Human Capital
Building on DOD's Reform Effort to Foster Governmentwide Improvements Gao ID: GAO-03-851T June 4, 2003People are at the heart of an organization's ability to perform its mission. Yet a key challenge for the Department of Defense (DOD), as for many federal agencies, is to strategically manage its human capital. DOD's proposed National Security Personnel System would provide for wide-ranging changes in DOD's civilian personnel pay and performance management and other human capital areas. Given the massive size of DOD, the proposal has important precedent-setting implications for federal human capital management. This testimony provides GAO's observations on DOD human capital reform proposals and the need for governmentwide reform.
GAO strongly supports the need for government transformation and the concept of modernizing federal human capital policies both within DOD and for the federal government at large. The federal personnel system is clearly broken in critical respects--designed for a time and workforce of an earlier era and not able to meet the needs and challenges of today's rapidly changing and knowledge-based environment. The human capital authorities being considered for DOD have far-reaching implications for the way DOD is managed as well as significant precedent-setting implications for the rest of the federal government. GAO is pleased that as the Congress has reviewed DOD's legislative proposal it has added a number of important safeguards, including many along the lines GAO has been suggesting, that will help DOD maximize its chances of success in addressing its human capital challenges and minimize the risk of failure. More generally, GAO believes that agency-specific human capital reforms should be enacted to the extent that the problems being addressed and the solutions offered are specific to a particular agency (e.g., military personnel reforms for DOD). Several of the proposed DOD reforms meet this test. In GAO's view, the relevant sections of the House's version of the National Defense Authorization Act for Fiscal Year 2004 and the proposal that is being considered as part of this hearing contain a number of important improvements over the initial DOD legislative proposal. Moving forward, GAO believes it would be preferable to employ a governmentwide approach to address human capital issues and the need for certain flexibilities that have broad-based application and serious potential implications for the civil service system, in general, and the Office of Personnel Management, in particular. GAO believes that several of the reforms that DOD is proposing fall into this category (e.g., broad banding, pay for performance, re-employment and pension offset waivers). In these situations, GAO believes it would be both prudent and preferable for the Congress to provide such authorities governmentwide and ensure that appropriate performance management systems and safeguards are in place before the new authorities are implemented by the respective agency. Importantly, employing this approach is not intended to delay action on DOD's or any other individual agency's efforts, but rather to accelerate needed human capital reform throughout the federal government in a manner that ensures reasonable consistency on key principles within the overall civilian workforce. This approach also would help to maintain a level playing field among federal agencies in competing for talent and would help avoid further fragmentation within the civil service.
GAO-03-851T, Human Capital: Building on DOD's Reform Effort to Foster Governmentwide Improvements
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Testimony:
Before the Committee on Governmental Affairs, U.S. Senate:
United States General Accounting Office:
GAO:
For Release on Delivery Expected at 9:30 a.m. EDT:
Wednesday, June 4, 2003:
Human Capital:
Building on DOD's Reform Effort to Foster Governmentwide Improvements:
Statement of David M. Walker
Comptroller General of the United States:
GAO-03-851T:
GAO Highlights:
Highlights of GAO-03-851T, testimony before the Committee on
Governmental Affairs, United States Senate
Why GAO Did This Study:
People are at the heart of an organization‘s ability to perform its
mission. Yet a key challenge for the Department of Defense (DOD), as
for many federal agencies, is to strategically manage its human
capital. DOD‘s proposed National Security Personnel System would
provide for wide-ranging changes in DOD‘s civilian personnel pay and
performance management and other human capital areas. Given the
massive size of DOD, the proposal has important precedent-setting
implications for federal human capital management.
This testimony provides GAO‘s observations on DOD human capital reform
proposals and the need for governmentwide reform.
What GAO Found:
GAO strongly supports the need for government transformation and the
concept of modernizing federal human capital policies both within DOD
and for the federal government at large. The federal personnel system
is clearly broken in critical respects”designed for a time and
workforce of an earlier era and not able to meet the needs and
challenges of today‘s rapidly changing and knowledge-based
environment. The human capital authorities being considered for DOD
have far-reaching implications for the way DOD is managed as well as
significant precedent-setting implications for the rest of the federal
government. GAO is pleased that as the Congress has reviewed DOD‘s
legislative proposal it has added a number of important safeguards,
including many along the lines GAO has been suggesting, that will help
DOD maximize its chances of success in addressing its human capital
challenges and minimize the risk of failure.
More generally, GAO believes that agency-specific human capital reforms
should be enacted to the extent that the problems being addressed and
the solutions offered are specific to a particular agency (e.g.,
military personnel reforms for DOD). Several of the proposed DOD
reforms meet this test. In GAO‘s view, the relevant sections of the
House‘s version of the National Defense Authorization Act for Fiscal
Year 2004 and the proposal that is being considered as part of this
hearing contain a number of important improvements over the initial
DOD legislative proposal.
Moving forward, GAO believes it would be preferable to employ a
governmentwide approach to address human capital issues and the need
for certain flexibilities that have broad-based application and
serious potential implications for the civil service system, in
general, and the Office of Personnel Management, in particular.
GAO believes that several of the reforms that DOD is proposing fall
into this category (e.g., broad banding, pay for performance, re-
employment and pension offset waivers). In these situations, GAO
believes it would be both prudent and preferable for the Congress to
provide such authorities governmentwide and ensure that appropriate
performance management systems and safeguards are in place before the
new authorities are implemented by the respective agency.
Importantly, employing this approach is not intended to delay action
on DOD‘s or any other individual agency‘s efforts, but rather to
accelerate needed human capital reform throughout the federal
government in a manner that ensures rreasonable consistency on key
principles within the overall civilian workforce. This approach also
would help to maintain a level playing field among federal agencies in
competing for talent and would help avoid further fragmentation within
the civil service.
To view the full testimony, click on the link above. For more
information, contact Derek Stewart at (202) 512-5559 or
stewartd@gao.gov.
[End of section]
Chairman Collins and Members of the Committee:
I am pleased to be here today to discuss legislative proposals to help
the Department of Defense (DOD) address its current and emerging human
capital challenges. Over the past few weeks, I have been honored to
appear as a witness before the Congress on three other occasions to
discuss this important issue and related DOD human capital
concerns.[Footnote 1] As the House of Representatives has reviewed
DOD's legislative proposal, it has added a number of important
safeguards, including many along the lines we were suggesting, that
will help DOD maximize its chances of success in addressing its human
capital challenges and minimize the risk of failure. Furthermore, the
proposed National Security Personnel System Act that is the subject of
this hearing also includes a significant number of improvements over
DOD's initial proposal. I understand that there are important issues
that will need to be resolved in conference that obviously have
implications for DOD's reform efforts, and may have major implications
for governmentwide reform efforts.
We strongly support the need for government transformation and the
concept of modernizing federal human capital policies both within DOD
and for the federal government at large. The federal personnel system
is clearly broken in critical respects--designed for a time and
workforce of an earlier era and not able to meet the needs and
challenges of our rapidly changing and knowledge-based environment.
Nonetheless, I believe that we have made more progress in addressing
the government's long-standing human capital challenges in the last 2
years than in the previous 20, and I am confident that we will make
more progress in the next 2 years than we have made in the last 2
years.
The human capital authorities being considered for DOD have far-
reaching implications for the way DOD is managed as well as significant
precedent-setting implications for the rest of the federal government.
DOD has almost 700,000 civilian employees. The Department of Homeland
Security, which also has broad human capital flexibilities, has about
140,000 civilian employees. Other federal agencies that have been
granted broad authorities, such as the Federal Aviation Administration
and the Internal Revenue Service, have many thousands more federal
employees. In essence, we are fast approaching the point where
"standard governmentwide" human capital policies and procedures are
neither standard nor governmentwide. In this environment, we should
pursue governmentwide reforms and flexibilities that can be used by
many government agencies, subject to agencies having appropriate
infrastructures in place before such authorities are put in operation.
Considering certain proposed DOD reforms in the context of the need for
governmentwide reform could serve to accelerate progress across the
government while at the same time incorporating appropriate safeguards
to maximize the ultimate chances of success and minimize the potential
for abuse and prevent the further fragmentation of the civil service.
More directly, agency-specific human capital reforms should be enacted
to the extent that the problems being addressed and the solutions
offered are specific to a particular agency (e.g., military personnel
reforms for DOD). Several of the proposed DOD reforms meet this test.
Importantly, the relevant sections of the House of Representatives'
version of the National Defense Authorization Act for Fiscal Year 2004
and Chairman Collins, Senator Levin, Senator Voinovich, and Senator
Sununu's National Security Personnel System Act, in our view, contain a
number of important improvements over the initial DOD legislative
proposal.
Moving forward, we believe it would be preferable to employ a
governmentwide approach to address human capital issues and the need
for certain flexibilities that have broad-based application and serious
potential implications for the civil service system, in general, and
the Office of Personnel Management (OPM), in particular. We believe
that several of the reforms that DOD is proposing fall into this
category (e.g., broad banding, pay for performance, re-employment, and
pension offset waivers). In these situations, we believe it would be
both prudent and preferable for the Congress to provide such
authorities governmentwide and ensure that appropriate performance
management systems and safeguards are in place before the new
authorities are implemented by the respective agencies. This approach
would help to maintain a level playing field among federal agencies in
competing for talent. Importantly, employing this approach is not
intended to delay action on DOD's or any other individual agency's
efforts.
However, in all cases whether through a governmentwide authority or
agency-specific legislation, in our view, such additional authorities
should be put in operation only when an agency has the institutional
infrastructure in place to use the new authorities effectively. This
institutional infrastructure includes, at a minimum, a human capital
planning process that integrates the agency's human capital policies,
strategies, and programs with its program goals and mission and desired
outcomes; the capabilities to develop and implement a new human capital
system effectively; and a modern, effective, and credible performance
management system that includes adequate safeguards, including
reasonable transparency and appropriate accountability mechanisms, to
ensure the fair, effective, and nondiscriminatory implementation of the
system.
My recent statements before the Congress have discussed DOD's human
capital challenges and have provided comments and suggestions on the
initial DOD proposal to create a National Security Personnel System
(NSPS). Building on those statements, today I will comment on current
DOD human capital reform proposals, including the National Security
Personnel System Act, and how those proposals can be used to help
leverage governmentwide change.
Observations on Proposed DOD Reforms:
As I observed when I first testified on the DOD proposal in April, many
of the basic principles underlying DOD's civilian human capital
proposals have merit and deserve the serious consideration they are
receiving. Secretary Rumsfeld and the rest of DOD's leadership are
clearly committed to transforming how DOD does business. Based on our
experience, while DOD's leadership has the intent and the ability to
transform DOD, the needed institutional infrastructure is not in place
within a vast majority of DOD organizations. Our work looking at DOD's
strategic human capital planning efforts and looking across the federal
government at the use of human capital flexibilities and related human
capital efforts underscores the critical steps that DOD needs to take
to properly develop and effectively implement any new personnel
authorities.[Footnote 2] In the absence of the right institutional
infrastructure, granting additional human capital authorities will
provide little advantage and could actually end up doing damage if the
authorities are not implemented properly.
The following provides some observations on key provisions of the
proposed National Security Personnel System Act in relation to the
House version of the National Defense Authorization Act for Fiscal Year
2004. First, I offer some comments on the overall design for a new
personnel system at DOD. Second, I provide comments on selected aspects
of the proposed system.
DOD's Overall Human Capital Program:
The House version of DOD's authorization bill would allow the Secretary
of Defense to develop regulations with the Director of OPM to establish
a human resources management system for DOD. The Secretary of Defense
could waive the requirement for the joint issuance of regulations if,
in the Secretary's judgment and subject to the decision of the
President, it is "essential to the national security"--which was not
defined in the proposed bill. As an improvement, the proposed National
Security Personnel System Act also requires that the new personnel
system be jointly developed by the Secretary of Defense and the
Director of OPM, but does not allow the joint issuance requirement to
be waived. This approach is consistent with the one the Congress took
in creating the Department of Homeland Security.
The proposed National Security Personnel System Act requires the
Secretary of Defense to phase in the implementation of NSPS beginning
in fiscal year 2004. Specifically, the new personnel authorities could
be implemented for a maximum of 120,000 of DOD's civilian employees in
fiscal year 2004, up to 240,000 employees in fiscal year 2005, and more
than 240,000 employees in a fiscal year after fiscal year 2005, if the
Secretary of Defense determines that, in accordance with the bill's
requirement that the Secretary and the Director of OPM jointly develop
regulations for DOD's new human resources management system, the
Department has in place a performance management system and pay formula
that meets criteria specified in the bill. We strongly support a phased
approach to implementing major management reforms, whether with the
human capital reforms at DOD or with change management initiatives at
other agencies or across the government. We suggest that OPM, in
fulfilling its role under this section of the bill, certify that DOD
has a modern, effective, credible, and, as appropriate, validated
performance management system with adequate safeguards, including
reasonable transparency and appropriate accountability mechanisms, in
place to support performance-based pay and related personnel decisions.
Employee Appeals Procedures:
The proposed National Security Personnel System Act states that the
Secretary of Defense may establish an employee appeals process that is
fair and ensures due process protections for employees. The Secretary
of Defense is required to consult with the Merit Systems Protection
Board (MSPB) before issuing any regulations in this area. The DOD
appeals process must be based on legal standards consistent with merit
system principles and may override legal standards and precedents
previously applied by MSPB and the courts in cases related to employee
conduct and performance that fails to meet expectations. The bill would
allow appeal of any decision adversely affecting an employee and
raising a substantial question of law or fact under this process to the
Merit Systems Protection Board under specific standards of review, and
the Board's decision could be subject to judicial review, as is the
case with other MSPB decisions. This proposal affords the employee
review by an independent body and the opportunity for judicial review
along the lines that we have been suggesting.
DOD Human Capital Reform Evaluation and Reporting:
The proposed National Security Personnel System Act does not include an
evaluation or reporting requirement from DOD on the implementation of
its human capital reforms, although DOD has stated that it will
continue its evaluation of the science and technology reinvention
laboratory demonstration projects when they are integrated under a
single human capital framework. We believe an evaluation and reporting
requirement would facilitate congressional oversight of NSPS, allow for
any midcourse corrections in its implementation, and serve as a tool
for documenting best practices and sharing lessons learned with
employees, stakeholders, other federal agencies, and the public.
Specifically, the Congress should consider requiring that DOD fully
track and periodically report on the implementation and results of its
new human capital program. Such reporting could be on a specified
timetable with sunset provisions. These required evaluations could be
broadly modeled on the evaluation requirements of OPM's personnel
demonstration program. Under the demonstration project authority,
agencies must evaluate and periodically report on results,
implementation of the demonstration project, cost and benefits, impacts
on veterans and other Equal Employment Opportunity groups, adherence to
merit principles, and the extent to which the lessons from the project
can be applied elsewhere, including governmentwide. The reports could
be done in consultation with or subject to review of OPM.
Specific DOD Human Capital Policies and Practices:
Performance Management and Pay Reform:
There is widespread understanding that the basic approach to federal
pay is outdated and that we need to move to a more market-and
performance-based approach. Doing so will be essential if we expect to
maximize the performance and assure the accountability of the federal
government for the benefit of the American people. DOD has said that
broad banded performance management and pay for performance systems
will be the cornerstone of its new system.
Reasonable people can and will debate and disagree about the merits of
individual reform proposals. However, all should be able to agree that
a modern, reliable, effective, and validated performance management
system with adequate safeguards, including reasonable transparency and
appropriate accountability mechanisms, must serve as the fundamental
underpinning of any successful results-oriented pay reform. We are
pleased that both the House version of DOD's fiscal year 2004
authorization bill and the proposed National Security Personnel System
Act contain statutory safeguards and standards along the lines that we
have been suggesting to help ensure that DOD's pay for performance
efforts are fair to employees and improve both individual and
organizational performance.
The statutory standards described in the National Security Personnel
System Act proposal are intended to help ensure a fair, credible, and
equitable system that results in meaningful distinctions in individual
employee performance; employee involvement in the design and
implementation of the system; and effective transparency and
accountability measures, including appropriate independent
reasonableness reviews, internal grievance procedures, internal
assessments, and employee surveys. In our reviews of agencies'
performance management systems--as in our own experience with designing
and implementing performance-based pay reform for ourselves at GAO--we
have found that these safeguards are key to maximizing the chances of
success and minimizing the risk of failure and abuse.
The proposed National Security Personnel System Act also takes the
essential first step in requiring DOD to link the performance
management system to the agency's strategic plan. Building on this, we
suggest that DOD should also be required to link its performance
management system to program and performance goals and desired
outcomes. Linking the performance management system to related goals
and desired outcomes helps the organization ensure that its efforts are
properly aligned and reinforces the line of sight between individual
performance and organizational success so that an individual can see
how her/his daily responsibilities contribute to results and outcomes.
The proposed National Security Personnel System Act includes a detailed
list of elements that regulations for DOD's broad band pay program must
cover. These elements appear to be taken from DOD's experience with its
civilian acquisition workforce personnel demonstration project as well
as the plan, as described in an April 2, 2003 Federal Register notice
to integrate all of DOD's current science and technology reinvention
laboratory demonstration projects under a single human capital
framework.[Footnote 3] Many of the required elements in the proposed
National Security Personnel System Act are entirely appropriate, such
as a communication and feedback requirement, a review process, and a
process for addressing performance that fails to meet expectations.
However, other required elements, such as "performance scores", appear
to imply a particular approach to performance management that, going
forward, may or may not be appropriate for DOD, and therefore may have
the unintended consequence of reducing DOD's flexibility to make
adjustments. Congress has an important and continuing role to play in
the design and implementation of the federal government's personnel
policies and procedures. Congress should consider how best to balance
its responsibilities with agencies' needs for the flexibility to
respond to changing circumstances.
Finally, under the proposed act, for fiscal years 2004 through 2008,
the overall amount allocated for compensation for civilian employees of
an organizational or functional unit of DOD that is included in NSPS
shall not be less than the amount of civilian pay that would have been
allocated to such compensation under the General Schedule. After fiscal
year 2008, DOD's regulations are to provide a formula for calculating
an overall amount, which is to ensure that employees in NSPS are not
disadvantaged in terms of the overall amount of pay available as a
result of their conversion into NSPS while providing DOD with
flexibility to accommodate changes in the function of the organization,
the mix of employees performing those functions, and other changes that
might affect pay levels.
Congress has had a longstanding and legitimate interest in federal
employee pay and compensation policies and, as a result, there are
provisions consistent with that interest in the National Security
Personnel System Act. However, as currently constructed, the proposed
bill may have the unintended consequence of creating disincentives,
until fiscal year 2009, for DOD to ensure that it has the most
effective and efficient organizational structure in place. This is
because, based on our understanding of the bill's language, if DOD were
to reorganize, outsource, or undertake other major change initiatives
through 2008 in an organizational or functional unit that is part of
NSPS, DOD may still be required to allocate an overall amount for
compensation to the reorganized unit based on the number and mix of
employees in place prior to conversion into NSPS. In other words, if
priorities shift and DOD needs to downsize a unit in NSPS
significantly, it may still be required that the downsized unit's
overall compensation level remain the same as it would have been in the
absence of the downsizing. While pay protections during a transition
period are generally appropriate to build employee support for the
changes, we believe that, should the Congress decide to require overall
organizational compensation protection, it should build in additional
flexibilities for DOD to make adjustments in response to changes in the
size of organizations, mix of employees, and other relevant factors.
DOD Senior Executive Service Performance and Pay Reforms:
The current allowable total annual compensation limit for senior
executives would be increased up to the Vice President's total annual
compensation (base pay, locality pay, and awards and bonuses) in the
proposed National Security Personnel System Act and the House National
Defense Authorization Act for Fiscal Year 2004. In addition, the
highest rate of (base) pay for senior executives would be increased in
the House version of the authorization bill.
The Homeland Security Act provided that OPM, with the concurrence of
the Office of Management and Budget, certify that agencies have
performance appraisal systems that, as designed and applied, make
meaningful distinctions based on relative performance before an agency
could increase its total annual compensation limit for senior
executives. While the House version of DOD's fiscal year 2004
authorization bill would still require an OPM certification process to
increase the highest rate of pay for senior executives, neither the
proposed National Security Personnel System Act nor the House bill
would require such a certification for increasing the total annual
compensation limit for senior executives.
To be generally consistent with the Homeland Security Act, we believe
that the Congress should require that OPM certify that the DOD senior
executive service (SES) performance management system makes meaningful
distinctions in performance and employs the other practices used by
leading organizations to develop effective performance management
systems, including establishing a clear, direct connection between (1)
SES performance ratings and rewards and (2) the degree to which the
organization achieved its goals. DOD would be required to receive the
OPM certification before it could increase the total annual
compensation limit and/or the highest rate of pay for its senior
executives.
Attracting Key Talent for DOD:
The National Security Personnel System Act contains a number of
provisions designed to give DOD flexibility to help obtain key critical
talent. It allows DOD greater flexibility to (1) hire experts and pay
them special rates for temporary periods up to six years, and (2)
define benefits for certain specialized overseas employees.
Specifically, the Secretary would have the authority to establish a
program to attract highly qualified experts in needed occupations with
the flexibility to establish the rate of pay, eligibility for
additional payments, and terms of the appointment. These authorities
give DOD considerable flexibility to obtain and compensate individuals
and exempt them from several provisions of current law. Consistent with
our earlier suggestions, the bill would limit the number of experts
employed at any one time to 300. The Congress should also consider
requiring that these provisions only be used to fill critically needed
skills identified in a DOD strategic human capital plan, and that DOD
report on the use of the authorities under these sections periodically.
Governmentwide Human Capital Reforms:
As I mentioned at the outset of my statement today, the consideration
of human capital reforms for DOD naturally suggests opportunities for
governmentwide reform as well. The following provides some suggestions
in that regard.
Governmentwide Performance-Based Pay and Other Human Capital
Authorities:
We believe that the Congress should consider providing governmentwide
authority to implement broad banding, other pay for performance
systems, and other personnel authorities whereby whole agencies are
allowed to use additional authorities after OPM has certified that they
have the institutional infrastructures in place to make effective and
fair use of those authorities. To obtain additional authority, an
agency should be required to have an OPM-approved human capital plan
that is fully integrated with the agency's strategic plan. These plans
need to describe the agency's critical human capital needs and how the
new provisions will be used to address the critical needs. The plan
should also identify the safeguards or other measures that will be
applied to ensure that the authorities are carried out fairly and in a
manner consistent with merit system principles and other national
goals.
Furthermore, the Congress should establish statutory principles for the
standards that an agency must have in place before OPM can grant
additional pay flexibilities. The standards for DOD's performance
management system contained in the National Security Personnel System
Act are the appropriate place to start. An agency would have to
demonstrate, and OPM would have to certify, that a modern, effective,
credible, and, as appropriate, validated performance management system
with adequate safeguards, including reasonable transparency and
appropriate accountability mechanisms, is in place to support more
performance-based pay and related personnel decisions before the agency
could put the new system in operation. OPM should be required to act on
any individual certifications within prescribed time frames (e.g., 30-
60 days).
Consistent with our suggestion to have DOD evaluate and report on its
efforts, agencies should also be required to evaluate the use of any
new pay or other human capital authorities periodically. Such
evaluations, in consultation with or subject to review of OPM, could be
broadly modeled on the evaluation requirements of OPM's personnel
demonstration program.
Governmentwide SES Performance and Pay Reforms:
Additional efforts should be undertaken to move the SES to an approach
where pay and rewards are more closely tied to performance. This is
consistent with the proposed Senior Executive Service Reform Act of
2003. Any effort to link pay to performance presupposes that effective,
results-oriented strategic and annual performance planning and
reporting systems are in place in an agency. That is, agencies must
have a clear understanding of the program results to be achieved and
the progress that is being made toward those intended results if they
are to link pay to performance. The SES needs to take the lead in
matters related to pay for performance.
Performance Management Improvement Funds:
We believe it would be highly desirable for the Congress to establish a
governmentwide fund where agencies, based on a sound business case,
could apply to OPM for funds to be used to modernize their performance
management systems and ensure that those systems have adequate
safeguards to prevent abuse. Too often, agencies lack the performance
management systems needed to effectively and fairly make pay and other
personnel decisions.
The basic idea of a governmentwide fund would be to provide for
targeted investments needed to prepare agencies to use their
performance management systems as strategic tools to achieve
organizational results and drive cultural change. Building such systems
and safeguards will likely require making targeted investments in
agencies' human capital programs, as our own experience has shown. (If
successful, this approach to targeted investments could be expanded to
foster and support agencies' related transformation efforts, including
other aspects of the High Performing Organization concept recommended
by the Commercial Activities Panel.[Footnote 4]):
Additional Targeted Governmentwide Reforms:
Finally, we also believe that the Congress should enact additional
targeted and governmentwide human capital reforms for which there is a
reasonable degree of consensus. Many of the provisions in the proposed
Federal Workforce Flexibility Act of 2003 and the governmentwide human
capital provisions of the House version of DOD's fiscal year 2004
authorization bill fall into this category.
Summary Observations:
Since we designated strategic human capital management as a
governmentwide high-risk area in January 2001, the Congress, the
administration, and agencies have taken steps to address the federal
government's human capital shortfalls. In a number of statements before
the Congress over the last 2 years, I have urged the government to
seize on the current momentum for change and enact lasting
improvements. Significant progress has been--and is being--made in
addressing the federal government's pressing human capital challenges.
But experience has shown that in making major changes in the cultures
of organizations, how it is done, when it is done, and the basis on
which it is done can make all the difference in whether we are
ultimately successful.
DOD and other agency-specific human capital reforms should be enacted
to the extent that the problems being addressed and the solutions
offered are specific to particular agencies. A governmentwide approach
should be used to address certain flexibilities that have broad-based
application and serious potential implications for the civil service
system, in general, and OPM, in particular. This approach will help to
accelerate needed human capital reform in DOD and throughout the rest
of the federal government.
Chairman Collins and Members of the Committee, this concludes my
prepared statement. I would be pleased to respond to any questions that
you may have.
Contacts and Acknowledgments:
For further information about this statement, please contact Derek B.
Stewart, Director, Defense Capabilities and Management, on (202) 512-
5140 or at stewartd@gao.gov. For further information on governmentwide
human capital issues, please contact J. Christopher Mihm, Director,
Strategic Issues, on (202) 512-6806 or at mihmj@gao.gov. Major
contributors to this testimony included William Doherty, Bruce Goddard,
Hilary Murrish, Lisa Shames, Edward H. Stephenson, Martha Tracy, and
Michael Volpe.
FOOTNOTES
[1] U.S. General Accounting Office, Human Capital: DOD's Civilian
Personnel Strategic Management and the Proposed National Security
Personnel System, GAO-03-493T (Washington, D.C.: May 12, 2003); Defense
Transformation: DOD's Proposed Civilian Personnel System and
Governmentwide Human Capital Reform, GAO-03-741T (Washington, D.C.: May
1, 2003); and Defense Transformation: Preliminary Observations on DOD's
Proposed Civilian Personnel Reforms, GAO-03-717T (Washington, D.C.:
Apr. 29, 2003).
[2] See, for example, U.S. General Accounting Office, Human Capital:
Effective Use of Flexibilities Can Assist Agencies in Managing Their
Workforces, GAO-03-2 (Washington, D.C.: Dec. 6, 2002); DOD Personnel:
DOD Actions Needed to Strengthen Civilian Human Capital Strategic
Planning and Integration with Military Personnel and Sourcing
Decisions, GAO-03-475 (Washington, D.C.: Mar. 28, 2003); and Defense
Logistics: Actions Needed to Overcome Capability Gaps in the Public
Depot System, GAO-02-105 (Washington, D.C.: Oct. 12, 2001).
[3] 68 Fed. Reg. 16,119-16,142 (2003).
[4] The panel was mandated by section 832 of the National Defense
Authorization Act for Fiscal Year 2001, which required the Comptroller
General to convene a panel of experts to study the process used by the
federal government to make sourcing decisions. After a yearlong study,
the panel published its report on April 30, 2002. See Commercial
Activities Panel, Improving the Sourcing Decisions of the Government:
Final Report (Washington, D.C.: Apr. 30, 2002). The report can be found
on GAO's Web site at www.gao.gov under the Commercial Activities Panel
heading.
