Opening Statement
U.S. Senator Daniel K. Akaka
Chairman, Senate Subcommittee on Oversight of Government Management,
the Federal Workforce, and the District of Columbia
Committee on Homeland Security and Governmental Affairs

"GAO Personnel Reform:  Does it Meet Expectations"
Joint House/Senate Hearing - Civil Services Subcommittee

Thank you Chairman Davis. I am so pleased that our two Subcommittees can come together and hold this joint hearing today on the new personnel system at the Government Accountability Office (GAO). I join you in welcoming Comptroller General David Walker and the rest of our witnesses to discuss the changes that have taken place at GAO since we passed the GAO Human Capital Reform Act of 2004. Since GAO's system is being described as a model for the rest of the federal government, we need a better understanding of how GAO's system works and what its impact is on GAO employees.

We all agree with the Comptroller General that federal agencies should have modern, effective, and credible performance management systems. Further, we agree that these systems need adequate safeguards to work. Safeguards include transparency and accountability mechanisms to ensure fairness and prevent abuse. For example, GAO recommends that agencies have a performance management system that makes meaningful distinctions in individual employee performance; involves employees and stakeholders in the design of the system; and achieves consistency, equity and nondiscrimination. It is through this same lens that we need to review the personnel system at GAO.

The GAO Human Capital Reform Act of 2004 decoupled the annual pay adjustment for GAO employees from those provided to all other federal employees paid under the General Schedule (GS). As a result, GAO sought to discover how its employees' pay compared to the private sector and other GAO competitors for the best and brightest workers. GAO hired Watson Wyatt Worldwide to conduct a market based pay survey and then restructured the pay bands for GAO analysts. However, many GAO employees have concerns over these changes.

Their complaints fall into three broad categories:

• A lack of transparency, credibility, and employee involvement in the development of the market-based survey;
• An unfair process and criteria used for determining placement in Band IIB; and
• The failure of some GAO employees, whose performance at least met expectations, to receive a cost of living increase.

In 2004 Watson Wyatt Worldwide conducted the market-based survey for GAO. However, according to documents provided to our Subcommittees, it appears that only three employees who were not part of the GAO Executive Committee or the Senior Executive Service were invited to participate in the survey design. In addition, Watson Wyatt relied on off the shelf market data to set pay ranges for GAO employees without weighing the data sufficiently towards its biggest competitors for top talent.

It is no secret that federal employees consistently lag behind their private sector counterparts in pay. The Federal Employee Pay Comparability Act is waived every year because it is too expensive to bridge the pay gap between the public and private sector. Given this, it is not clear why GAO analysts, who perform unique work for Congress in analyzing and investigating a range of complex programs and systems, would be overpaid. Nor is it clear why GAO, which is fighting to recruit the very best employees, would set its pay at a level below its competition.

I am also concerned by a gap created in the workforce ranks as a result of Watson Wyatt's survey. GAO separated Band II analysts into Band IIA, for senior analysts, and Band IIB, for lead analysts. In doing so, it effectively demoted a large portion of the GAO analyst workforce and undermined the team mentality at GAO, whereby employees in the same band would sometimes lead and other times staff reports.

After relying on the survey and the Band II restructuring to determine that several of its employees were overpaid, GAO decided that those employees should not receive a cost of living adjustment, despite the fact that these employees performed at or above the level of "meets expectations" - which is a rigorous standard at GAO. Moreover, the Comptroller General explicitly promised Congress that an annual pay adjustment would be given to employees who met or exceeded expectations unless there were extraordinary economic circumstances or severe budgetary constraints.

Because of these decisions, twelve employees filed a petition with the GAO Personnel Appeals Board (PAB), an independent appellate body at GAO, claiming that reassignment from a Band II to a Band IIA resulted in an unlawful demotion, reduction in pay, and was a violation of the GAO Personnel Act. On April 4, 2007, GAO settled the case. As a remedy, all the petitioners received retroactive placement in Band IIB, effective January 8, 2006, with full back pay, interest, and consideration for retroactive promotion to Band III with full back pay and interest. Last week, approximately 200 more GAO employees filed a petition with the PAB over the personnel reforms.

Out of continuing concern over these changes, a majority of eligible employees also filed a petition on May 8, 2007, to elect a union to represent them.

I look forward to learning more about the GAO personnel reforms. GAO is an important instrument of congressional oversight. Its employees are critical to Congress's mission. The question to be asked here today is whether the GAO personnel reforms should be considered a best practice to be emulated throughout the government, or rather, a lesson in what not to do. I look forward to hearing from our distinguished witnesses.

-30-