Questions for the Record Related to the Department of Defense's National Security Personnel System
Gao ID: GAO-05-771R June 14, 2005On April 12, 2005, the Comptroller General testified before Congress at a hearing on "NSPS: The New Department of Defense Civilian Personnel System--Reaching Readiness." This letter responds to a request that GAO provide answers to questions for the record. The questions covered major areas of concern for the Department of Defense's National Security Personnel System (NSPS).
GAO discussed the specific subjects of the regulations that would need to be defined in more detail before they were incorporated into the final system; proposed structure of leadership and powers granted to the leadership within NSPS; the alignment of performance and organizational goals; employee involvement in the system; the need for a written documentation of core competencies; the need for control points in the proposed pay-for-performance rules; the leadership structure of the proposed National Security Labor Relations Board; and the appeals process under the proposed system.
GAO-05-771R, Questions for the Record Related to the Department of Defense's National Security Personnel System
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June 14, 2005:
The Honorable Jon C. Porter:
Chairman:
Subcommittee on the Federal Workforce and Agency Organization:
Committee on Government Reform:
House of Representatives:
Subject: Questions for the Record Related to the Department of
Defense's National Security Personnel System:
On April 12, 2005, I testified before your Subcommittee at a hearing on
"NSPS: The New Department of Defense Civilian Personnel System--
Reaching Readiness."[Footnote 1] This letter responds to your request
that I provide answers to questions for the record. The questions,
along with my responses, follow.
Regulations versus "Implementing Issuances"
In your testimony, you noted the lack of detail in the proposed
regulations. The proposed regulations for the NSPS allow DOD to address
the specific details of the system through "implementing issuances."
1. Which specific subjects of the NSPS regulations should be included
in the final regulations?
In our recent testimonies on the proposed NSPS regulations, we noted
several issues that DOD will need to define in more detail than is
currently provided. For example, the proposed NSPS regulations permit
an internal DOD review of initial decisions issued by Merit Systems
Protection Board (MSPB) adjudicating officials. However, the proposed
regulations do not offer additional details on the department's
internal review process, such as how the review will be conducted and
who will conduct them. As we noted in our testimonies, an internal
agency review process this important should be addressed in the
regulations rather than in an implementing directive to ensure adequate
transparency and employee confidence in the process.
Importantly, the DOD regulations do not provide that appropriate
systems (e.g., modern performance appraisal systems that are linked to
the agencies' strategic plan and desired outcomes) and key safeguards
to help assure consistency and prevent abuse must be in place before
certain flexibilities (e.g., additional pay for performance) are
finalized. In this regard, although DOD's proposed regulations provide
some safeguards to ensure fairness and guard against abuse, additional
safeguards should be developed and details offered on how DOD would (1)
promote consistency and provide general oversight of the performance
management system to help ensure it is administered in a fair,
credible, and transparent manner, and (2) incorporate predecisional
internal safeguards that are implemented to help achieve consistency
and equity, and ensure nondiscrimination and nonpoliticization of the
performance management process.
2. Which aspects are appropriate for "implementing issuances"?
Going forward, DOD must ensure that it has the appropriate systems and
safeguards to make effective use of its new authorities. However, as
discussed above, many of the details of DOD's system have not been
addressed in the proposed regulations. These details do matter. They
should be addressed in the final regulations and then further defined
in implementing issuances.
Deputy Secretary of Defense for Management:
In your testimony you recommend that DOD appoint a Deputy Secretary of
Defense for Management to guide the transition to the NSPS. In their
oral testimony, Mr. Abell and Mr. Nesterczuk indicated that it would
not be helpful to have a divided leadership structure for the
transition to the NSPS and that an additional layer of leadership would
be a hindrance.
1. What is your response to Mr. Abell's and Mr. Nesterczuk's concerns?
As we noted in our statement, as DOD embarks on large-scale business
transformation efforts, like NSPS, we believe that the complexity and
long-term nature of these efforts require the development of an
executive position capable of providing strong and sustained business
transformation and change management leadership across the department
that can span a number of years and various administrations.[Footnote
2] In recent testimony on business transformation at DOD, we further
noted that a Chief Management Official (CMO) is essential for providing
sustained leadership needed to achieve lasting transformation of DOD's
many business systems.[Footnote 3] Given the systemic nature of the
business transformation challenges that DOD faces, we believe that it
is prudent and appropriate for Congress to enact legislation to provide
for a CMO at DOD. Importantly, our proposed CMO position does not
represent a new layer; rather, it represents a division of
responsibilities of the current Deputy position. Just as the CMO would
need to focus full-time on business transformation, we believe that the
day-to-day management functions are so demanding that it is difficult
for the related officials to maintain the oversight, focus, and
momentum needed to implement and sustain needed reforms of DOD's
overall business operations. This is particularly evident, given the
demands that the Iraq and Afghanistan postwar reconstruction activities
and the continuing war on terrorism have placed on current leaders.
Likewise, the breadth and complexity of the problems and their overall
level within the department preclude the under secretaries, such as the
DOD Comptroller, from asserting the necessary authority over selected
players and business areas while continuing to fulfill their other
responsibilities.
2. How significant is the risk that the transition to NSPS could fail
if DOD does not appoint a Deputy Secretary of Defense for Management?
Failure to have such a position will serve to increase the related
risk. However, the CMO position will be critical to the success of
DOD's overall business transformation effort. Specifically, given DOD's
size and mission, it is one of the largest and most complex
organizations in the world to manage effectively. While DOD maintains
military forces with unparalleled capabilities, it continues to
confront pervasive, decades-old management problems related to its
business operations, which include outdated organizational structures,
systems, and processes that support these forces. These management
weaknesses cut across all of DOD's major business areas, such as human
capital management, including the department's NSPS initiative; the
personnel security clearance program; support infrastructure
management; business systems modernization; financial management;
weapon systems acquisition; contract management; and selected supply
chain management issues. All of these areas are on GAO's high-risk list
of major government programs and operations that either need urgent
attention and transformation to ensure that the U.S. government
functions in the most economical, efficient, and effective manner
possible, or that are at high risk because of their greater
vulnerability to fraud, waste, abuse, and mismanagement. This year,
DOD's overall approach to business transformation was added because of
our concerns over DOD's lack of adequate management responsibility and
accountability, along with the absence of a strategic, departmentwide,
and integrated business transformation plan.
As noted in our recent testimony on DOD's business transformation
efforts, over 30 years ago, the Secretary of Defense asked Congress to
establish an additional Deputy Secretary of Defense for many of the
same reasons we are proposing that a CMO is needed.[Footnote 4] In a
letter to Congress, the then Secretary of Defense stated that the most
efficient management of DOD resources could not be achieved with just
the Secretary and Deputy Secretary, and that DOD deficiencies were in
large measure due to insufficient senior management attention to the
department's affairs.
3. What specific authorities should the Secretary grant to the Deputy
Secretary of Defense for Management so that the new position can
exercise effective leadership over the business transformation process?
As noted in recent testimony on business transformation at the
department, the CMO would have overall responsibility and
accountability for DOD's overall business transformation and change
management effort, while other DOD officials would still be responsible
for managing their daily business operations.[Footnote 5] The position
would divide and institutionalize the current functions of the Deputy
Secretary of Defense into a Deputy Secretary who, as the alter ego of
the Secretary, would focus on policy-related issues such as military
transformation, and a Deputy Secretary of Defense for Management (the
CMO), who would be responsible and accountable for the overall business
transformation effort and would serve full-time as the strategic
integrator of DOD's business transformation efforts. For example, the
CMO would be responsible and accountable for developing and
implementing a strategic and integrated plan for DOD's overall business
transformation efforts.
4. How can DOD ensure that the position of Deputy Secretary of Defense
for Management does not become just another unnecessary layer of
bureaucracy?
As discussed above, the CMO would be responsible and accountable for
planning, integrating, and executing the overall business
transformation effort. Therefore, the CMO would not assume the
responsibilities of the undersecretaries of defense, the service
secretaries, or other DOD officials for the day-to-day management of
business activities. Therefore, in our view, creating a CMO would not
be adding another hierarchical layer to oversee the day-to-day
management of the department. Importantly, the proposed CMO position
would represent a division of the current Deputy Secretary's
responsibilities rather than a new layer or level.
Alignment of Performance and Organizational Goals:
1. What specific procedures would you suggest to ensure that individual
performance expectations align with DOD's mission and strategic goals?
As stated in our recent testimony on federal agencies' use of human
capital flexibilities, we have advocated that the federal government
needs to fundamentally rethink its approach to performance management,
better linking individual, unit, and organizational performance and
reward individuals according to their skills, knowledge, performance
and contributions.[Footnote 6] Shifting the orientation of individual
performance expectations and accountability systems from an adherence
to process and the completion of activities to a greater focus on
contributions to results will require a cultural transformation in most
federal agencies, including DOD. One way to embed a results-orientation
is to align individual employee performance expectations with agency
goals so that individuals understand the connection between their daily
activities and their organization's overall success. High-performing
organizations have recognized that a key element of a fully successful
performance management system is to create a "line of sight" that shows
how individual responsibilities can contribute to organizational goals.
A first step to this end is to align the performance expectations,
appraisals, and pay of top leadership with organizational goals and
results achieved, and then cascade those expectations down to lower
organizational levels. As we noted in our testimony, we believe that
DOD should require the use of core competencies to communicate to
employees what is expected of them on the job. Core competencies can
help reinforce employee behaviors and actions that support the
department's mission, goals, and values, and can provide a consistent
message to employees about how they are expected to achieve results.
2. How could employees participate in this process?
Based on our review of other agency efforts, we have found that
involving employees in planning and sharing performance information can
help employees understand what the organization is trying to accomplish
and how it is progressing in that direction.[Footnote 7] Involving
employees in the planning process helps to develop agency goals and
objectives that incorporate insights about operations from a front-line
perspective, as well as increases employees' understanding and
acceptance of organizational goals and objectives. Involving front-line
employees in the goal-setting process also helps create a clear "line
of sight" throughout the organization so that everyone understands what
the organization is trying to achieve and the goals it seeks to reach.
As discussed above, we have encouraged DOD to establish a documented
set of core competencies to help provide reasonable consistency and
clearly communicate to employees what is expected of them. High-
performing organizations use validated core competencies as a key part
of evaluating individual contributions to organizational results. If
performance expectations are based on core competencies, then employees
can be involved in the validation of the competencies to ensure that
they are both appropriate and accepted.
Employee Involvement:
You have expressed concerns that the NSPS does not identify a process
for continuing involvement of employees in the design and
implementation of the NSPS. The proposed regulations for the DHS human
resources system contained provisions for a Performance Review Board
(PRB). The final regulations for the DHS human resource system provide
a place for employees to participate in pay decisions through the
establishment of a Compensation Committee rather than a PRB. The
proposed regulations for NSPS do not include specific provisions
establishing either a Compensation Committee or a Performance Review
Board.
1. Would you recommend the creation of a Compensation Committee or a
Performance Review Board for NSPS?
We believe DOD should define, in more detail than is currently
provided, how it plans to (1) promote consistency and provide general
oversight of the performance management system to help ensure that it
is administered in a fair, credible, and transparent manner, and (2)
incorporate predecisional internal safeguards that are implemented to
help achieve consistency and equity, and ensure nondiscrimination and
nonpoliticization of the performance management process. The creation
of a Performance Review Board or Compensation Committee could promote
consistency and provide general oversight of the performance management
system. However, the key will be to create a board or committee that is
independent of line management and review such matters as the
establishment and implementation of the performance appraisal system
and later, performance rating decisions, pay determinations, and
promotion actions before they are finalized to ensure they are merit
based.
2. Would such institutions for internal review of decisions improve the
fairness, credibility, and transparency of the NSPS?
Yes, these kinds of institutional oversight mechanisms would improve
the fairness, credibility, and transparency of NSPS. However, DOD also
needs to assure reasonable transparency and provide appropriate
accountability mechanisms in connection with the results of the
performance management process. This can include publishing overall
results of performance management and pay decisions while protecting
individual confidentiality and reporting periodically on internal
assessments and employee survey results relating to the performance
management system.
Core Competencies:
One concern you have with the new DHS performance management system is
that it does not require core competencies to be in writing. Similarly,
the proposed regulations on NSPS do not provide that core competencies
be in writing.
1. Assuming that you also think the NSPS regulations should require
that core competencies be issued in writing, do you see the value for
not having any expectations in writing?
To help enhance credibility and fairness and avoid problems, some sort
of written documentation of performance expectations is appropriate.
Core competencies and their performance standards that are documented
in writing help to ensure the transparency, consistency, and clarity in
communicating performance expectations to the employee.
Pay and Performance:
The proposed regulations for NSPS provide for the establishment of
control points within a pay band to limit increases in basic pay.
However, in the final regulations for DHS, control points were
eliminated because DHS and OPM believed that control points are at odds
with pay-for-performance. In your written testimony, you indicate that
control points can be useful.
1. Are control points a necessary part of the NSPS pay-for-performance
rules?
As noted in our recent testimonies on DOD's proposed regulations, the
use of control points to manage employees' progression through the
bands can help to ensure that their performance coincides with their
salaries and that only the highest performers move into the upper range
of the pay band, thereby controlling salary costs.[Footnote 8]
2. If so, how do you respond to OPM's concern?
Because movement through the pay band is based on performance,
employees who are above average performers should progress through the
pay band more quickly than under the General Schedule. Establishing
control points within each band is one method of preventing below
average employees from eventually migrating to the top of the pay band,
and thus increasing salary costs.
Labor-Management Relations:
Labor-management disputes will be handled by an internal National
Security Labor Relations Board (NSLRB) whose three members will be
appointed by the Secretary of Defense. Some have voiced concerns over
the independence of the Board, fearing that the members will act from a
political position rather than from a neutral one.
1. Would the appointment of members of the NSLRB for a fixed term
improve the independence of the Board?
The proposed NSPS regulations would establish the NSLRB that would
consist of members appointed to fixed terms of 3 years. Increasing the
initial term for Board members beyond 3 years could potentially bolster
the actual or perceived independence of the Board, but such an action
must be weighed against the willingness of prospective members to
commit to long-term service on the Board and the need for Board member
accountability. Nevertheless, the proposed NSPS regulations provide for
other means to foster independence and impartiality of the Board,
including staggered term appointments for members and some limited
conditions for removal of a member. For example, appointments of the
initial Board members will be for terms of 1, 2, and 3 years. The
Secretary of Defense may extend the term of any member beyond 3 years
when necessary to provide for an orderly transition and/or appoint the
member for up to two additional 1-year terms.
2. Other than allowing labor organization participation in the
appointment of Board members, how could the independence of the Board
be enhanced?
The Board can strengthen its independence and impartiality through a
commitment to transparency, reporting, and periodic evaluation, which
can be critical processes in ongoing human capital reform
efforts.[Footnote 9] Through regular and public reporting on its
activities and the results of its adjudications, the Board could
demonstrate to DOD's employees, labor organizations, and others that it
is carrying out its duties in a fair and impartial manner. This
reporting would likewise aid in promoting and facilitating formal
oversight and evaluations of the Board's activities as well as DOD's
overall human resources management system.
DOD could further enhance the independence and impartiality of the
Board through strengthening the appointment and removal processes of
Board members. This could include (1) a nomination panel that reflects
input from appropriate parties and a reasonable degree of balance among
differing views and interests in the composition of the Board to ensure
credibility, (2) stringent standards for removal, and (3) appropriate
notification to key stakeholders in the event that a Board member is
removed.
3. What value does the internal NSLRB bring to DOD?
In evaluating the merits of creating a separate NSLRB, DOD and OPM
noted that they put a high premium on the opportunity to establish a
NSLRB whose members would have a deep understanding of and an
appreciation for the unique challenges the department faces in carrying
out its national security mission. As we noted in our testimonies on
the proposed NSPS regulations, the NSLRB would largely replace the
Federal Labor Relations Authority. However, until the NSLRB has been
established and has functioned as an internal DOD labor relations
board, we cannot determine what value the proposed Board might bring to
DOD.
4. Will the NSLRB streamline the process or just add another layer of
unneeded bureaucracy?
Until the NSLRB has been established and it has developed its processes
and procedures, we cannot comment on whether the NSLRB would streamline
the process or not.
Adverse Actions and Appeals:
The appeals process that the proposed regulations would establish is
rather complex. For example, after an MSPB administrative judge issues
an initial MSPB decision in an adverse action appeal, DOD may
reconsider the administrative judge's decision and modify or reverse
the initial MSPB decision. § 9901.807(k)(8)(iii)(A). Similarly,
"[w]here the Department determines that the initial [MSPB] decision has
a direct and substantial adverse impact on the Department's national
security mission, or is based on an erroneous interpretation of law,
Governmentwide rule or regulation, or [the NSPS regulations], [DOD may]
issue a final DOD decision modifying or reversing that initial
decision." § 9901.807(k)(8)(iii)(B). Further, DOD may decide that the
initial decision of an MSPB administrative judge should serve as a
precedential decision. § 9901.807(k)(8)(iii)(C).
1. Are the provisions of the proposed regulations that allow DOD to
review initial MSPB decisions consistent with an independent external
appeals process?
Although the proposed NSPS regulations describe when DOD may review an
initial MSPB decision, the regulations do not provide any detail as to
how, who, or what basis DOD will process these reviews. Until DOD
provides further information, we are unable to make any observations
about the independence of this review process.
The proposed NSPS regulations do provide employees and OPM with the
ability to appeal a final DOD decision issued under §
9901.807(k)(8)(iii) to the full MSPB. Further, an employee or the
Secretary of Defense may seek judicial review of a final order or
decision of the MSPB.
2. Do you see any pitfalls with this proposed appeals process?
Our answer to question 1 above also applies to this question.
For additional information on our work on human capital issues at DOD,
please contact me on 512-5500 or Derek B. Stewart, Director, Defense
Capabilities and Management on 512-5559 or stewartd@gao.gov, or Eileen
Larence, Director, Strategic Issues on governmentwide human capital
issues at 512-6510 or larencee@gao.gov.
Signed by:
David M. Walker:
Comptroller General of the United States:
(350717):
FOOTNOTES
[1] GAO, Human Capital: Preliminary Observations on Proposed Department
of Defense National Security Personnel System Regulations, GAO-05-517T
(Washington, D.C.: Apr. 12, 2005).
[2] GAO-05-517T.
[3] GAO, Defense Management: Key Elements Needed to Successfully
Transform DOD Business Operations, GAO-05-629T (Washington, D.C.: Apr.
28, 2005).
[4] GAO-05-629T.
[5] GAO-05-629T.
[6] GAO, Human Capital: Agencies Need Leadership and the Supporting
Infrastructure to Take Advantage of New Flexibilities, GAO-05-616T
(Washington, D.C.: Apr. 21, 2005).
[7] GAO, Human Capital: Practices That Empowered and Involved
Employees, GAO-01-1070 (Washington, D.C.: Sept.14, 2001).
[8] GAO, Human Capital: Preliminary Observations on Proposed DOD
National Security Personnel System Regulations, GAO-05-432T
(Washington, D.C.: Mar. 15, 2005).
[9] GAO and the National Commission on the Public Service
Implementation Initiative, Highlights of a Forum: Human Capital:
Principles, Criteria, and Processes for Governmentwide Federal Human
Capital Reform, GAO-05-69SP (Washington, D.C.: Dec. 1, 2004).
