[Senate Hearing 108-149] [From the U.S. Government Publishing Office] S. Hrg. 108-149 NOMINATIONS OF TERRENCE A. DUFFY, SUSANNE T. MARSHALL, AND NEIL A.G. McPHIE ======================================================================= HEARING before the COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED EIGHTH CONGRESS FIRST SESSION ON THE NOMINATIONS OF TERRENCE A. DUFFY TO BE A MEMBER OF THE FEDERAL RETIREMENT THRIFT INVESTMENT BOARD; SUSANNE T. MARSHALL, TO BE CHAIRMAN OF THE MERIT SYSTEMS PROTECTION BOARD; AND NEIL A.G. MCPHIE TO BE A MEMBER OF THE MERIT SYSTEMS PROTECTION BOARD __________ MAY 15, 2003 __________ Printed for the use of the Committee on Governmental Affairs 88-249 U.S. GOVERNMENT PRINTING OFFICE WASHINGTON : 2003 ____________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpr.gov Phone: toll free (866) 512-1800; (202) 512�091800 Fax: (202) 512�092250 Mail: Stop SSOP, Washington, DC 20402�090001 COMMITTEE ON GOVERNMENTAL AFFAIRS SUSAN M. COLLINS, Maine, Chairman TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii ARLEN SPECTER, Pennsylvania RICHARD J. DURBIN, Illinois ROBERT F. BENNETT, Utah THOMAS R. CARPER, Deleware PETER G. FITZGERALD, Illinois MARK DAYTON, Minnesota JOHN E. SUNUNU, New Hampshire FRANK LAUTENBERG, New Jersey RICHARD C. SHELBY, Alabama MARK PRYOR, Arkansas Michael D. Bopp, Staff Director and Counsel Johanna L. Hardy, Senior Counsel Michael Russell, Staff Director, Financial Management, the Budget, and International Security Subcommittee Joyce A. Rechtschaffen, Minority Staff Director and Counsel Jennifer E. Hamilton, Minority Research Assistant Jennifer L. Tyree, Minority Counsel, Financial Management, the Budget, and International Security Subcommittee Darla D. Cassell, Chief Clerk C O N T E N T S ------ Opening statements: Page Senator Fitzgerald........................................... 1 Senator Durbin............................................... 2 Senator Akaka................................................ 4 WITNESSES Thursday, May 15, 2003 Hon. George Allen, a U.S. Senator from the State of Virginia..... 3 Terrence A. Duffy, to be a Member of the Federal Retirement Thrift Investment Board........................................ 5 Susanne T. Marshall, to be Chairman of the Merit Systems Protection Board............................................... 10 Neil A.G. McPhie, to be a Member of the Merit Systems Protection Board.......................................................... 11 Alphabetical List of Witnesses Allen, Hon. George: Testimony.................................................... 3 Duffy, Terrence A.: Testimony.................................................... 5 Biographical and professional information.................... 28 Pre-hearing questionnaire.................................... 32 Marshall, Susanne T.: Testimony.................................................... 10 Prepared statement........................................... 21 Biographical and professional information.................... 43 Pre-hearing questionnaire with attachments................... 48 Post-hearing questions and responses from Senator Akaka...... 181 McPhie, Neil A.G.: Testimony.................................................... 11 Prepared statement........................................... 27 Biographical and professional information.................... 157 Pre-hearing questionnaire.................................... 167 Post-hearing questions and responses from Senator Akaka...... 186 Appendix Memo to Elise Bean, PSI, Joe Bryan, Senator Levin, dated May 16, 2003, from Susanne T. Marshall, subject: Classified Information/Security Clearance Issues.......................... 23 Letter to Senator Fitzgerald from Susanne T. Marshall, dated May 21, 2003, with enclosed chart entitled ``Case Processing Times for Selected Agencies--May 19, 2003''.......................... 24 NOMINATIONS OF TERRENCE A. DUFFY, SUSANNE T. MARSHALL, AND NEIL A.G. McPHIE ---------- THURSDAY, MAY 15, 2003 U.S. Senate, Committee on Governmental Affairs, Washington, DC. The Committee met, pursuant to notice, at 2:03 p.m., in room S-143, U.S. Capitol, Hon. Peter G. Fitzgerald, presiding. Present: Senators Fitzgerald, Levin, Akaka, and Durbin. OPENING STATEMENT OF SENATOR FITZGERALD Senator Fitzgerald. The Committee will come to order. Senator Akaka is at a meeting but he gave us dispensation to begin without him. He will be here shortly. Today we consider the nominations of Terrence Duffy to be a member of the Federal Retirement Thrift Investment Board; Susanne Marshall to be chairman of the Merit Systems Protection Board; and Neil McPhie to be a member of the Merit Systems Protection Board. I would like to welcome our nominees today. Each of you has a distinguished background and record of service. The President has selected you for important positions in our government, and I congratulate you on your nominations. I would also like to welcome our distinguished colleagues from Illinois and Virginia, Senator Durbin and Senator Allen, who are with us today to introduce two of our nominees. Mr. Duffy, Ms. Marshall, and Mr. McPhie have filed responses to the Committee's biographical and financial questionnaire, answered prehearing questions submitted by the Committee, and had their financial statements reviewed by the Office of Government Ethics. Without objection, this information will be made part of the hearing record with the exception of the financial data which are on file and available for public inspection in the Committee offices. In addition, I personally have reviewed the FBI background investigation reports on each of the nominees. On our first panel today we will hear from Mr. Duffy, whom I have had the pleasure of knowing personally for several years now. President Bush nominated Mr. Duffy to be a member of the Federal Retirement Thrift Investment Board, which was established as an independent agency to administer the Thrift Savings Plan. Mr. Duffy has served as chairman of the Chicago Mercantile Exchange Inc. since April 2002, and has been a member of the Chicago Mercantile Exchange Inc. for over 20 years. On our second panel we will hear from Susanne Marshall, and Neil McPhie, whom the President has nominated to the positions of chairman and member, respectively, of the Merit Systems Protection Board. Both Ms. Marshall and Mr. McPhie currently serve in those positions on the board through recess appointments. The Merit Systems Protection Board was created in 1978 to serve as a guardian of Federal merit systems principles. The board plays a critical role in protecting the rights of whistleblowers, who have presented some of the most compelling evidence of government abuse and in fiscal mismanagement, saving the taxpayers hundreds of millions of dollars. Both the Federal Retirement Thrift Investment Board and Merit Systems Protection Board are vital agencies in our Federal Government. The nominees are being considered for important positions of leadership in these agencies, and we appreciate their presence today before this Committee. Before we proceed with their statements, I would first like to call on my colleague from Illinois, Senator Durbin, to introduce Terrence Duffy, if that is OK with Senator Allen. OPENING STATEMENT OF SENATOR DURBIN Senator Durbin. Thank you, Mr. Chairman. I am pleased to be here this afternoon and honored that Terry Duffy would ask me to introduce him to this Committee. Of course, he needs no introduction to you personally. We both know of Terry Duffy and his contribution to the business community and the city of Chicago. I think he is an excellent choice to be a member of the Federal Retirement Thrift Investment Board. I know that he is accompanied here by his spouse, Jennifer, and his mother, Barbara Duffy, and his assistant, Joyce Balkus. I am certain that he appreciates their presence and support at this important hearing. This is a critical appointment to an important position. The Federal Retirement Thrift Investment Board may be obscure to some, but it is not to the millions of Federal retirees and current Federal employees who are saving a portion of their earnings in anticipation of retirement. This is an independent agency which administers the Thrift Savings Plan and it has an important mission. Currently the Thrift Savings Plan has approximately 3 million participants and assets of over $100 billion, including the family fortune of the Durbin family, so I am particularly interested in making certain that Mr. Duffy does a great job in his new position. As you said, Mr. Chairman, he has an excellent background. A native of Chicago, he graduated from the University of Wisconsin at Whitewater, and worked as a broker assistant for RB&H Commodities in Chicago. Since November 1981, Terry Duffy has been president of TDA Trading, Inc., a trading broker association, most recently serving as chairman of the prestigious Chicago Mercantile Exchange Holdings Board and the board of the Chicago Mercantile Exchange Inc. itself. I have had an opportunity to look at his responses to the policy questions which this Committee has posed, and there is no question he is well-prepared and well-positioned to serve this Nation well in this capacity. I heartily endorse his nomination. Senator Fitzgerald. Thank you, Senator Durbin. I would now like to recognize my colleague from Virginia, Senator George Allen who will introduce Mr. McPhie on panel two. Senator Akaka is here. Do you want to let Senator Allen introduce Mr. McPhie first and then you can make your opening statement? Senator Akaka. Yes. Senator Allen. If I may, I will introduce Mr. McPhie and also Susanne Marshall. Senator Fitzgerald. You certainly may. STATEMENT OF HON. GEORGE ALLEN, A U.S. SENATOR FROM THE STATE OF VIRGINIA Senator Allen. Let me start first with Susanne Marshall as she is appointed to be chairperson of the U.S. Merit Systems Protection Board. I am pleased to introduce her. She is a resident of the Commonwealth of Virginia. She is well-known to many of you already having served on the Governmental Affairs Committee staff for Senator Roth of Delaware, Ted Stevens of Alaska, and Fred Thompson of Tennessee. As you may know, she was confirmed as a member of the Merit Systems Protection Board in November 1997 under former President Clinton, and now President Bush has nominated her to serve as chairman for the remainder of her term. I can go into her Virginia heritage, that I know you would all love to hear, since her father's side of the family came to Virginia in 1650 a few years after it first was founded in 1607. That makes her one of the first families of Virginia. She does have an expert record having served here on Capitol Hill as a staffer for more than 15 years in both the House of Representatives and the Senate, ending only upon her appointment to the Merit Systems Protection Board. Mr. Chairman, Senator Akaka, I recommend her very highly to you as an outstanding public servant and respectfully ask that she be confirmed as chair of the Merit Systems Protection Board. While her family is not here with her, they are all here in spirit and very proud of her. Mr. Chairman, Senator Akaka, I am also pleased to introduce Neil McPhie, who has been nominated to be a member of the U.S. Merit Systems Protection Board. I am confident that when you look at his record in the Commonwealth of Virginia and his service to the community, you will recognize that President Bush selected the right person for this job. I am pleased to be recommending him because I do know of his service. He helped me when I was Governor of the Commonwealth of Virginia. He has served most recently as senior assistant attorney general in Virginia since 2002 where he has shown himself to be a very seasoned and effective litigator. He also served the Commonwealth of Virginia as executive director of the Virginia Department of Employment Dispute Resolution. Now I mention my service as Governor. Right as my term ended, Governing magazine rated Virginia as one of the best managed States. Any CEO or executive will tell you, the executive is fine, but you need good people and a good cabinet. You need good leaders. Mr. McPhie, his attention to detail, his superb leadership skills really played an important role in Virginia getting that high honor from Governing magazine. It was not just to me. It was to my cabinet secretaries, to a variety of State agencies, and also to the attorney general's office. You will see from his education and his background, he unquestionably has way more than the necessary qualifications to undertake the charge President Bush has asked of him. He has a wealth of knowledge in employment law issues that will enable him to successfully meet the challenges he will face an adjudicator of the board. I would like to take a quick moment to recognize Neil's wife, Regina, holding young Sydney there. This is Abigail here. So he has a fine family and I urge each of you all on the Committee to move as quickly as possible to get Mr. McPhie to work for the people of the United States. I thank you, Mr. Chairman, Senator Akaka, for your willingness to pull together this hearing so that you can move forward in these deliberations. Thank you, all. Senator Fitzgerald. Thank you for being here. Hope you did not miss any votes. Senator Allen. Me too. If you will excuse me. Senator Fitzgerald. Thank you, Senator Allen. Now the Chair would call upon Senator Akaka for an opening statement. OPENING STATEMENT OF SENATOR AKAKA Senator Akaka. Thank you very much, Mr. Chairman. I want to welcome all of you here and add my welcome to all of you. Ms. Marshall, it is good to see you again after all these years. Mr. McPhie, and Mr. Duffy, welcome to this Committee. Before I begin I want to compliment the Chairman of this Committee. Today is one of those days when everything is upended. He was able to pull this hearing together despite a day-long voting session. I had some problem finding this room, but I finally found it, and I want to thank him for moving so quickly and so well. I would ask that my full statement be placed in the record. I just want to say that the positions to which our witnesses have been nominated are among the most important to Federal employees. Let me highlight that. You have a tough job ahead of you. But it is important for our country. If confirmed, Mr. Duffy will have authority over the government's retirement savings plan which serves over 3 million participants with assets of about $100 billion. Likewise, Ms. Marshall who is the acting chair of the Merit Systems Protection Board and Mr. McPhie who will join her, will play a critical role in safeguarding Federal employees from abuse by agency management. Those are important jobs. In the next 7 years it is going to be critical for our Nation, but we will talk about that later. I will submit the rest of my statement, Mr. Chairman. Senator Fitzgerald. Without objection, Senator Akaka's statement will be provided in the record. [The prepared statement of Senator Akaka follows:] PREPARED STATEMENT OF SENATOR AKAKA Thank you, Mr. Chairman. It's a pleasure to be with you this afternoon, and I join you in welcoming Ms. Marshall, Mr. McPhie, and Mr. Duffy to our Committee. The positions to which our witnesses have been nominated are among the most important to Federal employees. If confirmed, Mr. Duffy will have authority over the government's retirement savings plan, which serves over 3 million participants with assets of about 100 billion dollars. Likewise, Ms. Marshall, who is the acting chair of the Merit Systems Protection Board, and Mr. McPhie, who will join her, will play a critical role in safeguarding Federal employees from abuse by agency management. As the sponsor of legislation to strengthen Federal whistleblower statues, I believe that one of the key tenants of the Federal merit system principles is the ability of employees to report waste, fraud, and abuse without the fear of retaliation. Reporting government mismanagement is a basic obligation of a Federal employee. As our witnesses know, the MSPB shares great responsibility to ensure that employees are protected when they come forward to report waste, fraud, or abuse. Since enactment of the WPA in 1989, Congress has revisited the law to address actions taken by the Federal Circuit Court of Appeals, the MSPB, and the Office of Special Counsel that have been inconsistent with congressional intent. I plan to reintroduce whistleblower legislation shortly, and I welcome the opportunity to discuss this with Ms. Marshall and Mr. McPhie. I am also interested in your views on the new Department of Homeland Security and the Department of Defense proposal to exempt itself from many civil service laws, including MSPB appeal rights. I don't want Mr. Duffy to think I am ignoring him. You have had a distinguished career as a member of the Chicago Mercantile Exchange Inc. where you now serve as its chairman. As head of the Nation's largest futures exchange, I am hopeful that you will impart your knowledge and expertise with your fellow Thrift Board members. Mr. Chairman, I wish to thank you for holding today's hearing. Senator Fitzgerald. I am going to recommend that Senator Akaka and I leave to vote. The vote started at 2:10, so we are a few minutes into it, and they are only 10-minute roll calls. We will immediately return and then we will proceed with Mr. Duffy and then to the Merit Systems Protection Board. We will try and conduct this hearing rapidly given the time constraints we are under today. So we will recess for a few moments and we will be back shortly. Thank you. [Recess.] Senator Fitzgerald. I would like to call the meeting back to order. At this point I would like to call on our first witness, Terry Duffy. Why don't you come up here, Terry. Our Committee rules require that all witnesses at nomination hearings give their testimony under oath, so I am going to ask you to remain standing and raise your right hand. [Witness sworn.] Senator Fitzgerald. Thank you. You may be seated. Before you begin your opening statement, Terry, I wonder if you would like to again recognize your wife and mother and assistant who are here? I know Senator Durbin briefly referred to them but maybe you would like to introduce your family members. TESTIMONY OF TERRENCE A. DUFFY,\1\ TO BE A MEMBER OF THE FEDERAL RETIREMENT THRIFT INVESTMENT BOARD Mr. Duffy. I appreciate that, Senator. With me today I have my wife Jennifer, my mother Barbara, and my good friend and assistant, Joyce Balskus, along with two young ladies that represent us out here in our Washington office, Lita Frazier and Lanae Denney. --------------------------------------------------------------------------- \1\ The biographical and professional information of Mr. Duffy appears in the Appendix on page 28. Pre-hearing questionnaire appears in the Appendix on page 32. --------------------------------------------------------------------------- Senator Fitzgerald. Welcome to all of you. You may go ahead and give your statement. Mr. Duffy. Thank you, Mr. Chairman. I appreciate it very much. Senator Akaka, I appreciate it. Good afternoon. As Senator Fitzgerald has said, my name is Terry Duffy and it a great honor for me to be nominated to serve as a member of the Federal Retirement Thrift Investment Board. I understand the gravity of the responsibilities that I will be required to fulfill if my nomination is approved. Three million Federal employees have invested more than $100 billion to assure a successful and productive retirement after diligently serving the government and its uniformed services. I have discussed my duties and responsibilities with the staff and the board. I have reviewed the pending litigation involving the board and its director. I am confident that my background in the financial services industry will permit me to perform the duties of this high office as intended by Congress. I believe that my experience in the financial industry equips me to perform the important fiduciary duties for which I have been nominated. My professional life has been connected to the Chicago Mercantile Exchange Inc., which is now the largest, most successful futures exchange in the United States. I began my career at the very bottom of the ladder as a runner in 1980. In 1981, I became a CME member and was able to work as a floor broker and a trader. I have formed and been a president of my own company, TDA Trading, Incorporated since 1981. In 1995, I was elected to the CME's board, in which capacity I have served since that time. In 1998, I was elected vice chairman of the board, and in 2002 I was elected chairman of the board. In that time I led a very successful effort to execute an initial public offering to make the Chicago Mercantile Exchange Inc. the first publicly traded exchange in the United States. I have served or currently serve on the executive compensation, nominating, strategic planning, and regulatory oversight committees. My professional life has equipped me to understand tools available for modern risk management. In my leadership role at the CME, I have participated directly in the creation of new risk management tools, and I have managed financial risk in all segments of our economy. Retirees are a major element of our economy, and their economic welfare depends on the safety and the soundness of their retirement plans. In 2002, I was appointed by President Bush to serve on the National Saver Summit on retirement savings. I understand the serious responsibilities that are invested in the thrift board. I will bring to bear all my experiences and knowledge to serve the interest of the beneficiaries of the thrift board's actions. Again, I am extremely honored to be here today and look forward to answering any questions that you may have for me. Thank you. Senator Fitzgerald. Mr. Duffy, thank you very much. I would begin with customary Committee questions, and we will limit questions to 6 minutes each, if that is OK. We will probably have another vote shortly. Is there anything that you are aware of in your background which might present a conflict of interest with the duties of the office to which you have been nominated? Mr. Duffy. No, sir. Senator Fitzgerald. Do you know of anything personal or otherwise that would in any way prevent you from fully and honorably discharging the responsibilities of the office to which you have been nominated? Mr. Duffy. No, sir. Senator Fitzgerald. Do you agree without reservation to respond to any reasonable summons to appear and testify before any duly constituted committee of Congress if you are confirmed? Mr. Duffy. Yes. Senator Fitzgerald. Senator Akaka, do you have questions that you want to ask at this time? Senator Akaka. Yes, I do, Mr. Chairman. Mr. Duffy, let me start off by saying how impressive your background is. Mr. Duffy. Thank you, sir. Senator Akaka. It appears that you have been in the right place at the right time and moved up well, and here you are again, another place at another time. I did review your papers and everything seems to be in order. My question to you is one that interests me tremendously because I have been trying to move our country to be more financially literate. My question will be along that line. Federal employees, for instance, depend a lot on the thrift savings program for a significant part of their retirement savings. As life expectancy in the United States continues to increase and people are living longer, as they do in Hawaii, they must make sure that their retirement savings meet their future needs. Federal workers cannot afford to make mistakes on their TSP, the allocations, or miss opportunities presented by TSP or other retirement investment options. Employees of all agencies should be informed about different retirement options. My question to you is, what can be done to improve financial literacy among Federal employees to ensure that they are making educated and informed decisions about their retirement investment options, especially their use of TSP? Mr. Duffy. Senator, I think that is an excellent question. The way I would respond to it, I think that I would go about it the same way I do about running a public company today, and that is through the education process. I think education and communication are key. If you can have what I believe--I do not know the other board members of the TSP, but you have to have independence. When you have independence, then the participants who are in that plan will have more confidence in you and they will be more willing to listen to you when you try to educate them. So I think education, communication, and independence are critical to getting more people to participate in plans, and give them the confidence. This has been a very difficult time over the last 3 to 4 years with markets and market conditions. I think the American public, and I do not think the government workers are immune to it, have been affected by it. I think that they need to have the confidence reinstalled in them to let them know that there are legitimate people looking out for their best interest, and we should educate them, Senator. Senator Akaka. Mr. Chairman, I have other questions but I will submit them for the record. Thank you very much for your response. Senator Fitzgerald. I was wondering, Mr. Duffy, if you had been following the dispute that the TSP board has had with its contractor who had been working on its computer system. There subsequently was a suit filed by the board. Subsequent to that, a new board has come in at TSP and they have suggested that the executive director of TSP should not have filed that suit, and should have gone through the attorney general. There is a dispute about the level of independence that the TSP board should have from both Congress and the administration. This morning there was an article in the Washington Post that contained a recommendation or relayed a recommendation that the GAO had made regarding how greater accountability could be placed on the TSP board, having them made more accountable to the Department of Labor. Apparently, the Department of Labor could sanction a private pension fund that was violating its fiduciary responsibilities, but in the case of the TSP board the Department of Labor could find a violation but they could not do anything to the TSP board. So there is a tension between walling off the TSP board from the political process on the one hand to prevent it being used for political purposes. But on the other hand, there is a danger that the board not be accountable to anyone if there are violations of fiduciary obligations by the board of directors. I would like to ask if you had given any thought to whether the board should just totally be out on its own? If a member of Congress or the administration calls you and makes a recommendation, should you get your hackles up and be very concerned, or do you feel that it should be more accountable to Congress? This is a tough question, and I do not mean to throw a tough question to such a good friend, but it is an important issue. Mr. Duffy. I welcome it, Senator. Actually, I think there are several questions in your statement. I will address the latter part of it on the issue of whether the board should be accountable to Congress. Again, I am not on the board right now. I just know by what I read through the press and what is available in the public domain. As a chairman of a publicly traded company, I think independence is critical. To come under pressure from either side of the aisle of Congress does not seem to suit $100 billion very well because it just does not seem to work. These are decisions that have got to be made in the best interest of these government workers and I do not think that Congress should have too much influence over how that works. Obviously, there has got to be somebody that they have to be accountable to. When you talk about fiduciary responsibility, I think that is where the accountability comes in. I think that is why you hold these hearings and you try to find the best people to represent a substantial amount of money like this which is a good part of the savings of these people. So I think it is critical to have accountability. Whether it should be Congress or not, I do not know. I guess I would have to read into it a little bit more. I know that the Labor Department has some oversight on this. As far as the litigation is concerned, I am not a lawyer by trade, but as a chairman I worked in litigation with our lawyers. Just when you think you have got it figured out, there is another side of the story. That is one thing I have learned about lawsuits. So for me to make a comment on the litigation I do not think would be fair because I do not have the information the rest of the board has or the staff has. I only have what is in the public domain. I do know one thing for certain. Whatever is in the public domain, there is another side of that story, and there might be two more sides to that story. Senator Fitzgerald. I can attest to that. Mr. Duffy. So I think it is important that you have all the information. Senator Fitzgerald. That is right. I like your answer. I think you recognize the fiduciary responsibilities of the members on that board. That is an awful lot of money, $100 billion. It is a big responsibility to be one member of that board who is overseeing so much in retirement funds for so many people. It is an awesome responsibility. You are certainly one who is up to the task, and I think you have a proven record of success in the business world, and certainly at the Chicago Mercantile Exchange Inc., which was the most successful initial public offering in all of 2002 in our entire country. We really could not have someone much better than you here. So I congratulate you and wish you well. I would leave it open to Senator Akaka for any final questions you may have before we proceed to the others. Senator Akaka. May I ask one more? Senator Fitzgerald. Yes. Senator Akaka. Mr. Duffy, along the same line. The Federal Thrift Investment Board is seeking a new executive director. Given the current debate over independence and authority of the executive director as raised in the American Management System lawsuit over completion of the new TSP recordkeeping system, my question to you is, how would you define the roles and responsibilities of the executive director as compared to thrift board members? Mr. Duffy. I look at it, Senator, in a couple ways. But I would say again, I use my experience chairing a public company board, that the buck stops there. We are ultimately accountable to our shareholders. The Thrift Savings Board is ultimately accountable to its participants. So I could sit there and tell you that I think that the management made a bad decision. They say, that is great, but you are accountable. You are the board of directors. That to me is doing my fiduciary duty to the participants. It is no different from you today as being the chairman of the largest U.S. exchange. I have a duty to my shareholders, fiduciary responsibility. So I have to stay completely independent of my management. I think that is critical to the success, not only of private business, but also in the public and the private sector. Senator Akaka. Thank you very much for that response. Mr. Chairman, thank you. Senator Fitzgerald. Senator Akaka, thank you very much. Mr. Duffy, thank you for your testimony. Thank you for bringing your family here, today. We wish you well. We will not take any more of your time. We will now go on to Ms. Marshall and Mr. McPhie. Thank you very much for coming. Mr. Duffy. Thank you, Senator Fitzgerald. Thank you, Senator Akaka. I appreciate it very much. Senator Fitzgerald. Thank you. Another vote just started. We are going to take another break. We will not be long. A quick vote and we will be right back, and then we will swear in Ms. Marshall and Mr. McPhie. [Recess.] Senator Fitzgerald. I call the hearing back to order. I would like to swear both of the witnesses. [Witnesses sworn.] Senator Fitzgerald. Thank you. You may be seated. Mr. McPhie, I understand you want to introduce your family, too. I know that Senator Allen briefly introduced your family, but maybe you want to introduce them, and then I will allow Ms. Marshall to start with her statement. Mr. McPhie. Yes, sir. There are a number of people who came from Richmond that I will recognize, if I may. Senator Fitzgerald. Absolutely. Mr. McPhie. First my family. My wife Regina McPhie is right here. My daughter Abigail, and my son Sydney. Senator Fitzgerald. What grade is Sydney in? Mr. McPhie. Sydney is in third, but sometimes I think he is in sixth or seventh. I am very proud of those folks, and they have stood by dad, and my wife by me, through ups and downs. Without them, I would not be here and I am grateful for that. As I said, there are some folks who I really owe a lot to as my career has progressed. I do appreciate them taking time off and coming up here from Richmond, Virginia. There are some people from the Attorney General's office in Richmond, and then there are some folks from my agency over there, the Employment Dispute Resolution Agency that have come up here. And then there are two other persons who knew me when I was a little guy in my native country of Trinidad, and they are both here. I feel very grateful to be here with people like that around me. I appreciate the opportunity to say that on the record. Senator Fitzgerald. Welcome to all your friends, and thank you for being here. At this point, Ms. Marshall, I would welcome you to the Committee. Do you have a statement you would like to make at this time? TESTIMONY OF SUSANNE T. MARSHALL,\1\ TO BE CHAIRMAN OF THE MERIT SYSTEMS PROTECTION BOARD Ms. Marshall. Yes, Senator. Thank you and your staff for coordinating the hearing this afternoon with so much going on. I also want to thank Senator Allen for taking the time to be here to provide the introduction for both Mr. McPhie and myself. I have to thank President Bush for the honor of nominating me to be chairman of the Merit Systems Protection Board. --------------------------------------------------------------------------- \1\ The prepared statement of Ms. Marshall appears in the Appendix on page 21. The biographical and professional information of Ms. Marshall appears in the Appendix on page 43. Pre-hearing questionnaire with attachments appears in the Appendix on page 48. Post-hearing questions submitted for the Record by Senator Akaka appears in the Appendix on page 181. --------------------------------------------------------------------------- In order to save the Committee time, I will provide a more lengthy statement for the record. Senator Fitzgerald. Without objection, we will submit your prepared comments for the record. Ms. Marshall. Thank you. It is very hard for me to believe, having been a Committee staffer, that it has been 5\1/2\ years since I have been here in the Capitol building. It is really an honor for me to be here today, and quite a treat to see some of my former colleagues and friends. I do not have family here, but I would acknowledge friends that are here from the Hill as well as from the MSPB. So, I just would acknowledge that for the record. In 1997, when I was confirmed, my goal, as I stated at that time, was to prove myself worthy of the confidence that had been placed in me. As I come here 5\1/2\ years later, I hope that my record and my reputation speak for itself, and that I have the support of members on both sides of the aisle. In every effort that I have made as a member, as vice chair, as acting chair, and now as chairman, I look forward to being able to lead the agency throughout the remainder of my term. It is a terrific agency. It is very small, very efficient, with hard-working and dedicated civil servants. That is what I look forward to. I appreciate the opportunity to be here today. Senator Fitzgerald. That is great. Mr. McPhie, you may also submit your written comments for the record and we will make that a part of the Committee's transcript, or you may read them if you wish, or you may talk off the top of your head. TESTIMONY OF NEIL A.G. McPHIE,\1\ TO BE A MEMBER OF THE MERIT SYSTEMS PROTECTION BOARD Mr. McPhie. In the spirit of intimacy and speed I would submit--I have already submitted a prepared statement for the record and I would ask that it be placed into the record. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. McPhie appears in the Appendix on page 27. The biographical and professional information of Mr. McPhie appears in the Appendix on page 157. Pre-hearing questionnaire appears in the Appendix on page 167. Post-hearing questions submitted for the Record by Senator Akaka appears in the Appendix on page 186. --------------------------------------------------------------------------- Senator Fitzgerald. Without objection. Mr. McPhie. Rather than just read it, I just want to highlight some other things. I am extremely grateful to be here. I am honored by the confidence placed in me by the President of the United States. I am honored by the effort this Committee went through, and the opportunity for me to come before you at this time. I appreciate the questions that were asked of me, some very probing questions by your staffers some of whom are here. I tried to answer them as forthright and as best I could. I hope I have succeeded in doing that. I look forward to a relationship based on openness, candor, and forthrightness. If confirmed, I pledge to do everything within my power and to the best of my abilities to decide these important cases in a fair and objective basis, controlled by the facts, the law and the policies and nothing else. I intend to give this position all I have and to work with Chairman Marshall in a collaborative effort and a common goal to make the Merit Systems Protection Board better than I found it. I know the staffers by their questions had certain issues that they raised. I intend to follow up on some of these concerns and see if we cannot get cases in and out of that place as quickly as we can and as fairly as we can. I look forward to acquitting those responsibilities in that fashion. I would be more than happy to answer any questions you or anyone else may have, sir. Senator Fitzgerald. Thank you, Mr. McPhie. Ms. Marshall, you began serving as acting chairman in February 2002, and then as the board's chairman since August 2002? Ms. Marshall. Yes. Senator Fitzgerald. Given your experience in these capacities, what new initiatives have you undertaken, and what new policies have you implemented to improve the operations of the Merit Systems Protection Board? Ms. Marshall. Initially, because our main function is the adjudication of a large volume of cases, it was to try to determine how we could move more quickly, particularly with our complex cases. Oftentimes, these cases were reviewed so extensively in our Office of Appeals Counsel or Office of General Counsel before they came up to the board members that we were left with a short timeframe to act on them. Senator Fitzgerald. How many cases do you have? Ms. Marshall. At Board headquarters, we process, on average, about 1,700 cases annually. In those cases that are more difficult and more time-consuming, that have multiple claims or different sets of facts, we have tried to get them to the board members earlier so that we have enough time to give direction to the staff to work those cases. Senator Fitzgerald. Have you been able to do that? Ms. Marshall. Yes. We actually have color-coding, putting them in green folders so that we can make notes as they come into our office that this case has a particularly difficult issue and we need to give it expeditious review so that we can determine what direction it should take if it needs any more work. Senator Fitzgerald. Assuming your confirmation, are there any additional initiatives or policies that you want to implement? Ms. Marshall. One of the major initiatives that we are working on implementing is our e-Appeal process. It will be an interactive electronic process for filing an appeal. The user will be able to navigate it in a manner similar to TurboTax. Questions will be asked as to the action being appealed. Is it an adverse action? Is it a retirement decision? Then the user can follow a set of questions for the action being appealed, as opposed to having to deal with a very lengthy form. Senator Fitzgerald. To get rid of the paperwork. Ms. Marshall. Yes, it would also do that. We hope to have e-Appeal implemented by October. Senator Fitzgerald. So do you see the biggest challenge of the MSPB the caseload numbers and how to speed the cases along? Is that one of the biggest challenges? Ms. Marshall. That certainly is our daily challenge, something that we face on a regular basis. Right now, we also must deal with the challenge of the Department of Homeland Security, the Department of Defense, and plans that would take certain employees out from under Title 5 protections. I think the board must work to make sure that the role that we play in protecting employee rights is understood. We provide the neutral third party review. So, I think that our biggest challenge over the next year is going to be educating the public and other agencies as to the role that we play. Senator Fitzgerald. Do you think the MSPB has sufficient resources to do its job now? Ms. Marshall. Currently we operate adequately. We meet our needs. I would not want to see our budget cut. I think we are right at the edge. We have reduced our staff dramatically, with almost a 25-percent cut in personnel 5 years ago. So, we have to hold our own. I do not want to see us reduced. We operate, I think, very efficiently with the resources that we have. Senator Fitzgerald. Are there any legislative remedies that you would recommend that Congress consider to help the board at this time? Ms. Marshall. At this time I would say that it would be preserving the merit principles as Congress looks at the future of civil service protections for Federal employees. I have one proposal that I described in my written responses that deals with a legislative fix in the handling of FERS disability cases so that we do not have to have repayment issues occur. That is something I would be happy to provide additional information on if the staff wishes to follow up on this suggestion. Senator Fitzgerald. Part of the MSPB's work involves hearing cases that fall under the Whistleblower Protection Act as it was amended in 1994. The act was intended to strengthen protections for Federal employees when they disclose information pertaining to wrongdoing within a particular agency or department. This act is an integral part of the MSPB's mission and operations. Ms. Marshall, would you please share your assessment of the current effectiveness of this Whistleblower Protection Act including any particular strengths and weaknesses? Ms. Marshall. I think probably the greatest value of the act is something that we cannot measure. That would be the deterrent effect. I believe that by its very existence and the enforcement of it over the years that it has probably led many agency managers and supervisors to be much more careful in the actions that they take. They know that there will be enforcement by the Office of Special Counsel and the Merit Systems Protection Board. I personally am not supporting any particular legislative remedies. I know that there have been a number of provisions reviewed by the Committee and currently under review by the Committee. I have found, as an adjudicator, that the more recent amendments, when Congress emphasized the use of ``any''--and a very broad reading of the language--allows the adjudicator to look at all the particular facts of the case and any violation of any law, rule, or regulation or any significant change in duties. So I think it is our enforcement of a broad reading of the statute, the plain language of the statute that I find most useful. Senator Fitzgerald. Do you believe that whistleblower rights are adequately protected now? Ms. Marshall. I think it has been very effective. Senator Fitzgerald. Do you think they are adequately protected now? Do you know how many whistleblowers have been helped through settlements or board rulings providing relief, or what the win-loss track record for decisions is? Ms. Marshall. OSE considers all WPA claims first, but I think for cases that have come to the board, say over the past year, perhaps we have had 130 cases that have not been dismissed that we have looked at the merits of the issue. A little over 50 percent of that, maybe 60 percent, we have made a finding of a nonfrivolous allegation of whistleblowing. But even if we had a finding of potential whistleblowing, the agency still has the opportunity to prove by clear and convincing evidence that they would have taken the personnel action anyway. So you may have a valid whistleblower as an appellant, but it does not always lead to relief. Senator Fitzgerald. Thank you. Mr. McPhie, as has been noted by Senator Allen, you have a wealth of experience in dispute resolution through your work in the Virginia Department of Employment Dispute Resolution and at the EEOC. Based on your background and experience, what specific initiatives would you like to pursue as a confirmed member of the Merit Systems Protection Board? If we could interrupt you for one second, Mr. McPhie, I would like to welcome Senator Levin. Thank you for coming here. Senator Levin, would you have any opening comments? We are on Susanne Marshall and Neil McPhie, who are nominated for the Merit Systems Protection Board, and we were discussing the whistleblower laws. Senator Levin. I have some questions but no opening statement. Senator Fitzgerald. OK. Mr. McPhie, would you like to go back and answer that question. Based on your background and experience, what specific initiatives would you like to pursue as a confirmed member of the Merit Systems Protection Board? Mr. McPhie. First, sir, I want to tell you, I do not have any specific agenda. I came here with a wide open mind. The bottom line is, I want to be known and ultimately remembered as a member who decided cases objectively on the facts, applying the relevant law and policies and nothing else. I think the board has got to be impartial when it speaks. I think the board has a history of being impartial. I intend to continue that. Some of the things that I have picked up over the years is, whenever you run a system and you have a lot of pro se people in the system, those cases to me are the most difficult cases to decide. Not because the law or the facts are complex. Sometimes it is a clear loser. But because of the human emotion, and lack of understanding. It seems to me any system worth its salt, has to stay away from outcomes. I never carried around a win-loss record because then you get caught up in this one side should win more than it should be winning, and I think that is not healthy. But what I do try is to assure the folks who come before that system, win or lose, really feel that they have gotten a shot; somebody listened. Many times these disputes are between people who ultimately are going back to the same job situation and the expectation is from both sides that they are going to be friends, and they are going to be productive, and they are going to continue a relationship. So many times it is not about taking prisoners, who can use cross-examination to make the other person look bad and so on and so forth. You have to find a way to preserve that working relationship, albeit in difficult circumstances. So it seems to me, top and bottom, the board has got to reflect that kind of culture. I think we have got to understand, and I am going to try my best to employ some of it, is that you can do a case quickly and you can still assure quality. They are not necessarily two different items. They can coexist quite nicely. But if you do not get the folks from the front end to the back end to buy into that then it is not going to happen. I personally think the administrative judges in that system, have perhaps one of the most important jobs. I think the way people feel about the MSPB turns a lot of what happens to them in front of those administrative judges. I had the pleasure of going to a conference recently where I met the administrative judges for the first time in their element. These guys are not afraid to talk. And I listened to them. I will tell you it concerns them when cases take too long. It concerns them when people complain that they are not being fair. It concerns them when they get, in their view, scattershot directions from court precedent. These folk impressed me as people who understand the importance of their job, who want to do a good job, and will indeed do a good job. Some will tell you there are some resource issues. I do not know anything about that so---- Senator Fitzgerald. I am afraid I am going to have to interrupt you because I am going to have to run to the floor for a vote. Senator Levin, I do not know if you have voted. Senator Levin. I did, thank you. Senator Fitzgerald. I will turn it over to you, Senator Levin, you could ask some questions, and I will go vote. Thank you. Mr. McPhie. Senator Levin, those are some of the things I would do. Senator Levin. I just have a few questions for you, Ms. Marshall, because you have been there. Mr. McPhie, you are going to get off the hook a little bit here because you are new. I am intrigued by your comment that the people who appear before the board should feel that they have had a fair hearing, because that is what I think everybody's goal would be. That is a constant search and a constant struggle for whistleblowers. Some of the questions that I have of Ms. Marshall have been addressed to you, but for the record I want to clarify your answers to some of those questions. First is a case which was decided by the Federal Circuit in 1999, and maybe Mr. McPhie could listen to this. Even though you have not been on the board I would be interested in your reaction in any event. In the LaChance case, LaChance vs. White, the Federal Circuit said that in order to establish a reasonable belief of gross mismanagement, the whistleblower, the appellant, had to overcome a presumption that the management of the Department of the Air Force had acted ``correctly and fairly and in good faith, and in accordance with the law and governing regulations.'' So that the agency is given a presumption of good faith to begin with which the whistleblower needed to overcome. But then the court added the following, which was truly unusual. That the presumption would stand unless Mr. White provided irrefragable proof to the contrary. Now that is almost an irrebuttable presumption, to use another word. If you have to prove or disprove a presumption with irrefragable proof, you have got to show that what you allege is incontestable, incontrovertible, incapable of being overthrown, undeniable. That is what irrefragable means. So this standard is extreme. It contradicts Congressional intent in the whistleblower law. And it, frankly, I think almost stands alone in the law, as far as I can tell, in terms of what evidence would be needed to overcome a presumption. Now in your answers, you state that in your view the irrefragable standard applies only in limited circumstances so that it may not be necessary to amend the act to make it clear that we are talking about reasonable belief on the part of the whistleblower, and not having to prove something which is undeniable, indisputable, and so forth. Some of the experts that we have consulted with have already said that the LaChance decision has had an impact on a broad array of whistleblower cases and that we need to clarify the law. So I would ask you, Ms. Marshall, whether you would agree that is appropriate for Congress to pass legislation which clarifies the whistleblower statute and overturns the erroneous standard in the LaChance case? Ms. Marshall. Far be it from me to say Congress does not have the appropriate authority to take that action if it deemed it appropriate. Senator Levin. But would you recommend---- Ms. Marshall. I have not necessarily recommended it on LaChance vs. White. I do not look at the holding as being as strong as it has been interpreted by some others. As you said, the case was decided in 1999. Irrefragable had not been referred to prior to or after in any other whistleblower decision. I do not think it is a standard that the board has used, and I do not believe it is an appropriate standard, as you say, impossible to refute. Senator Levin. You do not think that is the appropriate standard for the board? Ms. Marshall. No. We would not be able to adjudicate under irrefragable in the sense that no one would ever be able to prove anything. So, in that sense, I understand the seriousness and the use of the term in that decision. Actually, the case is still pending before us on a remand decision, and it is something that we will be looking at again. As to whether Congress should deal specifically with irrefragable, I said as an adjudicator, earlier that, I prefer the broad language of the statute, which covers ``any'' violation of law, rule, or regulation. I think that is because we need to be able to look at all the facts of the case. Senator Levin. If the board does not follow the irrefragable standard, and I am glad to hear it does not, why should then there be any doubt that the Congress should make sure that is not the standard? Ms. Marshall. I should not say the Board does not follow a decision of the Federal Circuit because it is our reviewing court. I think it is the context in which language is used. I think there have been some initial decisions where ``irrefragable proof'' is quoted because it is quoted as having been from the Federal Circuit decision, so perhaps that is somewhat of a misstatement. Since I have been a member of the board, we have not seen the language as requiring proof that was irrefragable. Senator Levin. There is a lot of uncertainty here which needs to be cleared up. You have a court decision and I think the board is bound by it; are you not? Ms. Marshall. We are bound by the decisions of the Federal Circuit. They are precedential, very definitely. Senator Levin. So how then can you not follow that decision, even though it is wildly wrong? Ms. Marshall. I would say, without going too far, that in reading the White case, the holding in the case is that there should be an objective versus a subjective standard for a finding of gross mismanagement. The sentence in which irrefragable was used appeared in a following paragraph. It does not seem to me to be the main holding of the case. That is just my view as a member of the board. Senator Levin. Now has the legal---- Ms. Marshall. It is still pending before the board and it is something that we have been researching and continues to research. Senator Levin. Is there a counsel to the board who has given you advice on this issue? Ms. Marshall. Yes. Senator Levin. Has that counsel said that the irrefragable standard is not binding upon you, is not the holding in the case? Ms. Marshall. As the case is ongoing, it is hard to say that we have a final conclusion on that. That would obviously take a majority vote of the board. I have had some interesting discussions with your staff. As I said, if there were action by the Congress specifically to overturn the use of irrefragable proof, I see that only as upholding what I currently consider to be the law. Senator Levin. And what you consider to be appropriate for the board to follow. Ms. Marshall. Yes. Senator Levin. So that you do not believe the board should follow the irrefragable standard. But if Congress decided to adopt that belief into law you would---- Ms. Marshall. I think it would simply reinforce what I believe is what the board practices and what is appropriate. Senator Levin. A couple additional questions. Senator Akaka and I have the bill which would do just that and I would hope that the subcommittee could consider that bill given this court opinion which is so extreme on this subject, so unusual and is not apparently even viewed as a holding by the board, thank God. So perhaps the subcommittee will be able to take a look at the bill which Senator Akaka and I have introduced for possible consideration. Just two other questions, Ms. Marshall, for you. It relates to the question of somebody whose security clearance has been revoked because they have been a whistleblower. That is part of the retaliation, and as to what the board can do to reverse that decision revoking the security clearance of an employee. Your written answers suggest that there is no ability to reverse a security clearance revocation itself, therefore whatever the board might do would be viewed as an advisory opinion which the board cannot issue. First of all, I think that the board can do much more than just give an advisory opinion that the whistleblower was retaliated against. The board has the ability to invoke other remedies against the employer, the agency that discriminates against the whistleblower or retaliates against the whistleblower, other than ordering the removal of a security clearance. There are other remedies which are permitted including back pay, reassignment of the employee to a new position, attorney fees, and other relief. So how would that be viewed then as an advisory opinion? Ms. Marshall. In the written responses, I was looking at the fact, that the board's opinion in finding retaliation could be used by another agency to try to determine whether or not to restore a security clearance. It seemed to me that would be giving the board's opinion to another agency as to what we find and that this ought to be considered. I have met with your staff and had more detailed discussions on this. The way the bill is written, as a matter of law, we would have a final decision of the board providing relief. Then, it might trigger another action, but the decision is not advice from the board to the other agency. So I would agree, as a matter of law, that there is a distinction, yes. Senator Levin. And you would agree that the board in a security clearance revocation retaliation case, can order other remedies. Ms. Marshall. We could provide relief under the legislation, not under current law. Senator Levin. Under current law, do you not agree that the board could, if somebody was retaliated against in the form of revocation of security clearance, could remedy that in other ways than ordering the restoration of the security clearance, including attorneys fees, back pay, and so forth? Are there not other remedies? Ms. Marshall. We would be looking at retaliation, perhaps under an individual right of action case that might come to us. Generally, we are not going to look behind a security clearance issue. So, there might be a finding of retaliation for some other related reason, but we look at the due process rights for an individual under a security clearance revocation right now. We do not look at underlying issues. Senator Levin. You are saying under current law you cannot look at an allegation that somebody's security clearance was removed because of a retaliatory motive for whistleblowing; that you are not allowed to look at that. Ms. Marshall. We have not been reviewing security clearance issues under retaliation. Senator Levin. So our bill would give you the authority. Ms. Marshall. The legislation would provide that, yes. Senator Levin. So that is another reason why I would hope the subcommittee would look at the bill. But I would disagree with you. I think that you can look at other remedies under current law besides the restoration of the security clearance. Ms. Marshall. It would be possible for the board to look at other remedies. Senator Levin. Then finally, your written answers state that the legislation requiring the board to review security clearances would have an impact on how the board conducts its normal business and that the board would need to establish procedures and a separate process for handling and reviewing security clearance matters as well as classified and/or sensitive material. I understand that subsequently you reviewed the board's handling of past cases involving classified information and concluded that the board did and does have an information security manual which establishes official board policies for handling classified information; is that correct? Ms. Marshall. Yes, there is a manual. But we currently do not have employees with the necessary background checks. It has not been an issue during the 5\1/2\ years that I have been at the board. So, we would need to reinstitute and restore some of those practices. Senator Levin. By the manual---- Ms. Marshall. The manual exists. We have a process. We just do not have the employees right now. Senator Levin. Thank you, Mr. Chairman. Senator Fitzgerald. Senator Akaka, do you have any questions of the witnesses? Senator Akaka. Thank you very much, Mr. Chairman. I pose this question to both Ms. Marshall and Mr. McPhie. The Department of Defense has proposed legislation to waive a number of provisions in Title 5, including those relating to a Federal employee's right to appeal to the MSPB. Appeals from DOD constitute approximately one-third of MSPB's caseload according to your 2001 annual report. Now here is the question. If the Defense Department proposal is enacted, how would this change impact the MSPB? And what does this trend signal for the public's trust in the civilian workforce? Ms. Marshall. Certainly, DOD is the largest agency in terms of the number of civil service employees. What is not clear in the legislation as drafted is whether or not DOD employees would be in a different internal review process, or what their due process rights would be. As I said, we are trying to educate others as to our systems and how we have gained credibility with the civil service workforce for our independence. I use the example of the FAA. The board currently has the ability with FAA, as we do with the Internal Revenue Service, the Patent and Trademark Office, and other personnel systems that have provisions outside of Title 5, to adjudicate appeals from employees of those agencies. Our have to look at the particular regulations that govern in the particular personnel system that may be unique. The board has the ability to provide those services and I would just like to sell what I think is the very effective work of the board. Senator Akaka. Mr. McPhie. Mr. McPhie. I was asked that question by your staff. The answer involves a discussion of due process, what it is and how you protect it. Once you give people a right, then the Constitution says, before you can take it away you have to give them this dispute process. What it means simply is notice and opportunity to be heard; a hearing being the key. A hearing that is effective, a hearing that makes sense, you cross- examine, do all those kinds of things. Out there exists a number of due process models, some with review to third parties, some without. State and Federal courts broadly speaking, have held such models to be constitutional. So you would have, for example, a decisionmaker reviewing his or her own decision and it is constitutional. The question for me is, does it make good sense? The answer to that, based on my experience, is no. If you have an internal, a completely internal process, your process tends to lose credibility. If it has no credibility, in a sense you have no process because you end up with more disputes, not less. So in my judgment, at a minimum, you have to have some external body. Should it be the MSPB? I think Congress will put it wherever Congress wants. But if you have an MSPB and based on its history and its record, it is operating, with some criticisms but in the main it is operating well, why would you want to create another body to do that? It would not make a lot of sense to me. But again, I defer to the wisdom of Congress on that. Senator Akaka. Thank you very much for your response. Mr. Chairman, thank you very much. Senator Fitzgerald. I now will ask you both the standard questions that the Committee always asks. You may respond together. Is there anything you are aware of in your background which might present a conflict of interest with the duties of the office to which you have been nominated? Ms. Marshall. No. Mr. McPhie. No. Senator Fitzgerald. Do you know of anything, personal or otherwise, that would in any way prevent you from fully and honorably discharging the responsibilities of the office to which you have been nominated? Ms. Marshall. No, sir. Mr. McPhie. No. Senator Fitzgerald. Do you agree, without reservation, to respond to any reasonable summons to appear and testify before any duly constituted committee of Congress if you are confirmed? Ms. Marshall. Yes. Mr. McPhie. Yes. Senator Fitzgerald. If Senators have no further questions, and I gather there are no other Senators here, I want to thank you both very much for coming. Without objection, the hearing record will remain open for any additional statements or questions from Senators through 5 p.m. tomorrow. If there is no other business to come before the Committee, this hearing is adjourned. 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