Demonstration projects find success in personnel reform

Personnel reforms in the Defense and Homeland Security departments will happen, and managers and employees need to learn from reforms already in place at some agencies, Sen. George D. Voinovich, R-Ohio told a Senate subcommittee hearing Tuesday.

"We're going forward with this, there's no question about it," said Voinovich, chairman of the Senate Homeland Security and Governmental Affairs Subcommittee on Oversight of Government Management, the Federal Workforce and the District of Columbia. DHS plans to start the pay-for-performance portion of its system in January 2008; Defense plans to finalize regulations this fall for a similar system. The Bush administration is proposing to extend parts of these reforms to all agencies, although no bill has been introduced in Congress yet.

The committee heard testimony from administrators of existing alternative personnel systems, including the National Institute of Standards and Technology, the Federal Deposit Insurance Corporation and the Government Accountability Office, as well as opponents of the reforms.

NIST began its alternative system in 1987. According to Deputy Director Hratch Semerijian, it includes a pay-for-performance system that uses performance evaluations to grant locality increases, performance pay increases and performance bonuses. The system also includes direct hire authority, flexible entry salaries and recruiting allowances.

Semerijian said that since implementing the system almost 20 years ago, "NIST is more competitive for talent and retained more top performers," including two Nobel Prize winners. The NIST system covers about 2,500 employees who are scientific and engineering professionals and technicians as well as administrative professionals and support staff.

Two union presidents at the hearing--American Federation of Government Employees president John Gage and National Treasury Employees Union president Colleen Kelley-- took exception to the notion of modeling governmentwide reform on NIST's specialized workforce.

Gage called personnel reforms like those at NIST "a disaster for law enforcement" and "other jobs where there's such a team element."

Other agencies in the Commerce Department, of which NIST is a part, are being placed in alternative demonstration projects on the heels of what the department views as success at NIST.

Commerce Deputy Assistant Secretary for Administration Jeffery Nulf testified that since 1998, 4,200 additional employees in agency subcomponents have been placed in demonstration projects, primarily in the National Oceanic and Atmospheric Administration, with workers in positions much like those at NIST. Nulf said the agency will add employees in October that are represented by two unions, the Washington Printing and Graphic Communications Union and AFGE, upon their request.

The FDIC, an independent agency not funded by Congress, used its personnel flexibilities to dramatically shrink and grow its workforce as needed, Division of Administration Director Arleas Upton Kea testified. She said that in the early 1980s, FDIC had about 4,000 employees; due to massive bank failures in the early 1990s, its workforce grew to 23,000. As the crisis faded, the agency dwindled down to 5,000 employees.

Kea said that, in order to shrink its workforce, FDIC used one-year temporary appointments, flexible buyout authority and retraining to move employees into other jobs that were open.

Expansion of the systems at FDIC and NIST to the whole of government, however, is a much larger undertaking. The Office of Personnel Management would likely play a key role in administering these personnel reforms, which gave pause to some of the attendees, including David Walker, comptroller general of GAO.

Walker said he has "a serious concern that OPM does not have adequate capacity, both with the number [of employees] and with the skills and knowledge…I think that's a real issue."

Both Gage and Kelley stressed that collective bargaining needs to be part of any pay system, including those that are performance-based. Sections of DHS' personnel reforms that dealt with labor negotiations were ruled illegal in August, because they failed to provide adequate collective bargaining for employees.

Gage cited a demonstration project in the Defense Department at Fort Monmouth, N.J., which he said "works relatively well." He said that's because it has a "strong, fair, and reliable system of checks and balances achieved and maintained through collective bargaining."