Agencies Need Controls To Preclude Severance Payments to Certain Ineligible Former Employees

Gao ID: FPCD-82-44 May 7, 1982

Because the Office of Management and Budget (OMB) has taken several actions that should increase the number of agency contracts for commercial and industrial activities that Federal employees now perform, GAO reviewed the effectiveness of agency controls to preclude severance payments to former employees hired by Federal contractors.

Office of Personnel Management (OPM) regulations prohibit employees from receiving severance pay when their functions are transferred to a private contractor and the employees are offered comparable employment with the contractor, on or before the contract conversion, or accept any employment with the contractor within 90 days after contract conversion. GAO surveyed the 10 departments and agencies with the most commercial activities in 1981 and found that most of the departments and agencies had no controls to preclude severance payments to employees in these situations. Many agency personnel and procurement officials were not aware of, or did not understand, the OPM regulation. Prior to April 1980, Army policy contradicted the regulation. In addition, the absence of agency controls to enforce the regulation may have resulted in many former Federal employees receiving severance pay for which they were not entitled. After contracting out over 11,000 positions during the last 3 years, the Department of Defense could not identify how many involuntarily separated employees were hired by the contractors who were taking over the functions. In the absence of effective agency controls, severance payments to ineligible employees could amount to millions of dollars.


Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Rosslyn S. Kleeman Team: General Accounting Office: Federal Personnel and Compensation Division Phone: (202) 512-9204

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