations, and that language is wholly without justification.
Now as we all know, that provision has been struck down by
the U.S. District Court in NTEU et al. v. Chertoff. I find it
hard to believe that the administration wants to pursue this
provision when one so similar has already been ruled illegal.
The administration's bill would also expand the untested
and complex pay model from DHS and DOD before it has ever been
implemented or tested in these agencies, and there is no
evidence that this model will increase recruitment, retention,
or performance. And in fact, similar models have shown negative
results.
At the IRS, while employees represented by NTEU are not
covered by a pay banding system, the managers there are, and
the IRS hired the Hay Group to do an evaluation of that system
and this is what they found. Here are the results: 76 percent
of covered employees felt the system had a negative or no
impact on their motivation to perform their best; 63 percent
said it had a negative or no impact on the overall performance
of senior managers; only 25 percent of senior managers agreed
that the system was fair, and increased organizational
performance was not attributable to the system.
Now, under the administration's proposed pay system, there
will be many changes in how adjustments of any kind will be
provided to employees. There are a lot of new terms to be
learned, range rates and maximums and minimums, and there is a
lot of language in the proposal that says the director may
establish this or the director may provide that pay raise. But
at the end of the day, when you apply this new language, it is
very likely that an outstanding employee could receive no
locality adjustment because their occupation was not given an
increase. Because of the new definitions around pay pools and
the authority of the director, who may do this or may do that,
it is very possible that top performance would not receive a
pay performance or a performance pay adjustment because their
pay or their occupation may be determined not to have
contributed significantly to the mission of the agency, even
though they are a top performer in their occupation and doing
what they need to do to excel.
Now, assuming there is adequate funding to pay for
performance increases, which I think is questionable at best,
there are a lot of questions about managers who are having
difficulty applying the current structured system today and
having to move to a more vague, undefined system that employees
will have no confidence in.
If I could just summarize for a few seconds here, I would
suggest that the things NTU and our members believe are
important to the success of the agencies and a new system are
leadership; that rules and systems don't motivate people;
leaders do; opportunities for employees to have input into
decisions that affect them and the functioning of their
agencies--they have good ideas that are currently being
ignored; and a fair compensation that has credibility among
employees, promotes teamwork, is adequately funded and is not
administratively burdensome, as is being defined in this new
system.
So unfortunately, we do not see the system as meeting these
standards. But, again, I very much welcome the opportunity to
appear before you today, look forward to working on changes
that can be made that would be fair and appropriate, and to
answer any questions you might have. Thank you.
Mr. Porter. Thank you very much.
[The prepared statement of Ms. Kelley follows:]
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Mr. Porter. I'd like to ask, Mrs. Kelley, possibly we can
chat some time as to maybe a blueprint that you would suggest.
I say this, taking lead at Mr. Styles from a positive
perspective. I would assume you would concur that the system
needs some change, whatever it is. We may disagree on what that
it is, but it's a system that's been in place for 50, 60 years.
Today is not necessarily the time, but this is a draft, and I
would encourage that we could sit down and come up with some
positive ways to work on a system, a new and improved system. I
realize it's not a question. I just look forward to working
with you for some ideas and a blueprint you would suggest.
Ms. Kelley. I would welcome that opportunity. But if I
could add, Mr. Chairman, I do not think the current system is
perfect, but I believe what is wrong--where the current system
is the implementation of it, not so much the system. So my
worries are really magnified when I think about a vague,
undefined system and having to implement that, when there are
so many problems with implementation of the structured system
in place today.
Mr. Porter. I would expect you have heard this morning, not
only from some of the panelists but the subcommittee, that we
have similar concerns. Thank you.
Again, we always like to pick on manager styles. I follow
your lead again and ask for comments from Ms. Shaw.
On a positive side, you have had such great success and
we've been hearing this morning of the pros and the cons, and
certainly a lot of cons have been brought out, but how does it
work, how did you do it? Share with us how you had such great
success, because, based on what I'm hearing from some folks
this morning, is that it can't work and it hasn't been
successful.
Ms. Shaw. Well, it can and does work. It's worked for
Federal Student Aid. I'd like to say for the record here, all
of the accomplishments in the Federal Student Aid Office at the
Department of Education have been made by our incredibly
dedicated and talented Federal career staff at all levels. We
have just under 1,100 employees and those are the people who
did all the work for these accomplishments.
I would say that what we have been able to do, we do have
some flexibilities afforded to us in our performance-based
organization statute. We've been able to use those, and
particularly the hiring flexibilities I described. But also I
need to add that we've been able to work very diligently with
what--the other processes and procedures that are already in
place.
We've heard some of my panelists up here talk about the
system that we have today is difficult for people to
administer. It is. We have focused on that very diligently. We
have a host of training for our supervisors, new supervisors,
employees, around performance management and how that could and
should work, and we just keep at it.
We don't expect change overnight. We've been working on
this during my tenure, for 3 years. And there is an
organizational and operational and people readiness around
change. And we have been working that with a very focused plan
around our work force management. We have a strategic plan
around that, and it is working. I'm not here to say it's
perfect, but it is working. We are delivering incredible
results for the Department and for taxpayers.
Mr. Porter. Thank you. I think I said earlier, and I would
concur with your comments that we truly have some of the best
and brightest working for the Federal Government. With proper
funding, proper leadership, and proper training, I think we
certainly could emulate what your success is also. So with
that, I'd like to just remind the subcommittee we have about
another 30 minutes for questioning. I'd like to open it up for
questions.
Ms. Norton. Thank you very much, Mr. Chairman.
Let me begin with Ms. Shaw. First of all, let me
congratulate you on the vast improvement in the student loan
program. The taxpayers are happy, and I'm sure that the
consumers, colleges and universities, and particularly students
themselves.
I just want to note for the record that the Washington Post
did run an article this summer in which it talked about
thousands of civil servants leaving the Federal Government, and
that OPM led the list, 21.8 percent. So they wanted to seek
employment elsewhere in the government. The high rollers were
the OPM, Homeland Security, Defense--these are all
percentages--and, surprisingly, OMB. I guess they're tired of
cutting people's budgets or something. And the Education
Department was among the high rollers.
I don't think that takes away from what you have done. I've
read your testimony carefully and listened to you, and as best
I can tell, there are two major factors responsible for your
success. First of all, the problems with the agency were
attributable, it seems to me, to two bodies. One is this body
and the other is the management of the agency. And when you
describe what you have been able to do, essentially put in
place whole new systems so that you have tackled the high
default rate, that didn't have a thing to do with employee
performance. That had to do with the management of the agency.
Unhappy customers. That had to do with the shocking
performance of the agency. And its customers were, of course,
the colleges, universities.
Financial controls. That didn't have anything to do with
anything, except how managers, in fact, enable an agency to
run.
Then you go on in the second part of your testimony to
indicate how you did it, and one of the things you stress--and
I appreciate, and I'm not sure there would be much exception
taken to what you did in hiring--if we were in fact to
streamline our hiring. And you talked about hiring 70 senior
managers and professionals with the right skills who were
needed to work with the Federal career staff. Your career staff
is still there. The same folks are still there who everybody
was complaining about, and I know exactly what that process is
about. When I came to the EEOC, the people who took the flak
were the investigators, were the people who had to deal with
the public. What needed to happen was a whole new system needed
to be put in place.
With all due respect and for all the credit you must be
given, I must say that you show what can be done with the
present system, with the present pay system, with the present--
absolutely everything else. We didn't do anything to you the
way we did to OPM and to DHS. You made the present system work.
I think everybody needs to get in there, first and foremost
GAO, and find out how by putting in new systems you were able
to get the same civil servants to give you far better
performance. Has there been a GAO study of what you have been
able to achieve?
Ms. Shaw. Well, GAO was in for practically a whole year
before they took the Federal Student Aid programs off the high-
risk list, and they studied us from top to bottom.
Ms. Norton. But they were studying, of course, the very
things you report in your testimony.
Ms. Shaw. They studied--one of their particular focus
points was around our work force management and how we were
caring for our staff, growing our staff, focused on
performance, focused on the challenges that face every agency
with succession planning, the aging work force and planning for
the future. They actually spent an incredible amount of time
with us on that.
And I don't disagree with you, and I remarked to the
chairman that we worked very diligently to do better with what
we did have in terms of process, procedure, and program and
systems. And I'm not going to deny it does take leadership, not
only from me, but from every leader and manager in the Federal
Student Aid Office; and for my office, that's around 150
people. I meet with those people once a month, all together,
and we talk about these kinds of things: How are we going to
elevate our performance? How are we going to solve for this
problem or that problem with what we have? How are we going to
use the flexibilities that are afforded to us in a very smart
and managed way and with purpose, with an end result in mind,
and be able to, of course, correct as we go to inform ourselves
with things that maybe weren't working so well? How are we
going to change that? So it's a combination of all of those
things together, you're absolutely right.
Ms. Norton. Thank you. I think this neglected notion of how
management transforms, rather than workers from the bottom up
transforming agencies, could not be more important. And I don't
know the extent to which it's reflected at all in our bill.
I do have a question really out of--really to ask the
experts who have been looking at this. With all due respect to
you and the work you have done, because I think your work, Mr.
Gould--and, I'm sorry, is it Mr. Stier--is very important to us
to get, by people who think from outside the government. But
you are not helping me enough to meet the intellectual
challenges that I think we are posed with.
Let me just put the hard question to you as far as I'm
concerned. First you have to ask yourself why would anybody set
up a system like this. Why would anybody set up a cumbersome,
unwieldy system for hiring people, when we live in a market
society and everybody else out here gets paid basically to the
extent that they can? And of course, this is overblown, this
whole notion that everybody in the private sector gets paid
based on merit, and everybody sits down and goes through these
exercises. But let's leave that for a moment. Why are we in
such a system? All of this talk about market-based doesn't
phase me at all, because I don't work in that system.
If I ask myself these two hard questions, I come back with
these answers. We have this system for this unique work force
for two reasons: One, when there was a market-based system--if
you will forgive me, before there was a Civil Service system,
there was wholesale favoritism and fraud that so disgraced the
government of the United States that the Civil Service system
was created. Second, over the years, as a result of cases
brought in the courts, the courts have been forced to face the
fact that this is a system to which Constitutional protections
of due process apply.
Now, unless you can help me get through those two major
issues, you can't--the rest of this I already know and accept.
Therefore, I need to know, giving you the two great challenges
I see we face, how you would deal with a section of the present
proposal, for example, that gives so much flexibility to pay
that if an employee happens to be in the wrong pay pool, the
pay pool which the supervisor has decided in his discretion it
should not have, that group should not have the same kind of
increases that others have, even though that person has worked
their fanny off trying to hold up their end of the bargain.
That person is out of luck.
So if you can help me get through that, you would have
helped me. Or if you can help me get through this, you have
helped me. We're talking about pay for performance. Now, we're
talking about pay for performance so far in a bill that would--
and, again, the chairman could not be more right, it's not a
bill. We know what the administration has proposed, but we have
not disposed yet; and the chairman is trying to find out what
is the best way to do this.
But look at what it would do. Performance on which your
pay, your life, sir, depends, for all intents and purposes, not
to mention you might be out of the government altogether based
on this performance. That doesn't have to be in writing, can be
set--if the particular supervisor decides, or the agency
decides, it can be for the team, performance for the team, it
can be for the organization; in fact, it can take any darn form
you want it to take.
Now, I'm talking about a 2 million work force Federal
Government, and I'm talking about the structures we're talking
about, and you don't help me unless you can help me get through
those kinds of circumstances; because I guarantee you this,
gentlemen, this system, as the administration has now given us,
is a bonanza for lawyers, but it won't do anything for the work
force, because you'll be litigating this over and over again.
And I'd like your answers based on those two examples.
Mr. Stier. Congresswoman Norton, system change alone is not
going to fix our problems here. And as President Kelley said,
implementation issues are vital, and that is part and parcel of
our recommendations here; that we focus now, irrespective of
any legislation, on making sure that we help the Federal
Government improve its performance by focusing on management
capacity, on training development and a variety of other
issues. That has to be dealt with here and now, and I think the
function you're performing here in the oversight role will be
also vital to making sure that the Federal Government gets the
resources it needs and also focuses the attention that it
needs.
Ms. Norton. Would you agree, for example, before you went
to any system that said you can pay based on that, that you
ought to experiment with that in a sufficient number of folks
before spreading it throughout the work force? Would you agree
that before you decided that there should be flexibility to pay
performance, on which everything is based, could be any darn
thing you say it should be at your discretion? Do you believe
those things should be implemented only after it has been shown
they produce fairness and that they survive due process
constraints under which the government of the United States,
even its work force, must operate?
Mr. Stier. I would agree with you 100 percent. I think the
Working for America Act does this. Agencies should not be given
additional authorities and additional flexibilities until they
can show that they can use them effectively. And that is, I
think, a very important component of this legislation.
You asked the question why would anyone set up the system
that we have here today? And I would argue with you that all of
the issues that you raised can be addressed in a very different
system, a more streamlined system. I don't think anyone set up
this system, I think it grew topsy-turvy over time. I think it
grew because there wasn't sufficient focus from the top of the
house down on making sure we had a system that was enabling
people inside government to do their jobs effectively.
I think all of your concerns are absolutely legitimate in
that there is no doubt that the public sector is a different
environment than the private sector. There are different
concerns and there are different needs, and it would be a
mistake to believe that any system that is the best in the
private sector could be translated fully, as is, into the
public sector.
That said, I believe there is enormous room in the existing
system to permit Federal workers to be in an environment in
which they are supported more, they're rewarded more, not just
financially but in recognition for better work. I think that
would enable Federal workers to do more and do better. I think
there is enormous room to permit the system to allow it the
flexibility to hire people at rates that reflect the overall
talent war that's out there.
When the Federal Government is looking for people, it's
competing against all other sorts of organizations and
different sectors, and I think that's what the Working for
America Act should be designed to do. And I think there is room
here for it to do that.
I look forward--I think that there are individual places, a
lot of places where it can be improved. I think that the
chairman's question to President Kelley is a great one. I
believe that there is going to be unanimity that we can do
better, and the real issue will be identifying ways to make
that happen.
Mr. Porter. Thank you very much. Mr. Gould.
Mr. Gould. My view is the system was created 50 years ago
when Frederick Taylor reigned, and the nature of the mission
challenges the government faces today have changed
substantially: faster cycle times, greater threats, the
evolution of terrorists in the world, plagues that can travel
the globe in a matter of hours on an aircraft. We need people
who think, act, and move differently in the system and a system
that will support that.
I offer that as a mission-base perspective at the same time
that I acknowledge your very astute point on what part of the
system do we need to preserve the merit-based components,
protecting from undue political influence, and recognizing the
core fact that government is spending other people's money, the
taxpayers' money. We've got to find a way to do that
efficiently and effectively.
Mr. Porter. Thank you. We just have a few moments left.
Ms. Norton. I want to say, Mr. Chairman, that one thing
that this hearing has done for me is to indicate where emphasis
has to be. Certainly it's not on these bottom-line notions, all
that you have just said about the need for upgrading the system
or changing even substantially a system after 50 years. You get
everybody agreeing with that in the whole Congress, and that
will get us nowhere.
What in fact we need to do is, and Ms. Shaw has helped us
immensely by showing us the difference between hiring where the
flexibility does not implicate due process in nearly the same
way, to some extent, but not nearly in the same way; that
streamlining can work; and that you can use hiring as part of
the overall system.
But her testimony also shows us, and everybody needs to
look at what she's done, because she did it with what was in
place. And no one here has talked about what is in place works
good enough, or is all of that to be disposed of? So I would
ask us to focus on two things, because those are really the
only two things that matter here: performance and how we
measure that; and pay, and how you arrive at how pay is done.
Everything else is secondary or tertiary. Thank you.
Mr. Porter. Thank you very much. Mr. Van Hollen.
Mr. Van Hollen. Thank you, Mr. Chairman. Thank you all for
your testimony.
Thank you, Mr. Stier, for what you do at the Partnership
for Public Service to recognize the many achievements of our
public employees. I thought that the reception that you had the
other evening, recognizing those public employees, put exactly
what we're talking about here, the importance of the positive
forward and the incredible achievements of so many of our
public employees.
So often, I think, to the American public you have this
image of faceless bureaucrats, and I think that's compounded by
the fact that people often are critical of the Federal
Government without knowing what they do and the complexity of
the services they provide. So I think that recognition is
important, and I thank all of you for coming to testify in that
spirit.
I would also like, Ms. Shaw, to congratulate you on what
you have been able to do, and part of what does come out of
this conversation is the leadership of the manager is
important, and it's also important to support the managers with
the resources they need both in terms of training, so we have
trained managers, and that they have the resources they need to
provide the incentives that we need to deliver.
We're having this discussion outside sort of the whole
budget process, but I think we all have to understand it's easy
to say we're going to provide the resources, but I can tell
you, around here providing resources for this kind of critical
function has been very difficult to get.
So I hope that everybody will be just as unified in calling
for those additional resources and not supporting an effort
that's going to go forward in a way that's not done right. You
need the resources to do it, and the testimony has reflected
that.
I'd just like to pursue a little bit what my colleague Ms.
Norton, Representative Norton, was discussing with respect to
the existing tools that are out there that would allow us, if
they were put to better use, to get better results. I think
that there are clearly areas for improvement. We need to be
able to hire people more quickly. Doesn't do anybody any good
if people who want to join the Federal Government and offer
their services and are qualified, if they go somewhere because
we can't hire them quickly.
Clearly, we need to compete with the private sector on
salary in many, many areas, because we are losing expertise. I
do think that we need to be able to provide managers to have
clear criteria for their employees, the ability to reward
employees, but I would just--here is an example I think sort of
tests the system.
There is a little department within the State Department,
the Bureau of Intelligence and Research. You can't measure them
by what they produce in terms of how many student loans they
grant or that kind of performance. They are measured in
performance in terms of their ability to try to analyze what is
going on around the world and provide an intelligent assessment
and analysis of threats and that kind of thing. The Bureau of
Intelligence and Research, if you look at the footnotes on
various intelligence, national intelligence estimates, were
among the people who said, with respect to Iraq, that there
really wasn't a great--a lot of evidence of weapons of mass
destruction in Iraq.
And I am not going to debate the Iraq War. I am just saying
that is their job is to reach that conclusion. There was a
little foot buried in the national intelligent estimate. They
did their work. They were skeptical. They did it at some risk
to themselves in many cases because the whole politics of this
were that we are going to find evidence.
Well, I don't think any of them, frankly, has been
recognized or rewarded for the fact that they got it right and
then you have George Tenet getting the Presidential Medal of
Freedom, and he said it was a slam dunk case that there were
weapons of mass destruction.
Now, this is the political environment that we operate in.
And we need to have a system where those Federal employees,
whether in INR or Department of Education, or wherever they may
be, have the assurance that their work is being judged based on
their performance and not being judged based on other
considerations.
Now we have a vast Federal Government. Some of it is done
in a context that is not that political. But much of it is done
in a context political. And whatever system we come up with has
to be able to accommodate employees in both spectrums, or you
are going to have to have separate systems, depending on the
nature of the work.
And so I just, as we go forward, and Representative Norton
was talking about that, which is that part of the reason we
have the existing system is to prevent people from being
unfairly punished just because they have a different political
perspective in certain jobs.
And many jobs, again, are outside that parallel. So I would
just ask, with the system we have today, what more should we be
doing, what are the existing authorities that people have that
are not being taken advantage of? If we are not allowed to hire
people quickly, we should change that, in my view. OK, if we
can't compete with the private sector, which we obviously
can't, we should change that. We can find common ground.
But where are some areas in terms of pay for performance
like the bonus system that are not being adequately used today
to try and do the kinds of things that Ms. Shaw has been able
to do under the existing system? And I would just throw that
open to all of you.
Mr. Gage. Well, there are a number of things. I have been
advocating that we take a look at our career ladder system. And
I don't disagree with what anyone said about hiring. But once
you're in, what motivates Federal employees is not the within
grade increase that everybody says is--I don't know, people get
unfairly or just for longevity.
What motivates Federal employees is promotional
opportunity, is to be able to do a good job and to really
excel. And I see that just an agency that week I believe is
saying one problem with their pay for performance is that
people with a pay band did not have that incentive to work hard
for a promotion. And I think that is an incentive that really
is overlooked by the whole pay banding. But you know to reward
people, I think there is opportunity right now, Mr. Van Hollen,
to reward the best and brightest. I don't think that really is
a problem to use the system that we have right now to reward
the best and brightest. And if we want to change criteria from
within grades, have at it, that's fine. That is really not a
problem. I think that the pay for performance system and the
experiments that we have seen so far are really apples and
oranges compared to what this is.
Some of these, most of these, and I look forward to seeing
OPM's paper on these things, but most of them have--the
agencies have put supplemental money into it. People are
getting actually more money under that system--under the
experiment. I don't think that is the same--that is
contemplated in this proposal.
I think too, that when you break down, and we had a hearing
the other day in front of the Senate, and I thought there was
pretty much of a consensus that in the Federal Government, one
size does not fit all with many of our jobs. Pay for
performance, for instance, in law enforcement, will not work.
Can't work. Kills that teamwork. It just--no experiment has
showed that it works.
So I think it takes a lot of thought and to be very careful
to try to extrapolate from some experiments that applies to
scientists and take that down to our VA workers, our Social
Security workers, whose job is much different than the jobs
that were used in these experiments.
Ms. Kelley. I would also suggest that the agencies do have
authority to do some things today that they don't make the
maximum use out of, things like quality step increases to high
performers. They are given out in most agencies in very small
numbers. And there are no restrictions on that. They can give
them as they see fit. Yes, they have to do it within their
budget structure, they have to be able to fund those. But those
are recognitions that are seen and recognized across the
Federal work force when they are given. But they are given so
rarely.
There are also opportunities for managers to provide
management awards. And they have the discretion to do that.
Because we see them not implementing that very much, in many of
our negotiated rings, NTU has negotiated award agreements with
agencies so that there are known criteria for what employees
would need to see in a performance evaluation to know that they
would then be eligible for, or not eligible for an award under
the negotiated system. And we have done that because left to
the discretion of the agencies, they just do not use these
things the way they should.
Are they, you know, the be all and end all? Would it solve
all the problems of the current system? Of course not. But
there are two things right there that are within their
discretion that they do not use.
And someone last week at a hearing said that everyone gets
quality step increases. Well, I can tell you that is absolutely
not true. We have looked at numbers across agencies where NTU
represents and the percentages of employees who receive these
are very small. And there is no consistency across agencies.
Some will give as high as 5 or 10 percent of the work force,
and others will give less than 1 percent. We have worked with
some of our agencies in an effort to have them raised to more
of an average government level. Even though we don't think
there is a magic number, we think that if an employee is told
if they do A, B and C, and that is what they need to be to
excel, and they excel, then they should expect that recognition
and reward at the end.
I agree it is not just about money, but it is about
compensation and it is about recognition among the work force.
It is about promotional opportunities, about detail
opportunities, about temporary promotions, about creating new
jobs that will allow these employees to use the skills that
they have shown that they have and can excel at.
And all of these things are available to every agency today
with no limits on them at all, and yet they are not used.
Ms. Shaw. If I may add, we do use all of those things that
were just mentioned in Federal Student Aid. And in fact, we
used existing performance management system at the Department;
it is called Ed Pass. It is a five-tier system from highest
performance being outstanding, lowest being not acceptable. We
have spent the first 2 years of my tenure really focused and
talking about performance and educating the work force,
including management, training management, what does it mean to
have a sound, understandable, measurable performance plan? How
do you as a manager, evaluate that performance fairly and
accurately with that employee-based process that is currently
in place?
And then what we believe in, in the Department of Federal
Student Aid, is we want to reward the highest performance to
the maximum extent we possibly can. Our average outstanding
performer on this recent review cycle received an average of
$6,000 cash award. I don't know if that is high compared to
other agencies or not, but we told our performers, if you
perform in an outstanding manner, we are going to be fair and
we are going to reward you. And we have done just that. And
people respond. And it is not just about money. They do
respond.
We are doing incredible work. And people want us to be fair
and they do want us to recognize their performance. And that is
what we are about.
Mr. Styles. I think revamping some of the processes as
well, when you talk about QSIs, different agencies have
different methodologies for providing the QSIs. And I think
that, you know, you keep hearing me going to funding, funding,
funding. Even if you go to pay for performance, if you don't
provide the funding, you're going to undermine the system
before you even get there.
If you talk about market-based pay, if I could just jump to
there for a second. For us to take GS-11 and 12 brackets and
put them together and call them a pay band, and then 13 and 14
and make them a pay band, that is all well and good, especially
at the hiring levels where it gives you a little more of an
opportunity to hire people at different levels. But if you
don't raise the top level, if the GS-14 step 10 or GS-12 step
10 remains the same as it is today, you have not created a
market-based pay system unless you put into effect FEPCA, if
you really want to come down to it.
If you do not have those levels within those market areas
equal to, how can you possibly go out and recruit those folks
using a market-based pay? Did I make any sense with that? All I
am saying is to name it something, without providing that
essential tool, which happens to be the dollars, and the
benefit program that we have in place, then you're not going to
accomplish anything by doing that.
Ms. Kelley. If I can add one other thing that I hear over
and over, and in my experience, front line managers share many
of the same issue with front line employees. That is where the
rubber meets the road. That is where the work gets done. And
they very often, the front line manager wants to recognize the
front line employee. They want to give them a QSI or they want
to give them a cash award. And then what they run into is lack
of support from above.
I have had employees tell me that they were nominated for
QSI and their manager said they were told they could only put
in one per group. Well, what if you have three top performers,
three outstanding performers? Putting caps like that is not pay
for performance. That is exactly the kind of thing that will
give no credibility to a system. And that happens every day
today where front line managers who see the work and recognize
the top performers, and who should be recognized and rewarded
so they can motivate as well as reward, are not being supported
in their efforts, whether it is about training, whether it is
about support commitment, funding whatever it is, those front
line managers are really in a position where they cannot do
what they recognize needs to be done on behalf of the front
line employees.
And I don't doubt that it happens to them too, but I can
just tell you that I see it between the front line managers and
front line employees all the time, that the front line managers
are in a very, very difficult position and not being given the
training and support and funding to do what they know is the
right thing.
Mr. Porter. Appreciate your comments. We are out of time.
Mr. Van Hollen.
Ms. Norton. Would the gentleman yield to me? I just want to
because I think something very important has happened here. You
know, in this last discussion, I think we have learned that
there are more than the devil in the details, that the solution
to much of this may lie in the details.
You were telling me stuff, you know, I didn't know, and I
find it very informative. Because, first, when my colleague
asked about quality staff increases, my first notion I said to
him, do you know why anybody would do it? And this discussion--
by the way, Ms. Kelley, I can see reasons why there would be
some limits on it, you know, wherein the front office has to
deal with the agency's total budget, I can see where there
might be great variations, and I am sure you can see
circumstances in which that would happen. But I am driven back,
as I listened to you, to a hypothesis, that despite Ms. Shaw's
experience, and again, she is a gold star performer, where she
has been able to do very substantial quality step increases,
apparently, without getting morale problems within the agency.
Let's assume that, at least. I am driven back to the risk
that the manager takes by presuming to do so in a system,
again, bound by due process, where everybody compares to
everybody else under the law, where there is, in place, no
standard, even a rough one, to guide that manager, and so the
manager sees what she wants to do and she does it. She is
taking a great risk. And the burden is on the Congress to help
the OPM come to some way to harness this so it can be used.
Mr. Porter. Thank you, Ms. Norton.
Mr. Van Hollen. I want to thank you all you for your
testimony. I think this was a hearing where lots of good ideas
came out. I think the transcript will be something that we will
all want to read as we go over this. And we welcome obviously
your continuing input. Thank you, Mr. Chairman.
Mr. Porter. Thank you very much. I appreciate you all being
here. We had some diverse opinions, but all taken in a positive
sense. I would hope that as we picked on you, Ms. Shaw, today,
in a positive way, we would like to make sure that your
successes would be the rule and not the exception. And it
appears that there are managers that are afraid to take--or
afraid they are not going to have support. There are leaders
that have troubles with existing systems. So we want to make
sure that yours is the rule and not the exception. Thank you
all very much and all Members will be able to submit additional
questions. And they can submit them for the record. I want to
thank you all for being here today. The meeting is adjourned.
[Whereupon, at 12:14 p.m., the subcommittee was adjourned.]
[Additional information submitted for the hearing record
follows:]
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