[Senate Hearing 108-753] [From the U.S. Government Publishing Office] S. Hrg. 108-753 BUILDING THE 21ST CENTURY FEDERAL WORKFORCE: ASSESSING PROGRESS IN HUMAN CAPITAL MANAGEMENT ======================================================================= HEARING before the OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE of the COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE ONE HUNDRED EIGHTH CONGRESS SECOND SESSION __________ JULY 20, 2004 __________ Printed for the use of the Committee on Governmental Affairs U.S. GOVERNMENT PRINTING OFFICE 95-503 PDF WASHINGTON : 2005 ______________________________________________________________________________ For Sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; (202) 512-1800 Fax: (202) 512-2250 Mail: Stop SSOP, Washington, DC 20402-0001 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, Delaware 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 Chief Counsel Joyce A. Rechtschaffen, Minority Staff Director and Counsel Amy B. Newhouse, Chief Clerk ------ OVERSIGHT OF GOVERNMENT MANAGEMENT, THE FEDERAL WORKFORCE, AND THE DISTRICT OF COLUMBIA SUBCOMMITTEE GEORGE V. VOINOVICH, Ohio, Chairman TED STEVENS, Alaska RICHARD J. DURBIN, Illinois NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii ROBERT F. BENNETT, Utah THOMAS R. CARPER, Delaware PETER G. FITZGERALD, Illinois FRANK LAUTENBERG, New Jersey JOHN E. SUNUNU, New Hampshire MARK PRYOR, Arkansas Andrew Richardson, Staff Director Marianne Clifford Upton, Minority Staff Director and Chief Counsel Kevin R. Doran, Chief Clerk C O N T E N T S ------ Opening statements: Page Senator Voinovich............................................ 1 Senator Akaka................................................ 15 WITNESSES Tuesday, July 20, 2004 Hon. Clay Johnson, III, Deputy Director of Management, Office of Management and Budget.......................................... 4 Hon. Dan G. Blair, Deputy Director, Office of Personnel Management..................................................... 6 J. Christopher Mihm, Managing Director, Strategic Issues, U.S. Government Accountability Office............................... 20 Ed Sontag, Ph.D., Assistant Secretary for Administration and Management, Department of Health and Human Services............ 22 Joanne W. Simms, Deputy Assistant Attorney General for Human Resources and Administration, U.S. Department of Justice....... 24 Vicki Novak, Assistant Administrator for Human Resources, National Aeronautics and Space Administration.................. 26 Alphabetical List of Witnesses Blair, Hon. Dan G.: Testimony.................................................... 6 Prepared statement........................................... 40 Johnson, Hon. Clay, III: Testimony.................................................... 4 Prepared statement........................................... 37 Mihm, J. Christopher: Testimony.................................................... 20 Prepared statement........................................... 47 Novak, Vicki: Testimony.................................................... 26 Prepared statement........................................... 80 Simms, Joanne W.: Testimony.................................................... 24 Prepared statement........................................... 76 Stonag, Ed, Ph.D.: Testimony.................................................... 22 Prepared statement........................................... 68 APPENDIX Responses to follow-up Questions from Senator Voinovich for: Mr. Johnson.................................................. 85 Mr. Blair.................................................... 90 Mr. Mihm..................................................... 101 Mr. Sontag................................................... 109 Mr. Simms.................................................... 114 Mr. Novak.................................................... 118 BUILDING THE 21ST CENTURY FEDERAL WORKFORCE: ASSESSING PROGRESS IN HUMAN CAPITAL MANAGEMENT ---------- TUESDAY, JULY 20, 2004 U.S. Senate, Oversight of Government Management, the Federal Workforce and the District of Columbia Subcommittee of the Committee on Governmental Affairs, Washington, DC. The Subcommittee met, pursuant to notice, at 9:08 a.m., in room SD-342 Dirksen Senate Office Building, Hon. George V. Voinovich, Chairman of the Subcommittee, presiding. Present: Senators Voinovich and Akaka. OPENING STATEMENT OF SENATOR VOINOVICH Senator Voinovich. The Subcommittee will come to order. Good morning, and thank you all for coming. The title of today's hearing is ``Building the 21st Century Federal Workforce: Assessing Progress in Human Capital Management.'' Its purpose is to examine the implementation of six human capital reform bills that have been enacted over the last 2 years. All of these bills originated in this Subcommittee, and I am proud that they have become law. Before I discuss the legislation, I want to thank my colleagues across the aisle--Senator Akaka, Senator Carper, Senator Durbin, and Senator Lieberman--for their good ideas and tireless work over the last 2 years. All of these bills passed on a bipartisan basis. We need more bipartisanship here in the U.S. Senate. I consider it a privilege to work with each of these individuals. This is so important for our country, and I look forward to continuing to work together on behalf of the Federal Civil Service. I also thank our Chairman, Senator Collins. She is a leader in this field in her own right, and I appreciate that she has been a steadfast supporter of my efforts to improve the Civil Service. Chairman Collins was dedicated to establishing the Department of Defense National Security Personnel System, and this legislation is now law thanks to her hard work. On November 25, 2002, the Homeland Security Act of 2002 became law. Title XIII of that bill has incorporated a series of governmentwide human capital reforms, including the establishment of agency Chief Human Capital Officers, a Chief Human Capital Officers Council, the permanent authorization of workforce reshaping authorities, a long overdue modification of the hiring process that gives Federal agencies the option of using a more modern procedure. New category rating system versus the over 100-year-old rule of three, expands the pool of potential candidates from which a manager may choose. A year later, on November 11, 2003, S. 926, the Federal Employees Student Loan Assistant Act became law. This is very important, particularly because so many of our college students are graduating with the big loans that they must repay. This legislation raises from $6,000 to $10,000 and to $60,000 from $40,000, respectively, the annual aggregate limits of student loan repayment Federal agencies may offer as recruitment and retention incentives. I am hoping that soon the Finance Committee will consider S. 512, which would amend the tax code so Federal student loan repayments are not considered income of individuals working for the government. On November 24, 2003, the purpose of my Senior Executive Service Reform Act was accomplished by a provision of last year's defense authorization bill. This provision relieves pay compression within the Senior Executive Service and allows agencies to establish a pay for performance system for their senior executives. How this is implemented is very important as it hopefully will be a benchmark for other segments of the Federal workforce. On December 19, 2003, S. 1683, the Federal Law Enforcement Pay and Benefits Parity Act of 2003 became law. The law required OPM to conduct a study of Federal law enforcement compensation and classification. The report was submitted to Congress last week, finally. In that report, OPM argues for a comprehensive, integrated government approach for addressing three key problem areas: Retirement, classification, and base and premium pay. That is very important because Homeland Security is in the process of their harmonizing several law enforcement agencies. I think it is important that we consider non-Homeland Security law enforcement entities to make sure that we do not create a large discrepancy between agencies. This already is an ongoing problem at the FBI. For a dozen years, they have been asking for some changes in their workforce classification system, and it has fallen on deaf ears. And I am hoping that with this report, we can do something about it. On February 24, 2004, S. 610, the NASA Flexibility Act of 2004 became law. The law provides several new personnel flexibilities to the National Aeronautics and Space Administration to help that agency recruit and retain the best and brightest scientists and engineers for the Agency's high- technology mission. I am very happy that I got to know Administrator Sean O'Keefe when he was at OMB. It was interesting that considering workforce flexibilities was something that I encouraged him to do. Then once he got to NASA, he came back and said, ``George, we need some help at NASA,'' and I am really delighted that we were able to accomplish this for NASA because he is starting to make progress. Most recently, on July 7, 2004, H.R. 2751, the GAO Human Capital Reform Act of 2004, the companion measure to my legislation, S. 1522, became law. It provides several new personnel flexibilities to the newly named U.S. Government Accountability Office, which will allow GAO to continue to be a leader in the field of human capital management. As I said earlier, we are proud of the changes we have made to the Civil Service Code. All of these changes have been carefully considered and have sought to provide greater flexibility within the existing Civil Service framework. And I would be remiss if I did not at least mention Dean Joseph Nye, and the John F. Kennedy School of Government, for their willingness to make human capital an executive session at the John F. Kennedy School of Governments. There we brought together the best and brightest people in this country to discuss how we could better provide a competitive human capital program in the Federal Government. When combined with the much broader changes underway at the Departments of Homeland Security and Defense, in which my colleagues and I, on this Subcommittee, played a role, Congress has enacted the most far-reaching changes to the rules governing the Federal workforce since the passage of the Civil Service Reform Act of 1978. We have not stopped there. Currently, S. 129, the Federal Workforce Flexibility Act of 2000, is advancing through Congress. I am hopeful it will be enacted this year. However, passing legislation is merely the beginning of changing the way the Federal Government does business, in this case, to attract and retain the best and the brightest of the Federal Government. Implementation and careful management of the new flexibilities are critically important. Today we will examine how these six laws are being implemented. Through this hearing, I am hoping to establish a sense of what has worked, what has not, and how lessons learned from initial implementation can aid Congress as it considers future human capital reforms. Our work is far from finished. The Departments of Homeland Security and Defense are in the process of redesigning their personnel systems. It is a process that will take several years. I think we need to really emphasize that. I was remarking to somebody that I had breakfast with this morning that when I was governor of Ohio, we instituted total quality management. It actually took us 7 or 8 years to fully implement. I think everyone should understand that there are some significant challenges in implementation. For example, it will be approximately 2 years from authorization to implementation of the new personnel system at DHS. Negotiations between the Department and employees continue. I believe these significant changes are the beginning of broader reforms that may move across the entire Federal workforce. We must closely monitor their progress and learn from them. In the meantime, the measured reforms that I have sponsored during the last several years should continue to move forward for two reasons: One, they allow agencies to experiment with new and greater flexibilities and, two, agencies should be given as much flexibility as they need to address their workforce challenges until broader reforms are adopted governmentwide. I am hoping that Senator Durbin is going to be here, and when he does come in, I will give him an opportunity to make an opening statement. I would like all of the witnesses to stand up and be sworn. Do you swear that the testimony you are about to give before this Subcommittee is the truth, the whole truth, and nothing but the truth, so help you, God? [Chorus of I dos.] Senator Voinovich. Thank you very much. The record will indicate that you all answered in the affirmative. I would like to welcome Clay Johnson, Deputy Director for Management at the Office of Management and Budget, and the Hon. Dan Blair, Deputy Director of the Office of Personnel Management. I have worked often and closely on many issues with Mr. Johnson and Mr. Blair. Our second panel consists of four distinguished guests. Testifying first is Christopher Mihm, Managing Director of Strategic Issues for the Government Accountability Office. Chris, does that sound good--Government Accountability Office? Does Comptroller General Walker like that title? [Laughter.] Our other three witnesses are their respective agencies' Chief Human Capital Officers--Dr. Ed Sontag, from the Department of Health and Human Services; Joanne Simms, from the Department of Justice; and Vicki Novak, from the National Aeronautics and Space Administration. I want to thank you all for being here today. I would ask the witnesses to limit your oral statements to 5 minutes or thereabouts and remind you that the entire written statement will be entered into the record. Clay, again, it is nice to welcome you. I want to congratulate you on the really good job that you are doing. This administration is very serious about their President's Management Agenda. One way you can tell an administration is serious is whether or not they are willing to measure the performance of their people, and your grading system has been welcomed. Keep it up, and thank you again for coming. TESTIMONY OF HON. CLAY JOHNSON, III,\1\ DEPUTY DIRECTOR OF MANAGEMENT, OFFICE OF MANAGEMENT AND BUDGET Mr. Johnson. Mr. Chairman, thank you. I am going to make some general comments on the details about what the agencies are doing to implement these laws. More will come from the other panel members, but let me just make some general comments. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Johnson appears in the Appendix on page 37. --------------------------------------------------------------------------- In general, departments and agencies are doing a very good job in improving the way in which they place the right person in the right job at the right time. The goal is to place well trained, highly motivated people, with a clear understanding of what is expected of them and how they are performing relative to expectations; their improvements are the result of the legislation that you talked about in your opening statement and, I might add, of the President's Management Agenda. And one of the key issues is the new focus by the agencies on human capital. This is a new focus on results. I conducted some focus groups recently with managers, SESes, GS-14s and GS-15s, career employees in 10 agencies. During the focus groups I talked to them about how their agencies function now versus 3, 4, or 5 years ago. As an example, I asked, does the President's Management Agenda have an impact on ``the way they do business?'' And the responses were very interesting. The comments I received back, particularly with regard to performance evaluations, were that employees, by and large, are here to serve the American people. These Federal employees deserve, want and need greater clarity about what is expected of them, so they can better serve the American people. They want to be challenged, they want to do a good job, and they want better training, they want better managers, they want better information technology, and they want support to help them do a better job. The Federal Government performing better is not about all of our employees working harder; it is about our employees working smarter, and that means better management, better training, better IT, greater clarification about what is expected of them and so forth. It also means better pay. We received a lot of comments back from the employees that participated in the focus groups about pay. The details of what is happening at individual agencies will come from the other panel members. I would like to suggest that I think there are two big issues for the Executive Branch and for Congress to work on. The first one is how and when we will extend 21st Century personnel flexibilities throughout the Federal Government. The work that is going on in the Department of Homeland Security and the Department of Defense will be successful. It is too important for what happens throughout the Federal Government. It is too important to our creating the 21st Century workforce, which we all talk about and aspire to create. It will be successful. There will be a lot of continued discussions and negotiations with the unions, a lot of attention to detail, a lot of training of managers, but the goal will be accomplished. So the question I think that we ought to ask each other in the months and years ahead is what happens next? Do we extend these flexibilities piecemeal, agency by agency, NASA here, HHS there, Interior Department there, or do we do it across the board? I hope we would be inclined to do it across the board. That would prevent us from ending up with 26 or 28 slightly different personnel systems. I think there is great value to having consistency across agencies. It is not a question of whether we extend these flexibilities; it is a question of when and how. The second question that I hope we spend a lot of time working on together is when we begin to pay our employees more responsibly and effectively. Pay is a primary means by which we recruit, motivate and retain quality people. Our pay structure today is not set up to do that. We pay people too much alike. We give the same raises to top performers as we give to poor performers. We give the same raises to people in job categories that we have retention problems, as we do to job categories where we have no retention problems. We have the same problem with recruitment. One of the things I heard back from managers is that they need greater pay flexibilities in agencies to better manage their people. I know this is going to happen, and I also know that training is going to be a factor in this. We will be talking about not just pay on an annual basis, but about what we are doing with pay and training. I know this will happen, but we need to decide when. An election year is probably a difficult time to accomplish change, but this is going to happen, and I hope it happens sooner rather than later. Mr. Chairman, I look forward to working with you and the other Members of this Subcommittee and with other Members of Congress on these matters. A 21st Century workforce, which is a great umbrella under which to think about all of these management issues is going to occur. I think we have the potential to make this change happen in a handful of years. You talked about the changes accomplished in your State of Ohio. Total quality management took 7 or 8 years in Ohio, and they are probably still working on it and getting better at it every year. But I believe that we can get all of the disciplines in place that are required to manage a 21st Century workforce in a handful of years and not a decade. I think it is important to do this sooner, rather than later. Dave Walker, head of the General Accounting Office (GAO) held a conference at GAO 6 months or so ago, and we discussed whether you wait until it is 100-percent certain that the extension of flexibilities will be successful before making changes? And the resounding answer from everybody in the room was, no, you cannot wait until it is ever 100-percent certain because nothing is 100-percent certain. When you believe you have a good concept, you grant the authorities, and then you execute like crazy to make sure it happens well. Mr. Chairman, thank you for having me at this hearing, sir. I welcome any questions from the Subcommittee. Senator Voinovich. Thank you. Mr. Blair TESTIMONY OF HON. DAN G. BLAIR,\1\ DEPUTY DIRECTOR, OFFICE OF PERSONNEL MANAGEMENT Mr. Blair. Mr. Chairman, thank you for having me here today. I am glad to appear on behalf of the Office of Personnel Management (OPM) and Director James and share this panel with Deputy Director Johnson. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Blair appears in the Appendix on page 40. --------------------------------------------------------------------------- I have a written statement, and I ask it be included for the record, and I will be happy to summarize. But before I start, I would like to have the Subcommittee indulge me for a moment. I have a beloved family member in the audience today. My niece, Amy Blair, is sitting at the back, and she began her public service this summer interning for Senator Kit Bond. So I hope the Subcommittee could extend a warm welcome to her as well. You mentioned this in your opening statement, and I want to repeat it as well. We have seen tremendous progress on the human capital front over the past 3 years. I think this has been one of the busiest times we have seen since the enactment of the Civil Service Reform Act of 1978. The achievements brought about the enactment of the Chief Human Capital Officers Act were greatly needed. It granted agencies needed flexibilities in the Federal human resource (HR) field. These tools put into place a framework of accountability and assessment for using these flexibilities fairly and, importantly, responsibly. So my testimony today is going to focus on three dimensions: Leadership, flexibility, and accountability. First, let us talk about leadership. It starts at the top. President Bush knows that. That is why we have the President's Management Agenda. Mr. Chairman, you know that, and that is why you have taken the helm and shown the leadership in enacting the needed reforms that we have seen Congress act on. The President's Management Agenda highlights the strategic management of human capital. We have seen that progress on the other agenda initiatives clearly depends on having the right people, with the right skills, and the right jobs doing the right things for America. OPM's responsibility is driving that initiative. We are advising departments and agencies and holding them accountable according to the scorecard. Agencies are now focused like never before on strategically managing their most important assets, and that is their people. In the Chief Human Capital Officers Act, one key component established a new council for elevating human capital management to what we believe is its proper role in a place at the management table. It required agency-level designation of the Chief Human Capital Officers (CHCOs), it established a governmentwide council, and it signaled a cultural change in the strategic importance of managing people in the Federal Government. The CHCO Council met seven times the past year, adopted a charter, established an Executive Committee, conducted a 2-day retreat, and drafted a technical plan for the current fiscal year. We implemented a CHCO Academy for learning and sharing best practices, and we appointed an executive director, whom you know quite well. Leadership and the determination to break new ground in modernizing Federal Human Resources practices has indeed been demonstrated, both by you and this administration. Second of all is flexibility. There is a recognition that a one-size-fits-all government is a practice for the past. Agencies must have the ability to customize for individual needs. We have seen this with the Department of Homeland Security (DHS), the National Aeronautics and Space Administration (NASA), the Government Accountability Office (GAO) and now with the Department of Defense (DOD). Regarding DHS, those regs were issued back in February, after an intensive 10-month, highly collaborative and inclusive human resources systems-designed process. It involved employees, managers across DHS and staff and leadership from OPM as well. And our involvement was not only with the employees, but employee groups and unions. After a comment period, we proceeded to the statutory meet- and-confer stage, where we presently find ourselves, and that is set to end at the end of this week. Final regs are expected in late September. With the Department of Defense, we have the National Security Personnel System. A Program Executive Office has been established by DOD earlier this spring, and we are actively engaged in union employee outreach as well. Proposed regs are expected late this year. Our Law Enforcement Officer report, which you referred to in your opening statement, also showed that we need flexibility to modernize how we compensate law enforcement personnel. Also included in the Homeland Security Act and the Chief Human Capital Officers Act were new very significant authorities, such as direct hire. This expanded the authority during a severe shortage of candidates or critical hiring needs allows agencies to select from available candidates on-the- spot. OPM has approved six agency-specific requests, with two pending, in addition to governmentwide authorities for three occupations. You also referenced category rating, which was an update of the ``rule of three.'' That was a very important flexibility for agencies to use. It also included authorities for Voluntary Early Retirement Authority and Voluntary Separation Incentive Payments. Both are important authorities for agencies to be using as well. In an effort to educate agencies on the use of these flexibilities, OPM has taken a consistent leadership role in guiding, supporting, and evaluating the agencies. We have conducted training sessions for agencies. As a matter of fact, last month we had a hiring symposium on the hiring flexibilities for agencies and Chief Human Capital Officers. We have unveiled a 45-day hiring model for agencies to use. We have unveiled a 30-day hiring model for the Senior Executive Service. We have administered surveys of agency hiring practices and reported their findings, and we have also conducted CHCO academies. We also see other flexibilities on the road with S. 129. But I think that an important part of all of this is accountability, and you mentioned the careful implementation and good management. Executive Order 13197 established two new Civil Service rules aimed at addressing internal accountability, external oversight, and submission of workforce information to OPM. The scorecard really ratcheted that up several notches. It scores agencies on the five goals in the President's Management Agenda. OPM has developed six human capital standards for success, and this year seven agencies have achieved green status on the human capital management. So much has been accomplished. More remains to be done, but it will require close collaboration with the administration, congressional leaders, employees, veterans service organizations, union representatives, managers and other key stakeholders. But we are confident, Mr. Chairman, that under your leadership, we will continue to see more progress. You have been a tireless leader and champion for the Federal Government. We salute you for your hard work, and most of all we thank you. I am happy to answer any of your questions. Senator Voinovich. Thank you very much. As I mentioned earlier, significant reforms to the Federal workforce were enacted as part of the Homeland Security Act. However it seems that OPM has been slow to issue implementing regulation for these authorities. Agencies have been reluctant to use the new authorities under the interim regulations out of concern that there may be changes. This has led to some confusion regarding the new flexibilities, including the new hiring authority. I would like to ask both of you how are OMB and OPM working with agencies to ensure they understand these new flexibilities and are able to use them effectively? Mr. Johnson. I keep telling them they need to do it faster, and they just will not listen. [Laughter.] Mr. Blair. We want to do it fast, and we very much understand everyone's impatience. However, we also want to get it done right. Senator Voinovich. Mr. Blair, would you please elaborate. Mr. Blair. We want to get it done right at the same time. We are working hard to get the Senior Executive Service (SES) pay regulations out and the certification regulations out. We expect those to come out very soon. We recently issued the final regulations on category rating, and we have also issued the regulations on direct hire. We understand the agencies have been slow in embracing some of these flexibilities, and so we have been out on the road working with agencies to make sure that they understand them. I referenced in my statement earlier the number of training sessions that we have held at OPM. We had a hiring symposium, which was attended by about 250 people last month at OPM. We are going to be conducting one in August, but we are also going to take that show on the road because we understand that flexibilities need to be used in the field as well. So we will be working with our Federal Executive Boards to coordinate hiring symposiums across the country. But since last year, Director James has been putting out extensive guidance on the use of these flexibilities, and we will make sure that agencies have the knowledge, and have the guidance, and most of all have the will to use these things. Last week, I testified before the House Subcommittee on Civil Service, with some of the other Chief Human Capital Officers, and there was a recognition that not all agencies will want to utilize all of those flexibilities. We understand that. We just want to make sure that they know about them and that they are available. Senator Voinovich. We want to make sure that they have the flexibilities they need, but authorizing flexibilities and using them are two different things. What, Mr. Johnson, is OMB providing agencies regarding oversight and encouragement on the use of flexibilities? Mr. Johnson. That is not part of the Management Agenda. Flexibilities are a means to an end, and we hold them accountable for the end. We will work with OPM to change this and they are as interested as anybody in the use of these flexibilities, but we pay attention to what we are doing to fill skills gaps, succession gaps, leadership gaps, and performance evaluation systems and so forth. Senator Voinovich. How about training? Have you looked at the overall training programs? Mr. Johnson. Well, you and I have talked a little bit about training and your use and emphasis on training in Ohio. We have an opportunity to pay a lot more attention to training. We are not really sure how much money the Federal Government spends across the board on skills management and leadership training. We think it is in the vicinity of $2 billion a year, which makes it about 2 percent of our total payroll and benefits. I think in the private sector? The general rule of thumb is a 3 percent ratio. So that suggests that we do not spend as much money as we should, and if we are playing catch-up, we really do not spend as much money as we should be. So I think OMB and OPM need to work much more aggressively with the agencies and with Congress to think through more about formally what we are investing, what is the right level of investment on training on a year-to-year basis, particularly in the management area. As we become more focused on results and performance, we need to have managers who are better managers. They are not just senior workers; they are managers, and we need to invest in their ability to manage more effectively. Senator Voinovich. In terms of assembling budgets, several years ago I surveyed 12 Federal agencies and asked them how much money they were spending on training. Eleven said they did not know, and one said we do know, but we will not tell you. When you have asked folks to put together their annual budgets have you asked them to specifically put in an item for training or does it just fall under some other category? Mr. Johnson. I think it falls under another category. When Members of Congress and people in agencies go looking for money for other priorities, they tend to find it in training categories. It is an investment that is not managed as formally as it should be. Senator Voinovich. Mr. Blair. Mr. Blair. Mr. Chairman, when you mentioned training, I think you really hit a really ripe area for action. Over the course of the last 10 years, and during the downsizing effort of the 1990;s, we saw that a number of agency and Department Human Resources staffs were decimated, that the administrative arena was targeted for the buyouts and downsizing. And what we have seen with a number of our human resources folks, just not at OPM, but across government, is that some of the best ones left, and that the ones that we have left are in need of additional training and education. If we are going to be extending these flexibilities to the agencies, it is vitally important that they understand what they are. We are holding sessions at OPM. We will be doing it here in Washington and across the country, but what Director James has talked about is moving ahead toward a higher professionalization of the human resources staff. In my written testimony, we talk about implementing competency models and a community of practice, but it is very important that the human resources staffs across government understand their roles and what really their new roles are, that under decentralized government it is all the more important that they understand what the merit system principles are, that they understand the applications of veterans preference, that they understand what are the right circumstances for going for direct hire and the other flexibilities. And so that is going to be a new area that we will be embarking on in the future is better training and more of a professionalization of the human resources staff, just not at OPM, but across government as well. Senator Voinovich. Could you share with me what OMB and OPM have done within your own organizations to implement the use of workforce flexibilities. Mr. Johnson. Well, the specific flexibilities have been made possible with this past legislation. To my knowledge, OMB has not utilized them, the buyout authorities and student loan repayment. Our focus has been, thinking in terms of present management agenda goals, and what we have tried to do in the last year, is better differentiate between levels of performance with our workforce, improve the quality of our performance evaluation systems, help train our managers to be better evaluators, better providers of feedback to employees regarding what is expected of them and how they are performing relative to those expectations. We have been working on a better strategic plan to better define the outcomes that OMB is responsible for, which then gives us better definition of goals to hold senior leadership responsible for. Those have been the primary things that OMB has been working on to improve our human capital practices. Senator Voinovich. How often do you get together with the Secretaries of the Departments to talk about Management Agenda? Are there regular meetings to talk about the Management Agenda? Mr. Johnson. The so-called President's Management Council, the PMC, meets every other month. These are the chief operating officers, typically the deputies in the departments. The Executive Committee, which is six or seven members of the PMC, meet with me every month. We discuss the President's Management Agenda and what we need to accomplish and what the nature of the resistance is, what are the opportunities to go faster, and what can we do to help them get to where they want to be. So, the leadership of the PMC meets monthly, and the full PMC meets every other month. We also meet if individual issues come up, or if we are introducing a new initiative or there is a new law that needs to be explained. I am in constant communication with them by E-mail, and phone. Senator Voinovich. Mr. Blair, does OPM itself use flexibilities? Mr. Blair. We have utilized them. We have used category rating for between 25 and 30 positions, I am told. I do not believe we have used the direct hire authority yet, but we also have a student loan program that is in place, and we have utilized the 30-day hiring model for our SES positions, and we have also been utilizing the 45-day hiring model for our general schedule positions. Senator Voinovich. We talked a little bit about the regulations instituting pay for performance in the SES. What are their status? That is really important. Mr. Blair. They are imminent. They should be out in the next few days. They will come out in two parts. One will be the certification, which will be issued jointly, I believe, by both the Office of Management and Budget and OPM, and then we will have the pay regulations themselves, which will be open for comment for 30 days. The certification regulations I am told will be interim final. So agencies will be able to start applying them and will be able to get in the process of certifying them. Senator Voinovich. Well, it is really important they are published and that we, in Congress, really watch carefully how this is done. People must be trained to do the performance evaluations because I think that when this cascades into other segments of the workforce, we will need a benchmark to ensure they do it properly. It takes a lot of time to get to do it correctly. I hope everybody understands that. Mr. Blair. We will be putting out guidance along with the regulations, and we also plan to host another training session at OPM for those SES regulations. Senator Voinovich. Mr. Johnson, I was pleased to see that on the revised President's Management Agenda scorecard, seven agencies now have earned a green on their overall status of human capital management. What more will OMB do to continue moving agencies toward green? Mr. Johnson. Well, the way we relate to agencies now, with regard to the President's Management Agenda, is we are asking them to set goals of where they want to be on each of these five initiatives a year from now. So we are in the process of starting to work with them to decide where they would like to be on all five of these initiatives in July 2005. And we find the agencies are very aggressive in their goal- setting. They all want to get to yellow if they are red, and they want to get to green if they are yellow, and they want to get there faster than their fellow cabinet secretaries. They want to improve for bragging rights, but they also want to get there because they realize it is good for their agencies. Improvement in the Management Agenda helps their agencies be more focused on results. It makes their agencies better places to work. So we help them achieve their goals, sooner, rather than later. Our primary responsibility is to make sure that the 19 agencies that are not at green understand what the 7 agencies that are at green have done. There is a lot of facilitation, a lot of sharing of best practices. How did the 7 green agencies train their managers to better evaluate performance? What does the HHS performance contract look like, and so might one of these yellow or red agencies want to adopt something like HHS, which Ed Sontag will talk to you about later? A few agencies that, for instance, have pass/fail systems are expressing some reservation about going to a system that provides more distinction between different levels of performance. We are meeting with those agencies to explain to them--for instance, that OMB just went through this. We had a system a couple of years ago that though it was not called pass/fail, 80 percent of the people were in one category and 20 percent were in another. That is largely a pass/fail system, and I think we have successfully moved away from that, very much for the betterment of OMB. And so we met last week with the leadership at one of the agencies to take them through what we had experienced, to walk them through the steps OMB took to transition, and to give them comfort level that they could accomplish the same thing. And if they followed our model, we felt that they could be as successful as we have been. So it is giving them confidence to move forward and giving them best practices to move forward most expeditiously. Senator Voinovich. And is the forum for that the Chief Human Capital Officers Council? Mr. Johnson. That is the primary forum because that is where the real technical work is done. But then also for any significant movement to be made on any of these PMA initiatives, it has to have the total commitment at the top of the agency. If there is any reservation at the deputy level or secretary level, then there is going to be reservation throughout. And so while Director James and the CHCO Council are working on the expertise at the Chief Human Capital Officer, we are working with the senior leadership to make sure that they are committed, and they are going to go back to their agencies and help their CHCOs implement this sooner, rather than later. Senator Voinovich. Do you think they understand how that is going to help them do a better job? Mr. Johnson. We conducted focus groups in these 10 agencies that I mentioned, and they talked about what is in this for them, what enlightened personnel practices are all about, what is in it for the employee. And we had members of the leadership of these agencies sitting in on this to observe, and they all walked away, as I did, very enlightened that this is a good thing. This is not something that we are imposing upon the employees. This is good for employees. This makes their agencies better places to work, and therefore it is good for employees. And our challenge is to be able to develop and implement these new processes really well and really quickly. Senator Voinovich. Mr. Blair, in the recently released Federal Law Enforcement Pay and Benefits Report, OPM makes a case for broad authority to establish a governmentwide framework for law enforcement, retirement, classification, and basic pay and premium pay systems in consultation with employing agencies and with the concurrence of the Attorney General. Regarding basic pay, OPM says that this authority would provide the flexibility to make strategic decisions that target specific occupations based on labor market conditions and other factors. Could you please explain the difference between labor market pay adjustments and locality adjustments, and why do you believe that labor market adjustments are a better alternative? Mr. Blair. Labor market adjustments would be more targeted than just broad, across-the-board locality payments which may go beyond just law enforcement occupations. And what our report really wanted to do was to make a recommendation to Congress to follow the template that was established in DHS and DOD. It is a recognition that the law enforcement pay and compensation systems covering basic pay, premium pay, and retirement have become outmoded and outdated and that there is a need for them to be modernized and to be brought up-to-date. We need to go forward because over the past 50 years there has been a patchwork of authorities established giving certain groups of law enforcement premium pay, additional retirement benefits or additional pay, which has created inequities across the board. Rather than doing it on an across-the-board adjustment, which some of the legislation has proposed, we need to be much more targeted, and specific occupations and specific localities may need to be targeted as well. That is why we made a recommendation that we establish a broad framework that agencies could operate in, in order to best assess how they can recruit, retain and bring about the strategic management of their law enforcement communities. Senator Voinovich. Is your plan to look at various areas of the country to see what the market is paying and for comparable positions, for example, in the sheriff's office or the police department? Mr. Blair. I do not believe that our report would delve down that far, but what we would do is, depending on the legislative authority recommend that Congress give us broad latitude to look across the board at different localities, at differences within those localities among occupations and to develop a broad framework that agencies then could use. What we do not want to see is a system that we have now where one agency, because of additional legislative flexibilities such as added pay or retirement benefits, can pick the best of another agency's law enforcement. We need to equalize and harmonize and at the same time recognize that it can be done within a framework of flexibility. Senator Voinovich. Well, I know that when the law enforcement report was issued, some groups that were very disappointed because they thought there would be some specific recommendations. Instead, OPM issued generic recommendations in three broad areas. However, those recommendations need to be flushed out as quickly as possible. We really need to move on the FBI. We must provide relief to people that work for the Agency in high cost-of-living areas. I have heard horror stories of employees living 60 miles out of town in order to find affordable housing. I am not certain that locality adjustments will fix the problem. Given Mr. Blair's statement perhaps we should explore market based salary adjustments. I know when one of our outstanding leaders in Cleveland, Van Harp, transferred to Washington, they gave him an extra $26 a month to live in Washington, DC. I mean, there are just some unrealistic things going on out there. And if we are going to get the job done in homeland security, then we have to understand that those agents have got to be paid competitively. And I think that, as we are moving, I do not know where we are yet in Homeland Security--where are we, do you know, in terms of that harmonization? Mr. Blair. In Homeland Security, we are in the final work of the statutory meet-and-confer period, and that should be up at the end of this week, and we expect the final regulations later this fall. Senator Voinovich. In terms of the harmonization of the agencies, how is that coming? Where is that? What is the status of that, do you know? Mr. Blair. I would have to provide that for the record. I know that we have been in constant consultation with the employee organizations and with DHS on that. INFORMATION FOR THE RECORD The passage of the Homeland Security Act of 2002 signaled the beginning of one of the largest transformation of the U.S. Government in almost 60 years. When the new Department of Homeland Security (DHS) stood up in March 2003, it included 22 different human resources servicing offices, 8 different payroll systems, 19 financial management centers, and literally hundreds of legacy systems that had to be consolidated, integrated and upgraded. My understanding is that a year later, those 22 different human resources servicing offices are now down to 7, the 8 different payroll systems are now down to 3 and moving to 1, the 19 original financial centers are now down to 10, and steps are underway to address legacy systems. Recognizing the magnitude of this consolidation, the timetable for DHS to complete the standup stretched over a period of 24-30 months. I am told that the Department identified over 900 activities that needed to be completed during this period and that 12 months after the Department's first day, 75 percent of those activities had been completed. Senator Voinovich. What I would like to know is when are they contemplating doing their harmonization among the various agencies in Homeland Security? And look at that date, and what are they doing, and then we ought to move very quickly on the non-DHS agencies. But I think that you ought to set a goal that you knock this thing out in the next 6 months or sooner, if you possibly can. I think it is really important. Mr. Blair. That is a good message. Thank you, Mr. Chairman. Senator Voinovich. I have several other questions that I would like to ask, but I am going to ask that you answer them in writing. Senator Akaka is here today. Senator Akaka, thank you very much for being here. If you would like, you can share with us your words and ask the witnesses additional questions or you can start with asking additional questions. OPENING STATEMENT OF SENATOR AKAKA Senator Akaka. Thank you very much, Mr. Chairman. I would like to make a statement and then ask questions. I want to commend you, Mr. Chairman, for all you have done in human capital management. You have been a champion in this respect, and I have been so happy working with you on this. Mr. Chairman, our Nation will be facing a huge crisis in a few years if we do not move to take care of the problems that we expect in human capital and its management. Mr. Chairman, you and I have worked together to give agencies the tools and resources needed to recruit, retain, and manage their workforce. I was pleased to join you in offering an amendment to the Homeland Security Act providing a number of new workforce flexibilities for the Federal Government. It is in that spirit, Mr. Chairman, that I thank you for holding this hearing today to review the implementation, use, and training and education related to these new flexibilities. According to a new Government Accountability Office report, agencies cite several barriers to using the new flexibilities, including the lack of guidance and rigid regulations from the Office of Personnel Management. Although OPM has recently engaged in a number of activities to address this issue, I am interested in hearing OPM's long-term strategy to help agencies use flexibilities effectively. I wish to be fair to OPM because this problem is larger than OPM. Agencies must do their part, too, by engaging in strategic workforce planning and skills assessments and working with the Chief Human Capital Officers Council to determine best practices, eliminate internal red tape, and utilize the flexibilities best suited to meet their needs. Such action is essential because, despite continuing efforts to reduce inefficiencies and reform the hiring process, studies show that the Federal Government lags far behind the private sector in its ability to recruit, to hire, to retain and to manage a skilled workforce. These studies are quite troubling, in light of an increased interest in Federal employment during the past few years and the growing number of employees eligible to retire. We may be winning the hearts and minds of Americans seeking employment with the Federal Government, but we are still losing the talent war. Chairman Voinovich, you and I have committed ourselves to that cause, and I look forward to our continued partnership. I look forward to hearing from the witnesses, and I do have some questions for them. Mr. Blair, while I agree that not all flexibilities are appropriate for all agencies, I am concerned with the findings of GAO. The June 2004 report did not state that agencies failed to use new hiring flexibilities because they were unnecessary, but rather cited lack of OPM guidance. I recall that during the debate on the new human resources systems at DHS, GAO noted that agencies have the necessary flexibilities to manage their workforce, but failed to do because of a lack of OPM guidance. Mr. Blair, could you elaborate on the ``community of practice'' OPM plans to develop and provide more information on OPM's long-term plans to help agencies understand and use flexibilities, especially in the area of guidance and training. Mr. Blair. We took issue with the GAO finding about the lack of guidance. Since the enactment of the legislation, we have been putting out consistent and steadfast guidance on the use of these flexibilities. We have held training sessions, and Train the Trainer sessions. At every Chief Human Capital Officers Council meeting I am told that hiring was a subject. We have a hiring subcommittee devoted to the use of the hiring flexibilities. But you do hit a nail on the head when you talk about what are we going to do in the future to make sure that not OPM personnel, but that Agency personnel are trained in the use of this. One of the things that Director James has talked about is improving the competencies of human resources staff across the government. We need to move in the direction of automating some of our testing. The Administrative Careers with America test, which is not automated, needs to be updated and automated as well. But we also need to improve the talents, and the abilities, and the skills of human resources staff. That's one of the areas that we are going to be doing is looking at how we can increase the professionalism of human resources staff across government. Senator Akaka. Mr. Blair, last week, OPM delivered the report requested by Congress on pay and benefits for Federal law enforcement officers, which recommended that OPM be given broad authority to establish a governmentwide framework for law enforcement pay and benefits. This would be a rather broad grant of authority, and I would appreciate having more information as to what this framework would look like now or 5 months later. Mr. Blair. I would be happy to give you a thumbnail sketch of what is the template that we have seen for the Department of Homeland Security and for the National Security Personnel System within DOD. Congress has given OPM the authority to develop this along with DHS and DOD. We recognize that this new law enforcement system that we recommended would cross agency lines, but it is really necessary in order to bring about ways of addressing the inequities that exist throughout the law enforcement occupations in terms of pay and benefits. And so it is very important that Congress consider how they want to grant that authority to us, and we would say, look, at the authority granted to OPM and DHS, look at the authority granted to the Department of Defense and OPM in developing these new systems, and I think that that could provide the framework. Senator Akaka. Mr. Blair, what role would you expect Federal employee unions and associations to play in the development of this new system for law enforcement officers? Mr. Blair. I think that the expectation would be that they play the same collaborative role that they have been playing within DHS and that you are seeing within DOD as well. I think that they provided an excellent framework, that the collaborative process was hailed probably from many different directions as a model of collaboration and that we would use that as a model for any new system as well. Senator Akaka. Mr. Johnson, upon release of the July 2004 quarterly President's Management Agenda scorecard, you stated that agencies can only adopt the PMA's disciplines and habits and better focus on results if their employees are fully involved in the process. I agree that employee involvement is key to any change. What is OMB doing to help agencies fully involve their employees in meeting the goals of the President's Management Agenda? Mr. Johnson. Well, we were reminding agencies, starting at the top, that they have to do this. This is very important. As I mentioned, we conducted focus groups in 10 different agencies, and I have shared the findings, the feedback from employees and the managers that we talked to in these 10 focus groups, with the leadership of the 26 PMA agencies. And it is a very clear picture that is painted that what is good about this, what the challenges are about these changes and the degree to which employees need to be involved. The opportunity exists to do this with full engagement of the employees because it is to the employees' and the Agency's advantage; it is a win-win for everybody. And so I think we have done a good job so far of making sure that the leadership of agencies understand this agenda. Many agencies are already fully engaging their employees and have ways of seeking implementation ideas from their employees about how to get a clean audit or how to implement competitive sourcing or how to implement some new performance evaluation system. Some agencies obviously are better than others. A primary topic of conversation in these every-other-month PMC meetings is the various ways to involve employees. And in all of our communication about the PMA, such as our results.gov website, and the communication that agencies leadership are going to engage in with their employees in a couple of weeks, recapping what they have accomplished in each of the agencies over the last 3 years, they are going to be talking about their commitment to seek advice and counsel from the employees. They will remind the employees why this greater focus on results is good for the agencies and good for the employees. We will be reminding the leadership. The leadership will be reminding the employees. We will be talking about it as if it is an expectation, so that if and when it does not happen, there will be plenty of incentive for the employees and managers to raise their hand and say, ``Wait a minute. I thought we were supposed to be involved in this, we need more information than we are getting or we need to be more involved.'' Because they will be inclined to ask for involvement, results will happen with greater regularity. Senator Akaka. Mr. Blair, I understand that it is difficult to hire individuals for entry-level positions because most of the government's assessment tools are experience driven. What is OPM doing to help agencies recruit people for these positions? Mr. Blair. What I think you may be referring to are the administrative positions in a GS-5 and GS-7, which are covered under the Administrative Careers with America assessment tool. Right now that tool is cumbersome. It is experience driven, and we need to look at ways of modernizing that and bringing it up- to-date and automating that. We realize that this is a substantial investment. This is an area where the Chief Human Capital Officers Council can play a role, and OPM can play a role in looking at best ways of updating, modernizing and automating the tool so that we can do a better job of recruiting for those positions. Senator Akaka. Mr. Blair, OPM has suggested a 45-day hiring period for agencies from the close of the application period to the hire date. At last week's House hearing on the use of new hiring flexibilities, I understand that there was a discussion over the time needed for agencies to write vacancy announcements properly and plan for vacancies in advance. What time lines are suggested for posting openings and what guidelines are available to help agencies in this area? Mr. Blair. We have Human Capital Officers at OPM which are available for the agencies to help them assess and answer specific questions regarding any specific positions they may be recruiting for. Generally speaking, we have seen that sometimes the vacancy announcements are oftentimes laden with government jargon, which is not readily understandable to the applicant who is coming from college or who is coming from outside of government. We have seen sometimes the agencies do not need to open the vacancy announcements for quite as long as they have, but they do so because they have agreements or other types of what we call self-wrapping red tape that bind them in one way, shape or form. We urge agencies to look at those and see what ways that they can streamline that process. It depends on the position that you are recruiting for. Some of these may be very hard-to-fill positions. Maybe it is a position that direct hire authority may be good for, if it is a critical hire or a shortage category. And, we recognize one size does not fit all in this, but what does fit into all of this is the need for agency leadership to pay close attention to the recruiting strategies and staffing strategies that the agency is employing because we all know that the retirement wave is coming upon us and that now, more than ever, it is important that we have staffing mechanisms in place through which you can quickly recruit employees to fill those positions. Before you do the recruitment, you need to do the succession planning and identify those vacancies in advance. If you do not plan for the vacancy until it arises, then you have already passed the critical point, and you are going to suffer further delay. This is why succession planning is critical. Senator Akaka. Mr. Chairman, I have one last question. May I? Senator Voinovich. Yes. Senator Akaka. Mr. Blair, I am interested in how agencies can do a better job of selling the Federal Government as an employer of choice. While OPM has offered training on the use of flexibilities, what kind of training does OPM provide on marketing Federal job opportunities? Mr. Blair. One of the things that we have done is that we have reached out to colleges and universities through a partnership with the Partnership for Public Service in a Call to Serve Initiative. We have engaged over 55,000 people in our hiring fairs across the country, and I think that those hiring fairs shattered what we believe to be a myth, that the Federal Government cannot recruit top-notch talent. We held over a dozen hiring fairs across the country. Over 55,000 people attended. Our hiring fair in New York had lines wrapped around Madison Square Garden probably at least four times. And our surveys of the people who attended showed not only were these bright, ambitious young people, but they were also well- educated, they came prepared with resumes, and they came prepared with a dedication to public service, and a patriotic spirit, and they wanted to serve America. So we see that there is a broad vein to be tapped out there of not just young people, but people across the board who want to work for America. We just want to make sure that we have the processes in place that agencies can access in order to tap into that talent. Mr. Johnson. Senator, one comment about that question. Agencies have their own programs for attracting MBAs or fast- track people or people with specific skills, and it is really quite impressive. And your question makes me think we need to do a better job of keeping inventory of all of those best practices and share that with agencies, and Dan and I will make sure that happens. We will share that information with you. We will do that here in the next month or so. Senator Voinovich. Thank you. I really appreciate your being here for this hearing. It is my understanding that the Partnership for Public Service works with OPM. In addition, OPM hired ``Monster,'' to redesign the USAJOBS website. What is the status of that project? Mr. Blair. We have updated our website. We have gone through a series of initiatives in which we have worked with the agencies to improve vacancy announcements, and we have had a whole series of updates to the website in order to try to make it more user friendly. That is an ongoing process for us. Senator Voinovich. Have you been responsive to suggestions of the Partnership for Public Service? Mr. Blair. We work very closely with that group. It is a key stakeholder. They have the best interests of the civil service and public service at heart. We engaged them in the Call to Serve in which we have reached out to about 450 colleges and universities to date. We have worked with them on a number of initiatives on improving hiring, and we see them as a partner in this continuing effort to assess our human capital leadership. Senator Voinovich. Have they been helpful? Mr. Blair. Very helpful. Senator Voinovich. Well, I want to thank you for your testimony. I want you to know that I look forward to a continuing dialogue. I just want all of you to understand that I am going to continue to have hearings on all of this legislation and this issue. I want to make sure that it gets cascaded out throughout the various government agencies. Senator Akaka, you and I and several others are going to have to decide how reforms should progress, whether we are going to consider reforms agency-by-agency--and I know the Chairman of our Subcommittee has thought about that--or do we consider across-the-board changes? Of course, how we proceed depend upon the regulations for the new personnel system at the Department of Homeland Security. I want to underscore again how important it is that when the final regulations are published employees and unions, have been fully involved in the design process. I think it is really important that independent people reviewing the regulations will say that they are fair, make sense, and it is going to help the government and at the same time be fair to the people who work for our government that are represented by organized labor. Thanks very much. Mr. Blair. Thank you. Mr. Johnson. Thank you. Senator Voinovich. As I mentioned in my opening statement, I would like each of you to limit your remarks to 5 minutes. First of all, thank you for coming. We will start our testimony with Mr. Mihm. TESTIMONY OF J. CHRISTOPHER MIHM,\1\ MANAGING DIRECTOR, STRATEGIC ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE Mr. Mihm. Thank you, Mr. Chairman. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Mihm appears in the Appendix on page 47. --------------------------------------------------------------------------- Senator Voinovich. We welcome you back. You have been here a lot of times over the last 5 years. Mr. Mihm. Well, thank you, sir, and it is always an honor to appear before you and Senator Akaka to discuss progress in addressing the Federal Government's human capital challenges. Mr. Chairman, your December 2000 report to the President noted that successfully addressing the human capital crisis will not come quickly or easily. No single piece of legislation or Executive Order can accomplish these goals. And for this effort to be successful, it must be embraced by Congress, career managers and employees on the front lines--exactly the points you have been underscoring today. Without the sustained effort of all the stakeholders, this effort will fall short. Since 2000, and under the leadership of this Subcommittee and others in Congress, more progress has been made in addressing human capital challenges that the agencies face than in the last 20 years--a point that Mr. Blair made in his statement as well. The key to continued progress in our view is twofold: First, agencies must use the tools and authorities that Congress provided to address their individual challenges and ensure that they are creating the organizations they need for the future rather than just recreating the past. This is exactly the point, Mr. Chairman, that you made in your opening statement. Second, we need to consider if additional and more systemic changes are needed to the Federal Civil Service system, and that is the point, of course, that Deputy Director Johnson was making in his remarks. Turning then briefly to the first issue. A little over a year ago, in a joint hearing before your Subcommittee and Chairwoman Davis on the House side, we testified that Federal human capital strategies were not constituted to meet current and emerging challenges or to drive the needed transformation across government. At your request, and the request of others in Congress, we have undertaken a large body of work since then, looking at the implementation of the recent legislative initiatives. That work centered on four major themes that are detailed in my written statement, including: First, conducting strategic workforce planning, including using the right-sizing and hiring tools that Congress provided; Second, strengthening employee training and development, an area where, as you have noted, there has been substantial underinvestment, and often that investment has been unwise where it has been made, that is, not strategic; Third, implementing Pay for Performance and management reforms, particularly the new SES statutory reforms; And then, fourth, creating strategic human capital offices with strategic human capital officers and an effective and strategic Chief Human Capital Officer Council, which in our view is absolutely vital. Our work in each of these areas identified leading practice for the agencies to consider as they seek to address the current challenges and prepare for the future. Taking your guidance, Mr. Chairman and Senator Akaka's, we have had a specific focus on the capabilities that agencies need to put in place, in order to effectively use the new authorities that have been given: Training, employee involvement, education, strategically planning to use those authorities. All this we have done in order to help the successful implementation of these initiatives. Turning to my second point, the need to consider additional structural changes to the Federal Civil Service system. The broad authorities that Congress has provided the Department of Homeland Security and DOD were clearly important for those agencies. Nevertheless, we are fast approaching the point where the so-called standard and governmentwide ways of doing business are neither standard nor governmentwide. To help advance a discussion concerning how human capital reforms should proceed, the Comptroller General and Chairman Volcker hosted a forum to discuss the framework for human capital reform, as Mr. Johnson noted in his remarks. While we will issue a detailed summary in the coming weeks, the discussion was centered on three areas: First, principles that the government should retain in a framework for reform because of their inherent enduring qualities, such as an updated set of merit principles; Second, criteria that agencies should have in place as they plan and manage their new human capital authorities; And, third, processes that agencies should follow as they implement any new authorities. Returning to the point, Mr. Chairman, you made in your December 2000 report. Congress, OPM, OMB, the agencies, Federal employees and other stakeholders have all worked very hard together in recent years to make marked improvement in the Federal Government's human capital management. We are making progress, and that is real progress. We need to build on that current momentum, however, and ensure that agencies and their employees have, and are effectively using, the tools and authorities they need to address the governance challenges of the 21st Century. Senator Voinovich, this concludes my statement, and obviously I would be happy to take any questions you may have. Senator Voinovich. Thank you. Dr. Sontag. TESTIMONY OF ED SONTAG, PH.D.,\1\ ASSISTANT SECRETARY FOR ADMINISTRATION AND MANAGEMENT, DEPARTMENT OF HEALTH AND HUMAN SERVICES Mr. Sontag. Senator Voinovich, it is a pleasure and an opportunity to be here this morning to testify on the flexibilities and efficiencies that Congress, administered by OPM and OMB, have given the Department of Health and Human Services. --------------------------------------------------------------------------- \1\ The prepared statement of Mr. Sontag appears in the Appendix on page 68. --------------------------------------------------------------------------- Secretary Thompson's major goal with the Department when he arrived in January 2001 was to create one department. We feel very confident and take a great deal of pleasure in talking about the flexibilities that have been granted to us and how they are helping Secretary Thompson and his appointees administer a very complex program. Clearly, recruitment, hiring, developing, and retaining the workforce is the key to any solid administrative management effort. Our one Department goal has been the showplace and centerpiece of what we are attempting to do, to bring disparate and sometimes unrelated agencies together to respond to the Nation's health needs. I would like to briefly talk about some of the things that we have done not only as a direct result of the authorized flexibilities, but of the culture of change that these flexibilities have brought about in our Department. We have reduced the number of hiring officers in a department from 40 to 4, saving, in person power, over 33 percent and at the same time increasing our efficiencies. We have de-layered the Department of Health and Human Services. We have administered e-grants. We are moving into e-payroll. Particularly in the area of human capital, we have created Emerging Leaders Program. This program is really one of our showcases in human capital. We have recruited over 250 individuals into government. We now are in our third year of administering this program. In the first 2 years, we have retained over 95 percent of the young people who have come to government. This program primarily focuses on individuals with graduate degrees. The vitas and the resumes they bring to government is just a wonderful example that government can recruit the best and brightest. We have developed our SES Candidate Program along the lines of some of the flexibilities that have been granted to us. We have created, and particularly to respond to some of the complexities in training, an HHS University. This university has eliminated many of the redundant training programs and increased training opportunities for all employees. At the same time we have done all of these things, we have increased the workforce diversity in the Department of Health and Human Services. Particularly, we are very pleased with the human capital flexibilities that have been granted us, the direct hiring authorities. We now have direct hiring authority, and we are using it for medical nurses, and other related personnel. As we implement Medicare, Medicaid changes, we have direct hiring authority in that area. And most recently, one authority that we are very excited about is the flexibility, in the case of a Secretary or Presidential emergency, to directly hire individuals who can respond to geographic and State needs. This cuts across a lot of professional and nonprofessional areas, but it means that we can develop rosters of individuals who can respond to emergency needs almost on a minute's notice. We can start putting those rosters together and, called upon, we can deploy literally thousands of people in particularly geographic areas who are employees of the Federal Government. One issue that we are having a little bit of trouble with is the categorical rating. We are working with other agencies. We think it is a good flexibility. It is just taking us a little longer to utilize than some of the others, but we hope in 4 or 5 months to have it up and running and being used by this Department and other agencies. I would like to end my brief comments here just on one note. It was raised earlier. We are still not being able to capture and recruit the individuals right out of their baccalaureate degree. This is a future strength that we need to attend to. We need to make sure that we have the flexibilities to do this. And the way the currency system is weighted, it is very difficult for a person with minimal experience and just a baccalaureate degree to come into the Federal Government. In conclusion, Senator, we are very excited about the cultural changes that these flexibilities are bringing to our Department, and we look forward to working with you in the future. TESTIMONY OF JOANNE W. SIMMS,\1\ DEPUTY ASSISTANT ATTORNEY GENERAL FOR HUMAN RESOURCES AND ADMINISTRATION, U.S. DEPARTMENT OF JUSTICE Ms. Simms. Good morning, Chairman Voinovich. Thank you for the opportunity to testify today. We appreciate and share your interest in improving the management of human capital in our Department and throughout the Federal Government. --------------------------------------------------------------------------- \1\ The prepared statement of Ms. Simms appears in the Appendix on page 76. --------------------------------------------------------------------------- Since September 11, the Justice Department has undergone a significant transformation in its mission, with a focus on finding and bringing to justice the perpetrators of terrorism and preventing terrorist acts in our Nation. This new mission has been added to our crucial mission areas, including enforcement of Federal laws and protecting the interests of the American people, assisting local, State, and tribal governments in preventing and reducing crime and violence and ensuring the fair and efficient operation of the Federal justice system. It has been our goal to implement strategic human capital efforts that guarantee a workforce capable of delivering this mission. To that end, the Department has focused substantially on revitalizing the partnership we have in place with our components to achieve an integrated vision for and set of human capital policies and programs. In terms of organizational culture, this partnership has resulted in a dramatic departure from past practice. Agencies are now functioning as one, a complete entity, and that is our vision as well. I am pleased to report that we have successfully worked with our components in developing policies and programs that meet their needs and the Department's needs, as a whole, in human capital planning and management. In September 2002, the Department issued a comprehensive Human Capital Strategic Plan, and in less than 2 years, we have accomplished the majority of our planned initiatives. Specific achievements are many and varied, as noted in my prepared statement. I would like to emphasize that through your work, and that of the Subcommittee, in concert with the administration and the President's Management Agenda, our Department has made significant and meaningful progress in projecting its workforce needs and in creating and implementing plans to address problems before they negatively affect our mission. In the past 18 months, we have conducted a thorough workforce analysis and planning review, with an emphasis on identifying skill gaps. We have launched the first departmentwide SES Candidate Development Program in 20 years to ensure a pipeline for projected SES vacancies. We had over 200 applicants for what we had originally advertised as 25 vacancies, and we are currently in the process of expanding that because of the interest shown in the program. We have completely revamped our performance management systems for SES and GS employees, ensuring that mission and organizational objectives are described in performance work plans and that results are recognized and rewarded. These are only three examples of the many improvements we have made. Beyond our overarching human capital plans, we have also sought to make full use of the flexibilities you afforded us in the enactment of the homeland security legislation. For example, I assumed responsibility as the Department's Chief Human Capital Officer in May 2003. Justice is one of the six agencies that OPM talked about earlier that sought and received approval for direct hire authority for critical needs primarily in our Criminal Division. This year, eight Justice components requested and were approved for voluntary early retirement authority, and three of those components requested and received voluntary separation incentive payments authority. This flexibility has enabled us to address funding shortfalls, realign our workforce to reduce skill gaps and restructure organizations to meet changing mission needs and priorities. The student volunteer transit subsidy was deployed and is a great resource for interns who work with the Department for short periods of time. The Department has made limited use of the academic training provision primarily in our Executive Office of U.S. Attorneys. EOUSA established an intern program that provides the payment of academic training while the employees provide Agency support. This program was successfully piloted, and these flexibilities are providing the much-needed information technology skills for the Agency. In 2003, we provided student loan repayment assistance for 63 employees, at a cost of $300,000. This year, we look to double the number of participants, and I can tell you that I personally participated in 2003 and 2004 in reviewing well over 200 applications for the slots and funding that we had available--a very successful program. As you know, our employees do a superb job maintaining the security of our citizens and enforcing the rule of law. We are confident that you agree that they deserve the best support we can give them as they perform their jobs on our behalf. Above all, providing us the ability to ensure fair and equitable treatment in pay and benefits for all professionals in the Department is essential to maintaining a stable, satisfied and high-performing workforce. We are pleased with our progress, and we are optimistic regarding efforts to ensure a future workforce, capable of meeting challenges for the Department and for our Nation. In closing, I would like to acknowledge the report on law enforcement pay and benefits released by OPM on July 16. We believe the issue of inconsistent pay, benefits, and roles of law enforcement personnel is a serious one, a problem with substantial impact on our operations and management of our workforce and ultimately our mission delivery. We look forward to working closely with you, and with OPM, as the recommendations in the report are considered, and these problems are addressed. Thank you for this opportunity to appear before you. I will be pleased to answer any questions that you may have. Senator Voinovich. Thank you, Ms. Simms. Ms. Novak. TESTIMONY OF VICKI NOVAK,\1\ ASSISTANT ADMINISTRATOR FOR HUMAN RESOURCES, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION Ms. Novak. Good morning, Mr. Chairman. I am the Assistant Administrator for Human Resources at NASA and NASA's Chief Human Capital Officer. I am delighted to be here this morning to discuss the programs and initiatives that NASA has undertaken to address the Agency's human capital challenges, including our use of new workforce flexibilities. --------------------------------------------------------------------------- \1\ The prepared statement of Ms. Novak appears in the Appendix on page 80. --------------------------------------------------------------------------- Let me begin by expressing our appreciation on behalf of Mr. O'Keefe, our administrator, for your leadership and support in the area of Federal human capital management, both governmentwide and on behalf of NASA. We appreciate all you have done and look forward to continuing to work with you. You are already familiar with the challenges that NASA has faced with respect to its workforce. We are experiencing skills imbalances due to downsizing, anticipated loss of experience and knowledge due to projected retirements, and fewer qualified science and technology workers in the education pipeline, as well as increased competition for such workers. We at NASA have been very engaged over the last several years in addressing our human capital challenges so that we can assure that we continue to have a high-performing workforce with the competencies that the Agency needs to achieve our challenging mission. As I have said many times, in many forums, while I serve as the Agency's Chief Human Capital Officer, responsibility and accountability for effectively managing NASA's human capital resource is shared throughout all levels of the Agency. Two years ago, we produced a Strategic Human Capital Plan, as well as a companion Strategic Human Capital Implementation Plan, which created for us an integrated, systematic approach to assuring that the Agency continues to achieve and retain the workforce that it needs. The Strategic Human Capital Plan is a flexible, long-term plan, capable of accommodating changes in mission and program direction. It identifies human capital goals, strategies and improvement initiatives in areas where we feel improvements are most critical and necessary for the Agency. The implementation plan, which is updated periodically, provides action plan and metrics for achieving the Agency's human capital goals. Ensuring that NASA has state-of-the-art competence 10 years from now in emerging and cutting-edge technologies is a challenge. A critical element of our enhanced workforce planning and analysis is our competency management system. This was developed as an initiative under the Strategic Human Capital Plan, and it provides NASA our first-time-ever agencywide inventory of workforce competencies needed to accomplish our mission. It helps us to better identify, manage and report the competency strengths and needs, and it also helps us target recruitment, retention, training and workforce development and succession planning in a more focused and integrated way. We have also enhanced our recruitment efforts. In addition to our individual field centers' recruiting, we have established an active corporate recruitment effort targeted at at-risk competencies identified using our competency management system. This year, in the fall and also in the spring, NASA's senior leaders and managers participated in 18 recruitment events throughout the country, including on-campus visits, and we extended tentative offers to entry-level employees--well, to about 150 entry-level employees. And the very good news is those who have accepted to date are a very diverse group. We have also improved our hiring mechanisms. We have an on- line, automated recruitment system we call NASA STARS, which gives applicants the convenience of applying on-line. It has reduced the time to fill vacancies by over 35 percent and enjoys an extremely high satisfaction rate among applicants for its ease of use. We also have interrelated performance management and awards and recognition programs which link to our Agency human capital programs and support mission accomplishment. We have explicit selection and performance criteria, which hold members of NASA's senior executive service directly accountable for performance results and for the effective management of human capital. We select, promote, appraise, and reward our senior executives based on these criteria. These requirements further cascade down to the non-SES supervisors and have been tailored and cascaded down to the rest of the workforce as well. Leadership development is an area where we spend a lot of time and attention. We have a leadership development strategy that we have implemented around OPM's executive core qualifications, as well as around our SES performance criteria and a NASA leadership model. We have a very robust set of leadership programs such as the SES CDP program, which has been a very effective pipeline to filling our key leadership positions. Let me turn to the workforce flexibilities. As you know, we have sought and obtained additional workforce flexibilities to help us recruit and retain the talent we need, and we are also making use of governmentwide flexibilities that Congress has provided. The flexibilities in the Homeland Security Act have been, and will continue to be, very useful to NASA in addressing its human capital challenges. Two significant provisions in the Act that have been very beneficial in the past year to us in reshaping our workforce have been the buy-out authority and the voluntary early retirement authority. We anticipate continued use of these tools to rebalance the workforce to align with our program needs and shifting priorities, particularly with the New Space Exploration Vision that we have to implement. We expect as many as six or seven buyouts and early outs in the coming fiscal year at our field centers as we rebalance our workforce. We are also very much looking forward to using the category rating system. We have long supported this provision, and we have worked with our field centers to develop implementing policies. Our NASA STARS evaluation process is in the process of being reprogrammed now so that we will be able to accommodate category rating in the next several months, and we expect to be aggressive in using that authority. In February of this year, of course, we were blessed with the NASA Flexibility Act of 2004, which gives our agency additional tools to help us address the specific workforce challenges we are facing. We are very grateful to you, Mr. Chairman, and to your Subcommittee in supporting this legislation. The law required that NASA submit a workforce plan approved by the Office of Personnel Management to Congress 90 days prior to exercising any of the new authorities. The 90-day waiting period ended less than 2 weeks ago on July 8, so we are in the very early stages of using these new authorities in connection with recruitment and retention initiatives. Nevertheless, our field centers and our senior managers were prepared to take action as soon as the flexibilities became available. Already several of our centers have issued vacancy announcements to fill positions under the new flexible term appointment authority that we received in the Act. Last week, two field centers offered the enhanced annual leave benefit to two prospective new hires as an incentive to accept our job offers. One center also offered the enhanced travel and relocation benefits to a candidate who has now accepted our offer and will be reporting to work at NASA in several weeks. Last, another center in a high-cost area has offered the enhanced travel benefit to attract two individuals with exceptional expertise to fill positions that have actually remained vacant for over 2 years. So, while we are just beginning, we think we are going to be very aggressive in the use of these new tools, and we know that they are going to help us in a great way. In closing, let me say that the human capital flexibility Congress has provided, along with the human capital programs and initiatives we are pursuing at NASA, are designed to improve the effectiveness of our human capital management and to maintain NASA's position as an employer of choice. While individually they can be powerful tools to address the Agency's workforce challenges, we believe it is in the integration of them, with each other and with our Agency's mission, goals, and objectives, that we will achieve the best results. Thank you very much, and I look forward to working with you in the future. Senator Voinovich. Thank you very much. I am very impressed with what NASA has been able to accomplish. Ms. Simms, you heard the testimony from Mr. Johnson and Mr. Blair. Preceeding the Federal Law Enforcement Pay and Benefits Report was a 1993 report. This is 11 years later, and nothing was done after the 1993 report. There are some real problems in your Agency, as I have heard from other committees. What are you going to do to make sure that this is just not another report that lays on the shelf? Ms. Simms. I think, for those who take a look at the report, they will see right away the Department's commitment to ensuring that pay and benefits for the law enforcement community is taken seriously. One of the things that we pushed for very strongly, and are very pleased it ended up in the report, is that anything that is done by OPM, with respect to law enforcement, is done with the concurrence of the Attorney General. That language was specifically requested by the Department of Justice because we are committed to moving that whole effort forward. So, in working jointly with OPM, we will ensure that law enforcement pay and benefits, to the extent that they can be, are consistent across the board. We are very much concerned about Homeland Security or DOD, as TSA did in the past, raiding other agencies when they set up their particular programs. It is our wish or our primary concern that we ensure as much flexibility as we can for agencies in being able to determine what is the appropriate pay level, not only taking into account the location, but also the caliber of the individuals that we wish to attract and retain. Senator Voinovich. Some law enforcement groups have argued that establishing a performance-based pay system for their members may be difficult to achieve. For instance, they argue that developing measures of performance based on criteria, such as number of arrests, may not be a valid indicator of successful performance. In your opinion, can a system for performance-based pay be created for Federal law enforcement officers? Ms. Simms. I think it is something that we should seriously take a look at. We are concerned about where our officers are, our agents, what they are doing, and certainly the input of the unions, the employee representatives, will be very important to this process. Senator Voinovich. Do you have any idea of what key indicators you would look at to show they are doing their job? Ms. Simms. Well, there are a multitude of key indicators that we could take a look at. I think what is most important is what is going to provide us with the most information in being able to make the appropriate decisions. The number of cases are relevant, certainly, but there are some cases that are more difficult to handle than others, and they will take longer. So it is not just the number that we should be looking at. We should also be looking at the quality of the case and the results of what comes out of all of that. So I think there are a number of measurements that can be brought to bear. Senator Voinovich. Do you know if there are any benchmarks around the country, in terms of Pay for Performance with law enforcement? Ms. Simms. I am not currently aware, but I certainly think it is something that the OPM, as well as the Department of Justice and other agencies with law enforcement interests should be taking a look at. Senator Voinovich. Maybe GAO---- Ms. Simms. GAO? Senator Voinovich. Mr. Mihm, can you help them? Mr. Mihm. Mr. Chairman, the issue for Pay for Performance for law enforcement personnel, as Joanne is saying, is obviously an extremely sensitive one, and you do not want to create goals that create the wrong types of incentives--such as goals on the numbers of arrests. As one law enforcement put it to me, he said, ``Oh, we know how to meet that, if that is the goal, and it probably would not be pretty.'' What you would want to do is to recognize and reward for competencies rather than results; that is, you figure out what are the individual competencies that are most closely related to a successful law enforcement officer, and then you pay the individuals to the extent that they demonstrate and develop those types of competencies. That gets you out of the trap of creating the wrong types of incentives, and in a positive way, gets you to pay for what has been shown to be positively related to good law enforcement. So it is a difficult issue, but it is not one that cannot be broken down. Senator Voinovich. Your agency has a lot of responsibility, but I know reforms for the FBI are long overdue. I am also concerned about the number of people that you have to get the job done. You have taken on additional responsibilities, with the highest priority on homeland security, but the traditional work of the FBI needs to be done. One of the concerns I have, and this stems from a hearing that we had in the Foreign Relations Committee, of which I am a member, was the issue of organized crime and corruption. I was quite taken back in regard to the activity of the Russian mafia in the United States. When I asked the question about whether or not the FBI has the wherewithal to get the job done, the answer was, no. I would like to know whether you have looked at the workload and determined whether or not you have got the right number of people to get the job done, and if that is reflected in your request to the administration for funding? Ms. Simms. The answer to your last question is, yes, it is reflected in our request for funding. FBI is one of the, if not the, largest agency within the Department of Justice. There have been many conversations with the leadership, with Mueller, with Gephardt, with Mark Bullock, who is my peer there, regarding their needs and how they are looking at their workforce planning and structuring. The one thing that we are most proud of is that the FBI is partnering with the rest of the Department in managing their skills and providing an analysis of where their skill gaps are, their recruitment processes, as well as their ability to not only take a look at the overall performance, but how they can shift or how they will be shifting their priorities going forward. Terrorism is No. 1, but we recognize that the FBI must continue to do all of those other things that they are tasked with. And as much as we are looking at terrorism and counterterrorism efforts, we cannot afford not to pay attention to those. It is one of their continuing priorities as well. Senator Voinovich. Good. The other one I mentioned earlier in my remarks, and that is locality pay and the complaint that I have. I mentioned Van Harp, from Cleveland, who came here, and they give him an extra $26. And you also have a real problem in the FBI in terms of the number of people who are eligible to retire or take early retirement, which is another issue that has to be looked at. Ms. Simms. The FBI exercises a number of the flexibilities that we have, in terms of recruitment and retention, relocation benefits, more so probably than any other component within the Department. They have utilized those flexibilities for several years now and continue to do so. The locality pay issue we know is prime on everyone's plate because the FBI moves its agents around in order to gain experience, in order to be able to move them forward into their SAC positions. Even in looking at the SES Pay for Performance effort, we took a look with respect to their SESers and the impact that would have because locality pay, given the changes, is no longer available for SESers within the FBI. So that has been a primary piece of the plan that we have put together and received approval from by our Attorney General and are moving forward to OPM with. Senator Voinovich. Mr. Mihm, we are talking about Pay for Performance. We know it is easier said than done. Eight months have passed since we passed the legislation and regulations have not been issued. Have you seen agencies beginning to prepare for the transition? Do they understand what this means? Mr. Mihm. Certainly, we are beginning to see them prepare for the transition. We, at your request, did a body of work looking at leading practices in executive performance management both here and overseas, synthesized that down into a report and set of practices, and then assessed the performance management systems of a number of agencies against those practices. And we found, not surprisingly, that agencies are making good progress in terms of putting in the general or the basic infrastructure, but much more needs to be done in order to align individual executive performance to the organizational goals, and that is the most important part. While pay for performance is good, dollars matter, obviously, in the final analysis, especially for people in the public sector, they come to government to maximize their self worth, not their net worth. And so the way you motivate, the way you get improved performance, is linking individual and unit goals to organizational results, at creating this so-called line of sight. When that is done, then you can overlay a Pay for Performance scheme on top of that, and then you get additional benefits. But it is that alignment that takes time, and it is the alignment that is so difficult. That is still a work in progress for many agencies. Senator Voinovich. Well, we are going to continue to ask you to look at that because I want to make sure that when they move on it, that we have got the training in place so that it is done, and it is done right. If it is not done right, it will be a disaster, and it will discredit the whole issue, and we will not be able to move forward with it. I was very glad that, after visiting with the Department of Defense, they have reevaluated their October deadline and now have, with the help of Navy Secretary Gordon England, put a plan in place that they are going to cascade implementation over a long period of time. Mr. Mihm. Yes, sir. Senator Voinovich. But their announcement they were going to implement NSPS by October, I thought they would have a nuclear explosion. [Laughter.] It is interesting that, Dr. Sontag, you were indicating that you still cannot hire undergraduates with a baccalaureate, that is, you do not have the power to hire them on the spot. I know that we have given NASA the authority. Have you used this yet? Ms. Novak. Yes, sir. We have not used that particular provision yet. That is one of the ones that we got in the Workforce Flexibility Act that we will be able to use here shortly. But we used this in our past corporate recruitment effort last spring and last fall, we used the Federal Career Intern Program, which is an authority that is available to everybody, and we were very successful in getting---- Senator Voinovich. What program did you use again---- Ms. Novak. It is the Federal Career Intern Program. It is one of the programs out of OPM. And we were very successful in attracting, as I mentioned, about 100 fresh-outs or entry-level employees into the workforce using that. And that, coupled with our automated, on-line application system, allowed us to actually bring people or make offers to people within 3 to 5 days and, in some cases, almost on the spot. Senator Voinovich. And you do not have that authority, Dr. Sontag? Mr. Sontag. I do not believe we have that specific legislative authority. The issue that I was talking about was the fact that when we go to recruit GS-5s and GS-7s, at an entry-level level without an internship program, without one of the special programs that we utilize, experience weighs very heavily in the current assessment instruments that are used. It is that weighting of so much experience that almost precludes a person just fresh out of a baccalaureate degree. Senator Voinovich. I hear that all the time from people. They say I get the application--I am talking about young people we are trying to get involved--and that is a real problem then, is it not? Mr. Sontag. Yes, sir. That is one we would like to work with OPM and the Congress in addressing. Senator Voinovich. I see, Mr. Dovilla, you are in the audience here today. Have you heard that complaint, also? Mr. Dovilla. From students, sir? Senator Voinovich. Yes. Mr. Dovilla. It is certainly an issue, and it is one the OPM and the agencies are working on, but one of the things I was just commenting to my colleague here on was a targeting of the people that we are looking to bring in, whether or not they are interested in coming in as G-5s or G-7s or at a higher grade with a baccalaureate degree. So we need to look at, in terms of competitive pay, in addition to desire to serve and make a difference in the program. Senator Voinovich. I would like the council to really work on that to see if we cannot do something about it. I have lots of other questions, and I would like to wrap this hearing up at 11 o'clock. I guess the real important question is has legislation and the President's Management Agenda worked? Ms. Novak, how long have you been with NASA? Ms. Novak. I have been with NASA for about 15 years, and in my current position for 6 years. Senator Voinovich. Ms. Simms. Ms. Simms. I have been with the Department of Justice for 6 years and my current position for about 2\1/2\ years. Senator Voinovich. Dr. Sontag. Mr. Sontag. I have been with Health and Human Services for 3 years, although I started my government career with HEW in 1972 and worked for Governor Thompson when he was governor of Wisconsin. Senator Voinovich. The real question is has human capital, human resources been elevated during the last couple of years so that people are paying attention to it? Ms. Simms. I would answer yes to that. Although I have only been at the Department for 6 years, I have been in the government for 36 years. So I have a long history of taking a look at where we were versus where we are. For a number of years, the Human Resource Officers were talking about having a seat at the table. I think we can honestly say now that we have a seat at the table. Senator Voinovich. And people do understand at the Justice Department how important it is that you have the right people with the right knowledge and skills, at the right time, at the right place. Ms. Simms. Clearly, beginning at the Attorney General's level all the way down. Ms. Novak. If I may jump in, I would like to say yes, also. At NASA, clearly, things are much different. Strategic human capital management really matters, and it is not just a human resources program, but it is something that starts at the top level with our administrator and cascades down. It was not just the President's Management Agenda that was the driver; it was also a realization, as we looked at the workforce demographics, that we needed to attend to some of the problems that we have. And it is really right. It is the linchpin of just about everything we do now. Senator Voinovich. You have a real urgency there. Mr. Mihm's how many years was NASA on your high-risk list---- Mr. Mihm. Pretty much from the beginning, sir. I think that probably from the early 1990's on the contract management part on the high-risk list. Senator Voinovich. Yes. Mr. Mihm. It is a heavily contracted agency, and so it has been an enormous challenge for them. The question you are raising about whether we are giving more attention to human capital, the answer to that is unmistakably yes. There is much greater attention across government. For years the rhetoric has always been people are our most important asset, and yet what do we do when times are tough? Just as you pointed out in your statement, we cut training, we cut recruitment, we cut hiring initiatives during tight budget times. We are seeing changes to that now. We are beginning to really appreciate that if people are our most important asset, if we do the government's work with our people, that means we need to invest in them, we need to value them, and we need to reward them. And that is what the PMA and all of the legislation that you have put in place has been about: To underscore that type of thinking within agencies. We are seeing it across the board with the Executive Branch, notwithstanding the progress that still needs to be made. There has been enormous progress made over the last couple of years. Senator Voinovich. Good. They are serious. Mr. Mihm. Yes, sir. Senator Voinovich. Good. Because, as I say, if I am around, I am going to stay on this issue. I think that it is the most important thing that we can possibly do for our country is to have these people that we have, to keep the really good people, reward them, make the Federal Government an exciting place to come to work. We need young people in this country wanting to come to work for the Federal Government and not only to make a difference and serve their country, but also to be compensated fairly and look at the Federal workforce as a chance to grow in their lives and continue to make a contribution. Mr. Mihm. Well, sir, and just on the oversight point, there is that line in large organizations, ``What gets measured gets managed.'' There is also a line in Washington, ``What gets overseen gets managed.'' And so the oversight that this Subcommittee has shown, and obviously other committees over on the House side, sends clear, unmistakable messages to OPM, OMB, GAO, the agencies about the importance that Congress puts on investing in people that is, questions will be asked, progress will be measured, and people will be held accountable. That is exactly the types of messages that need to be sent and need to continue to be sent. Senator Voinovich. Mr. Mihm, do you think OPM is moving fast enough or do you think they still have some problems that need to be worked out? Mr. Mihm. Well, we think the Chief Human Capital Officers Council is vitally important to continuing to make progress on that and on the whole range of issues. And that was one of the great reforms that was put in place. We know from the CFO Council for financial officers, and the CIO Council for information officers, that there are models of how you can use these councils to both generate ideas and test ideas. OPM, in recent months, we have heard, has begun to use this council in far more strategic ways. Some of the early rollout was seen as a bit of a transmission belt--come, and we will tell you what we are doing. Now, it is much more of a collegial exchange of ideas. Certainly, in the hiring initiatives that you asked about earlier, we reported in our April survey, of some of the problems that the Chief Human Capital Officers were seeing with OPM guidance. Since then, there has just been an explosion of initiatives, as you have heard from Deputy Director Blair, in terms of the training, the capacity building, the regulations that have finally come out. They are active on a whole range of issues. We think that, just to circle back, that the Chief Human Capital Officers Council, using them and recognizing the value of the Chief Human Capital Officers as change agents within their agencies, needs to continue to be nurtured because that is really where we are going to get the leverage points. Senator Voinovich. Thank you. I would like to thank all of you for coming today. I have not read all of your testimony. I want you to know I am going to read it. I have other questions that I would have liked to have asked, and I will submit them to you in writing, and I would hope that you would respond to me. Thanks, again, and thanks for the great job that you are doing. It is exciting to hear what all of you are doing in your respective agencies. The hearing is adjourned. 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