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Committee Reports

108th Congress (2003-2004)

House Report 108-116 - Part 1

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CIVIL SERVICE AND NATIONAL SECURITY PERSONNEL IMPROVEMENT ACT

19-006

108TH CONGRESS

REPT. 108-116

HOUSE OF REPRESENTATIVES

1st Session

Part 1
CIVIL SERVICE AND NATIONAL SECURITY PERSONNEL IMPROVEMENT ACT

MAY 19, 2003- Ordered to be printed
Mr. TOM DAVIS of Virginia, from the Committee on Government Reform, submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 1836]
[Including cost estimate of the Congressional Budget Office]

CONTENTS Page
Committee Statement and Views 30
Section-by-Section Analysis 32
Explanation of Amendments 41
Committee Consideration 42
Rollcall Votes 42
Application of Law to the Legislative Branch 50
Statement of Oversight Findings and Recommendations of the Committee 50
Statement of General Performance Goals and Objectives 50
Constitutional Authority Statement 50
Unfunded Mandate Statement 50
Committee Estimate 50
Budget Authority and Congressional Budget Office Cost Estimate 51
Changes in Existing Law Made by the Bill, as Reported 58
Minority Views 104

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

Sec. 1. Short title; table of contents.
TITLE I--DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM
Sec. 101. Short title.
Sec. 102. Department of Defense national security personnel system.
TITLE II--DEPARTMENT OF DEFENSE CIVILIAN PERSONNEL
Sec. 201. Modification of the overtime pay cap.
Sec. 202. Civil Service Retirement System computation for part-time service.
Sec. 203. Military leave for mobilized Federal civilian employees.
Sec. 204. Common occupational and health standards for differential payments as a consequence of exposure to asbestos.
Sec. 205. Increase in annual student loan repayment authority.
Sec. 206. Authorization for cabinet secretaries, secretaries of military departments, and heads of executive agencies to be paid on a biweekly basis.
Sec. 207. Additional classes of individuals eligible to participate in the Federal long-term care insurance program.
Sec. 208. Clarification to Hatch Act; limitation on disclosure of certain records.
Sec. 209. Senior Executive Service and performance.
Sec. 210. Design elements of pay-for-performance systems in demonstration projects.
Sec. 211. Federal flexible benefits plan administrative costs.
Sec. 212. Nonreduction in pay while Federal employee is serving on active duty in a reserve component of the uniformed services.
Sec. 213. Employee surveys.
TITLE III--PROVISIONS RELATING TO THE SECURITIES AND EXCHANGE COMMISSION AND THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
Subtitle A--Securities and Exchange Commission
Sec. 301. Securities and Exchange Commission.
Subtitle B--National Aeronautics and Space Administration
Sec. 311. Workforce authorities and personnel provisions.
TITLE IV--HUMAN CAPITAL PERFORMANCE FUND
Sec. 401. Human Capital Performance Fund.
TITLE V--MISCELLANEOUS
Sec. 501. Prohibition on use of quotas.

TITLE I--DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM

SEC. 101. SHORT TITLE.

SEC. 102. DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM.

`CHAPTER 99--DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM

`Sec.
`9901. Definitions.
`9902. Establishment of human resources management system.
`9903. Attracting highly qualified experts.
`9904. Employment of older Americans.
`9905. Special pay and benefits for certain employees outside the United States.

`Sec. 9901. Definitions

`Sec. 9902. Establishment of human resources management system

`Sec. 9903. Attracting highly qualified experts

`Sec. 9904. Employment of older Americans

`Sec. 9905. Special pay and benefits for certain employees outside the United States

`99.
Department of Defense National Security Personnel System
9901'.

TITLE II--DEPARTMENT OF DEFENSE CIVILIAN PERSONNEL

SEC. 201. MODIFICATION OF THE OVERTIME PAY CAP.

SEC. 202. CIVIL SERVICE RETIREMENT SYSTEM COMPUTATION FOR PART-TIME SERVICE.

SEC. 203. MILITARY LEAVE FOR MOBILIZED FEDERAL CIVILIAN EMPLOYEES.

SEC. 204. COMMON OCCUPATIONAL AND HEALTH STANDARDS FOR DIFFERENTIAL PAYMENTS AS A CONSEQUENCE OF EXPOSURE TO ASBESTOS.

SEC. 205. INCREASE IN ANNUAL STUDENT LOAN REPAYMENT AUTHORITY.

SEC. 206. AUTHORIZATION FOR CABINET SECRETARIES, SECRETARIES OF MILITARY DEPARTMENTS, AND HEADS OF EXECUTIVE AGENCIES TO BE PAID ON A BIWEEKLY BASIS.

SEC. 207. ADDITIONAL CLASSES OF INDIVIDUALS ELIGIBLE TO PARTICIPATE IN THE FEDERAL LONG-TERM CARE INSURANCE PROGRAM.

SEC. 208. CLARIFICATION TO HATCH ACT; LIMITATION ON DISCLOSURE OF CERTAIN RECORDS.

SEC. 209. SENIOR EXECUTIVE SERVICE AND PERFORMANCE.

`Sec. 5382. Establishment of rates of pay for the Senior Executive Service

`Sec. 7302. Post-employment notification

`5382. Establishment of rates of pay for the Senior Executive Service.'.

`7302. Post-employment notification.'.

SEC. 210. DESIGN ELEMENTS OF PAY-FOR-PERFORMANCE SYSTEMS IN DEMONSTRATION PROJECTS.

SEC. 211. FEDERAL FLEXIBLE BENEFITS PLAN ADMINISTRATIVE COSTS.

SEC. 212. NONREDUCTION IN PAY WHILE FEDERAL EMPLOYEE IS SERVING ON ACTIVE DUTY IN A RESERVE COMPONENT OF THE UNIFORMED SERVICES.

`Sec. 5538. Nonreduction in pay while serving on active duty in a reserve component

`5538. Nonreduction in pay while serving on active duty in a reserve component.'.

SEC. 213. EMPLOYEE SURVEYS.

TITLE III--PROVISIONS RELATING TO THE SECURITIES AND EXCHANGE COMMISSION AND THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

Subtitle A--Securities and Exchange Commission

SEC. 301. SECURITIES AND EXCHANGE COMMISSION.

`Sec. 3114. Appointment of accountants, economists, and examiners by the Securities and Exchange Commission

`3114. Appointment of accountants, economists, and examiners by the Securities and Exchange Commission.'.

Subtitle B--National Aeronautics and Space Administration

SEC. 311. WORKFORCE AUTHORITIES AND PERSONNEL PROVISIONS.

`CHAPTER 98--NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

`SUBCHAPTER I--WORKFORCE AUTHORITIES
`Sec.
`9801. Definitions.
`9802. Planning, notification, and reporting requirements.
`9803. Workforce authorities.
`9804. Recruitment, redesignation, and relocation bonuses.
`9805. Retention bonuses.
`9806. Term appointments.
`9807. Pay authority for critical positions.
`9808. Assignments of intergovernmental personnel.
`9809. Enhanced demonstration project authority.
`9810. Voluntary separation incentive payments.
`9811. Limitations relating to bonuses.
`SUBCHAPTER II--PERSONNEL PROVISIONS
`9831. Definitions.
`9832. NASA-Industry exchange program.
`9833. Science and technology scholarship program.
`9834. Distinguished scholar appointment authority.
`9835. Travel and transportation expenses of certain new appointees.
`9836. Annual leave enhancements.
`9837. Limited appointments to Senior Executive Service positions.
`9838. Superior qualifications pay.

`SUBCHAPTER I--WORKFORCE AUTHORITIES

`Sec. 9801. Definitions

`Sec. 9802. Planning, notification, and reporting requirements

`Sec. 9803. Workforce authorities

`Sec. 9804. Recruitment, redesignation, and relocation bonuses

`Sec. 9805. Retention bonuses

`Sec. 9806. Term appointments

`Sec. 9807. Pay authority for critical positions

`Sec. 9808. Assignments of intergovernmental personnel

`Sec. 9809. Enhanced demonstration project authority

`Sec. 9810. Voluntary separation incentive payments

`Sec. 9811. Limitations relating to bonuses

`SUBCHAPTER II--PERSONNEL PROVISIONS

`Sec. 9831. Definitions

`Sec. 9832. NASA-Industry exchange program

`Sec. 9833. Science and technology scholarship program

`Sec. 9834. Distinguished scholar appointment authority

`Sec. 9835. Travel and transportation expenses of certain new appointees

`Sec. 9836. Annual leave enhancements

`Sec. 9837. Limited appointments to Senior Executive Service positions

`Sec. 9838. Superior qualifications pay

`98.
National Aeronautics and Space Administration
9801'.

TITLE IV--HUMAN CAPITAL PERFORMANCE FUND

SEC. 401. HUMAN CAPITAL PERFORMANCE FUND.

`CHAPTER 54--HUMAN CAPITAL PERFORMANCE FUND

`Sec.
`5401. Purpose.
`5402. Definitions.
`5403. Human Capital Performance Fund.
`5404. Human capital performance payments.
`5405. Regulations.
`5406. Agency plan.
`5407. Nature of payment.
`5408. Appropriations.

`Sec. 5401. Purpose

`Sec. 5402. Definitions

`Sec. 5403. Human Capital Performance Fund

`Sec. 5404. Human capital performance payments

`Sec. 5405. Regulations

`Sec. 5406. Agency plan

`Sec. 5407. Nature of payment

`Sec. 5408. Appropriations

`54.
Human Capital Performance Fund
5401'.

TITLE V--MISCELLANEOUS

SEC. 501. PROHIBITION ON USE OF QUOTAS.

COMMITTEE STATEMENT AND VIEWS

PURPOSE AND SUMMARY

H.R. 1836, as amended, would make changes to certain areas of federal civil service, such as the Department of Defense (DOD) civilian workforce, the National Aeronautics and Space Administration (NASA), the Securities and Exchange Commission (SEC), and government-wide improvements, in order to improve the flexibility and competitiveness of federal human resources management.

BACKGROUND AND NEED FOR THE LEGISLATION

One of the top priorities for the Government Reform Committee in the 108th Congress is to advance comprehensive civil service reform for the federal government. The current system, put in place more than fifty years ago, does not adequately address the priorities of a 21st century federal workforce. Although comprehensive reform is still the Committee's top priority, this legislation seeks to address some critical needs that face certain federal agencies and could be used as a model for other agencies while we continue to work on government-wide civil service reforms.

The primary focus of this legislation is to address the human capital management challenges facing three key federal agencies: the Department of Defense, the Securities and Exchange Commission and the National Aeronautics and Space Administration. In addition, the legislation includes a number of government-wide improvements to the civil service system, including a modification of the overtime pay cap, an increase in the annual student loan repayment authority and an increase in the pay cap for the Senior Executive Service. Finally, H.R. 1836 includes language authorizing the creation of a human capital performance fund.

HEARINGS

In addition to a year-long debate in Congress over granting almost identical human resources management flexibility to the Department of Homeland Security, followed by a months-long discussion within the Administration on what flexibilities to request for DOD, Congress has held a number of hearings to discuss the proposal since it was submitted to Congress last month.

On April 29, 2003, the Subcommittee on Civil Service and Agency Organization of the House Committee on Government Reform held a hearing entitled `Transforming the Defense Department: Exploring the Merits of the Proposed National Security Personnel System.' The purpose of the hearing was to discuss the merits of the proposal to create a National Security Personnel System and to provide DOD the opportunity to discuss the individual elements of the proposal with Members of the Subcommittee. Witnesses at the hearing included: the Honorable David S. Chu, Under Secretary of Defense for Personnel and Readiness, Department of Defense; the Honorable Dan G. Blair, Deputy Director, Office of Personnel Management; the Honorable David M. Walker, Comptroller General, General Accounting Office; Mr. Bobby Harnage, National President, American Federation of Government Employees, AFL-CIO; and Mr. G. Jerry Shaw, General Counsel, Senior Executives Association.

On May 1, 2003, the House Committee on Armed Services held a hearing on the `Defense Transformation for the 21st Century Act' that was submitted to the Congress by the Administration. The hearing addressed the provisions in the proposal that related to civilian personnel and acquisition policy, provisions that were being considered in preparation for the fiscal year 2004 defense authorization act. Witnesses at the hearing included: the Honorable David S. Chu, Under Secretary of Defense for Personnel and Readiness, Department of Defense; the Honorable E.C. `Pete' Aldridge, Under Secretary of Defense for Acquisition, Technology and Logistics, Department of Defense; the Honorable David M. Walker, Comptroller General, General Accounting Office; and Mr. Bobby Harnage, National President, American Federation of Government Employees, AFL-CIO.

On May 6, 2003, the House Committee on Government Reform held a hearing entitled `Instilling Agility, Flexibility and a Culture of Achievement in Critical Federal Agencies: A Review of H.R. 1836, the Civil Service and National Security Personnel Improvement Act of 2003.' The primary focus of this hearing was to discuss the Defense Department's National Security Personnel System proposal. The hearing also focused on the civil service flexibility proposals for NASA, the SEC, the government-wide personnel provisions, and the proposal to create a human capital performance fund. All of these elements were included in H.R. 1836, which was introduced by Government Reform Committee Chairman Tom Davis (R-VA) and Armed Services Committee Chairman Duncan Hunter (R-CA) on April 29, 2003. Witnesses at the hearing included: the Honorable Paul Wolfowitz, Deputy Secretary, Department of Defense (accompanied by General Peter Pace, Vice Chairman of the Joint Chiefs of Staff and Admiral Vern Clark, Chief of Naval Operations); the Honorable Kay Coles James, Director, Office of

Personnel Management; the Honorable Sean O'Keefe, Administration, National Aeronautics and Space Administration; the Honorable William Donaldson, Chairman, Securities and Exchange Commission; Dr. Paul Light, Director, Center for Public Service, the Brookings Institution; Mr. Bobby Harnage, National President, American Federation of Government Employees, AFL-CIO; Ms. Colleen Kelley, President, National Treasury Employees Union; and Ms. Mildred Turner, Member of the Department of Agriculture Conference of the Federal Managers Association.

SECTION-BY-SECTION ANALYSIS

Section 1. Short title; table of contents

This Act may be cited as the `Civil Service and National Security Personnel Improvement Act.'

TITLE I--DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM

Section 101. Short title

This section may be cited as the `National Security Personnel System Act.'

Section 102. Department of Defense National Security Personnel System

This title would amend title 5 of the United States Code by adding a new chapter 99 at the end of subpart I of part III. The new chapter would contain the following sections:

Section 9901: This section would provide definitions of various terms used throughout the new chapter.

Section 9902: This section would authorize the Secretary of Defense, along with the Director of the Office of Personnel Management (OPM), to establish a civilian human resources management system through regulations for some or all of the organizational or functional units of the Department of Defense (DOD), which would enable the Department to fulfill its national security mission. In developing this system, the Director of OPM would serve as a strategic and collaborative partner. If the Secretary certified that an issuance or adjustment of a regulation, or the inclusion, exclusion, or modification or a particular provision therein, would be essential to the national security, the Secretary would be able to, subject to the decision of the President, waive the requirement that the provision(s) be issued jointly with OPM. This system would have to be consistent with the merit system principles as set forth in title 5. It also would protect veterans' preference, ensure that employees may organize and bargain collectively, and allow the Secretary to engage in bargaining at the national level, in addition to local collective bargaining. The section would further:

Section 9903: This section would authorize DOD to hire highly qualified experts for up to five years, with the possibility of a one-year extension, and to prescribe the appropriate pay rates. It is consistent with the authority now available to the Defense Advanced Research Projects Agency and Military Departments for hiring scientists and engineers.

Section 9904: This section would authorize the Secretary of Defense to hire American citizens 55 years of age and older to work for the Department of Defense for up to two years, without a reduction in any annuity, pension, retirement pay, of similar payment, to fill needs that are not otherwise met by civilian employees.

Section 9905: This section would authorize DOD to align the allowances and benefits of certain employees outside the United States with those of the Foreign Service and the Central Intelligence Agency.

TITLE II--DEPARTMENT OF DEFENSE CIVILIAN PERSONNEL

This title includes a number of government-wide civil service provisions.

Section 201. Modification of the overtime pay cap

Under current law, overtime pay is capped at 150% of GS-10, step 1. Employees whose regular pay exceeds this overtime cap are paid at a rate lesser than their regular hourly rate for their overtime work. This section would authorize the Secretary to

provide overtime pay at a rate of either 150% of GS-10, step 1, or the employee's hourly rate of pay, whichever is greater.

Section 202. Civil Service Retirement System computation for part-time service

This section would amend 5 U.S.C. 8339(p) to provide a special annuity computation formula for employees who performed part-time service after April 6, 1986. For these employees, the section would extend application of the full-time rates of pay in computing average salary to all service, regardless of when it was performed. This would correct the anomaly in the current computation scheme; eliminate a disincentive for employees nearing the end of their careers who would like to phase into retirement by working part-time schedules; and allow agencies to keep senior staff on board as part of a succession planning effort.

Section 203. Military leave for mobilized Federal civilian employees

This section would help Federal civilian employees whose military pay is less than their Federal civilian salary `transition' to military service by allowing them to receive 22 additional workdays of military leave when mobilized. Such leave would help alleviate the difference in pay for the first month of service by enabling them to receive the difference between their Federal civilian pay and their military pay. Current law only entitles Reserve component members to the additional military leave.

Section 204. Common occupational and health standards for differential payments as a consequence of exposure to asbestos

This section would standardize the current law that allows employees to be paid differentials for duty involving severe working conditions or hazards. This provision specifies that for `any hardship or hazard related to asbestos, such differentials shall be determined by applying occupational safety and health standards consistent with the permissible exposure limit promulgated by the Secretary of Labor under the Occupational Safety and Health Act of 1970.'

Section 205. Increase in annual student loan repayment authority

Current law authorizes the head of an agency to repay student loans for highly qualified personnel. The current repayment amount for an employee is limited to $6,000 per year and $40,000 total. This provision would raise the $6,000 amount to $10,000 per year, responding to the increases in annual college tuition costs since the enactment of the original statute. The $40,000 total cap would remain.

Section 206. Authorization for Cabinet secretaries, secretaries of military departments, and heads of executive agencies to be paid on a biweekly basis

This section would allow cabinet secretaries, secretaries of military departments and heads of executive agencies to be paid bi-weekly like most Federal employees. This proposal would save time and cost resources by relieving civilian pay and disbursing operations from having to utilize special manual procedures to accommodate these personnel.

Section 207. Additional classes of individuals eligible to participate in the Federal Long-Term Care Insurance Program

This section would amend title 5, United States Code, by enabling certain additional eligible classes of individuals to participate in the Federal Long-Term Care Insurance Program (FLTCIP). These classes are: (1) individuals who were employed by the District of Columbia Government before October 1, 1987, and who are covered by the Civil Service Retirement System; (2) former Federal employees who have met the service requirements for a deferred annuity but do not meet the age requirement to receive retirement annuity; (3) reservists who are now in the retired reserves, having completed the service requirements of retirement, but have not reached the age to receive retirement annuity.

Section 208. Clarification to Hatch Act; limitation on disclosure of certain records

This section includes legislation introduced by Chairman Davis (H.R. 1509) that would clarify that a Federal employee who voluntarily separates from the civil service shall not be subject to the enforcement provisions of the Hatch Act unless he or she re-enters the civil service.

Section 209. Senior Executive Service and performance

This section would amend provisions of chapter 53 of title 5, United States Code, relating to pay of senior executives. First, this section would add positions in the Senior Executive Service, and in any equivalent system determined by the President's Pay Agent, to the list of positions for which locality pay is unavailable. This section would also provide that there will be a range of rates of basic pay for the Senior Executive Service, established according to OPM regulations. Each senior executive's pay would be set by the employing agency at one of the rates of the range on the basis of individual performance, contribution to agency performance, or both, as determined under a rigorous performance management system. The provision in current law that sets the minimum rate of the range at the minimum rate for senior-level positions would be retained. However, the maximum rate for such positions would be raised from level IV to level III of the Executive Schedule. This section would also provide for the adjustment of the applicable maximum to level II of the Executive Schedule for any agency that is certified as having a performance appraisal system that makes meaningful distinctions among senior executives, based on their relative performance, as that system is both designed and applied. No employee would suffer a reduction in pay by reason of transfer from an agency with the higher, level II maximum, to an agency with the lower level III maximum. This section would also provide a new standard for determining the applicability of one of the post-employment restrictions to those who are in the Senior Executive Service or equivalent positions in other pay systems. In this regard, that restriction would apply to those individuals whose rate of basic pay exceeds 96 percent of the rate for level II of the Executive Schedule. Employees in positions currently described by section 207(c)(2)(A)(ii) of title 18, U.S. Code, would continue to be subject to the one-year post-employment restriction upon leaving that senior position at any time during the two years following enactment of this Act. When that two-year period is complete, any such individual who is still an officer or employee in the executive branch in a position other than that described in clauses (i), (iii), and (iv) of section 207(c)(2)(A), will be a senior employee only if he or she meets the new salary threshold in clause (ii) of that section. Finally, this section would specify that the amendments concerning pay for senior executives could not result in a reduction in basic pay for any senior executive

during the first year after enactment. The rate of basic pay which could not be reduced would be deemed to be the rate of basic pay for the senior executive.

Section 210. Design elements of pay-for-performance systems in demonstration projects

This section would provide specific elements to be incorporated into any pay-for-performance system established in a demonstration project under chapter 47, such as, among other things, adherence to merit principles, a fair, credible and transparent employee appraisal system, a link between the pay-for-performance system and the agency's strategic plan, adequate training, a means for ensuring employee feedback, and effective safeguards.

Section 211. Federal flexible benefits plan administrative costs

This section would prohibit agencies that provide or plan to provide flexible benefits plans for its employees from imposing any fees related to the program on its employees in order to defray the administrative costs associated with such option. This section would also require a number of reporting requirements associated with the benefits plans.

Section 212. Non-reduction in pay while Federal employee is serving on active duty in a Reserve Component of the uniformed services

This section would entitle a Federal employee who is also a member of the reserves and who is absent from his or her civilian employment position under a call or order for active duty service of more than 30 days, to receive an amount equal to the difference in pay between the military compensation received and the civilian compensation that otherwise would have been received during such period, to be paid by the individual's employing agency. This section would also make such amounts also payable during: (1) any period of hospitalization or convalescence required as a result of such service; and (2) the 14-day period following such service.

Section 213. Employee surveys

This section would authorize executive agencies to conduct annual surveys of their employees in order to assess: the leadership and management practices that contribute to agency performance; employee satisfaction with leadership policies and practices, work environment and rewards and recognition for professional accomplishment and personal contributions to achieving organization mission; opportunity for professional development and growth; and opportunity to contribute to achieving organizational mission. OPM would issue regulations prescribing survey questions to address these issues. Results of such surveys would be available to the public and posted on agency Web sites, unless the head of an agency determines that doing so would jeopardize or negatively impact national security.

TITLE III--PROVISIONS RELATING TO THE SECURITIES AND EXCHANGE COMMISSION AND THE NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

This title includes human resources management flexibilities for the Securities and Exchange Commission and the National Aeronautics and Space Administration.

SUBTITLE A--SECURITIES AND EXCHANGE COMMISSION

This section would add a new section 3114 to subchapter I of chapter 31 of title 5, United States Code.

Section 301. Securities and Exchange Commission

Section 3114: This subtitle would include a provision that would grant the Securities and Exchange Commission the flexibility to circumvent federal hiring procedures in hiring accountants, economists and compliance examiners at the Commission.

SUBTITLE B--NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

This section would add a new chapter 98 to subpart I of part III of title 5, United States Code.

Section 311. Workforce authorities and personnel provisions

SUBCHAPTER I--WORKFORCE AUTHORITIES

Section 9801: The section would provide definitions of various terms used throughout the new chapter.

Section 9802: This section would require that ninety days prior to exercising any of the workforce authorities under this subchapter, the NASA Administrator is required to submit to Congress a written plan for approval, and OPM must approve this workforce plan. The plan, and any subsequent modifications, must be circulated to employees 60 days prior to submission to OPM, and employee representatives must be given 30 calendar days to review and make recommendations to the plan or modifications.

Section 9803: Workforce authorities under this subchapter would include: authority to pay recruitment, redesignation and relocation bonuses; authority to pay retention bonuses; authority to make term appointments; authority to extend intergovernmental personnel assignments; term appointments; and critical pay.

Section 9804: Under this section, bonuses would be available for new employees, redesignated employees and relocated employees. Different bonus authorities would be authorized based on whether such position is determined to be critical or non-critical. A service agreement (which factors in length of service, form of payment, amount of the bonus, and termination conditions) would be required before a bonus could be granted.

Section 9805: This section would authorize retention bonuses to be given to employees whose qualifications are unique and essential and who might potentially leave NASA without the bonus. Again, different bonus authorities would be authorized based on whether such position is determined to be critical or non-critical, and a service agreement would be required for the bonus (unless it is paid on a biweekly basis along with the employee's salary).

Section 9806: This section would authorize NASA to offer term appointments for 1-6 years. The NASA Administrator would be able to convert appointees into the civil service without competing the position, provided that (1) the appointment was made in compliance with chapter 33 of title 5, (2) the potential for conversion was clearly stated in the original announcement, (3) the individual has been there for more than two years

and has demonstrated good performance, and (4) the civil service position is at the same level as the appointed position.

Section 9807: Under this section, the NASA Administrator would be authorized to offer enhanced pay for positions at an `extremely high level' in a scientific, technical, professional, or administrative field. Such authority would only be utilized to retain existing NASA personnel or to bring in someone from outside the federal government, and only 10 employees would be able to receive such pay under this section. The total pay received by such individuals would not be able to exceed the rate of pay of the Vice President.

Section 9808: This section would allow NASA to retain inter-governmental personnel up to six years.

Section 9809: This section would authorize NASA to establish personnel demonstration projects that encompass such numbers of employees as determined by the Administration (as opposed to the current government-wide limit of 5,000 employees in any demo project).

Section 9810: This section would authorize `voluntary separation incentive payments' for NASA of up to 50% of salary (subject to the availability of funds), allowing NASA to streamline its workforce.

Section 9811: This section would limit bonuses awarded to supervisors under sections 9804 and 9805 to 15% of total bonuses, and it would require the Administration to maintain a separate account for bonuses.

SUBCHAPTER II--PERSONNEL PROVISIONS

Section 9831: This section would include necessary definitions for the subchapter.

Section 9832: This section would provide a new exchange program that would limit the length of employee exchanges to one year, with authority for extensions of up to an additional year. This section sets forth ethical standard requirements for employees involved in the assignments. Employees would only be able to serve in the exchange program if they commit to return to NASA after the assignment. This language closely resembles the exchange programs that Chairman Davis included in the Digital Tech Corps Act and the Services Acquisition Reform Act.

Section 9833: This section would provide a new science and technology scholarship program, added at the request of the Science Committee. The new language would require employees to serve as an employee of NASA for 2 years for each year of the scholarship.

Section 9834: This section would authorize the Administrator to appoint qualified individuals to professional or research positions within NASA without employing competitive service hiring procedures, provided that the individual graduated from an accredited university with a GPA of 3.5 or higher. Appointments would be career-conditional appointments in the competitive service. The terms `professional' position and `research' position would subsequently be defined.

Section 9835: This section would authorize the Administrator to pay the travel, transportation and relocation expenses of certain new appointees. Such benefits are available to current federal employees who accept a new position within the Federal government.

Section 9836: Under this section, NASA would be able to deem a period of qualified non-federal career experience for an individual an equal period of service performed as a federal employee for purposes of calculating leave accrual. It would also provide that all senior executives and other senior level employees at NASA accrue annual leave at the maximum rate: one day for each bi-weekly pay period.

Section 9837: This provision would permit limited SES appointees to be appointed to career reserved positions, provided that the limited appointee, immediately before the limited appointment, was serving under a career or career-conditional appointment outside of the SES. The limited appointment authority would be expanded to include any bona fide temporary need as determined by the Administrator. It would also authorize payment of performance bonuses for NASA limited term employees in the same amounts and in the same manner as career SES appointees.

Section 9838: Under this section, NASA would be able to set a GS employee at any step within the pay range based on the superior qualifications of the employee or special need of NASA (this authority exists for new hires, but not for current employees).

TITLE IV--HUMAN CAPITAL PERFORMANCE FUND

This title would insert a new chapter 54 in subpart D of part III, United States Code, authorizing the establishment of a Human Capital Performance Fund.

Section 401. Human Capital Performance Fund

This section would add a new chapter 54 to title 5, United States Code that would authorize $500 million annually for a human capital performance fund.

Section 5401: This section would explain the purpose of the new chapter, which would be to promote, through the creation of a Human Capital Performance Fund, greater performance in the federal government. Monies from the fund would be used to reward agencies' highest performance and most valuable employees. This fund would offer federal managers a new tool to recognize employee performance that is critical to the achievement of agency missions.

Section 5402: This section would provide definitions necessary for the chapter.

Section 5403: This section would establish, and require OPM to administer, the new Human Capital Performance Fund, which would be used to make human capital performance payments. An agency would have to submit a plan for OPM's approval before it could receive allocations from the Fund. In FY 2004, up to 10 percent of the Fund would be set aside for agency training on the operation of the Fund plan, as well as on performance evaluation in general. Thereafter, the remainder of the Fund would be allocated by OPM to agencies, with up to 90 percent of that amount allocated on the basis of an agency's pro rata share of Executive branch payroll; OPM would have discretion over the distribution of the remaining 10 percent, and an agency with an exceptionally high-quality plan would be eligible to receive an additional distribution. In FY 2005 and

beyond, OPM would allocate 90 percent of the amounts appropriated for the Fund to agencies on a pro rata basis, and would have discretion over allocation of the remainder. Each agency would be required to provide payroll information to OPM to facilitate the determination of the Executive branch payroll and the pro rata shares.

Section 5404: This section would permit OPM to allow an agency to provide human capital performance payments to employees, based on exceptional performance or contributions to the agency's mission, in a manner specified in the agency's approved plan.

Human Capital Performance Fund payments would not affect the operation of current basic pay systems such as the General Schedule. No more than 15 percent of an agency's eligible employees would be permitted to receive a Fund payment in any given year. Individual payments would be limited to no more than 10 percent of an employee's basic rate of pay in any given year, and in the aggregate, when combined with an employee's rate of basic pay as adjusted by any locality-based comparability payments, would not be permitted to exceed Executive Level IV. This section would also bar the use of the Fund to pay for a new position or for other types of performance-related payments or for any other payment not otherwise authorized by the new chapter, including recruitment and retention authorized under sections 5753 and 5754 of Title 5. Further, this section would provide that initial human capital performance payments could be made to individual employees using monies from the Human Capital Performance Fund, but, in subsequent years, agencies would be required to budget for and fund the continuation of those previously granted individual payments as part of their overall salaries and expenses budget.

Section 5405: This section would require OPM to prescribe regulations to administer the provisions of the new chapter 54 and the Fund. The regulations would have to include criteria governing agency plans, allocations to agencies from the Fund, payments to individual employees, and the various circumstances permitting allocations that are either less than or greater than the agency's pro rata share of the Fund. These criteria could include limits on the aggregate annualized value of human capital performance payments authorized by each agency. In addition, the relationship of agency performance management systems to this chapter and the parameters of training for supervisors, managers, and other individuals involved in the process of making performance distinctions would be specified in the regulations.

Section 5406: This section would require an agency to submit to OPM a plan for making payments to employees under chapter 54. The plan would have to be approved by OPM before the agency could receive an allocation from the Fund. Each agency with an approved plan would have to give OPM whatever information OPM requires concerning how the agency has used its allocation from the Fund. Each agency would also be required to demonstrate that its performance management system supports its strategic goals and objectives, and is used to make meaningful distinctions in performance. This section would also require appropriate training.

Section 5407: This section would provide that any payment to an employee under chapter 54 is part of the employee's basic pay for retirement and life insurance purposes, and for any other purposes OPM determines by regulation. However, a payment under chapter 54 could not be part of basic pay for purposes of chapter 75 of title 5 (regarding adverse actions).

Section 5408: This section would authorize appropriations to implement chapter 54 in the amount of $500 million for FY 2004, and, for each subsequent fiscal year, such sums as may be necessary to carry out the provisions of that chapter.

TITLE V--MISCELLANEOUS

This title would prohibit the use of quotas in public-private competitions unless it is based on considered research and sound analysis of past activities and is consistent with the stated mission of the department or agency.

Section 501. Prohibition on use of quotas

This section would prohibit the Office of Management and Budget from establishing, applying or enforcing any numerical goal, target, or quota for subjecting the employees of a department or agency of the Government to public-private competitions or converting such employees to contractor performance under OMB Circular A-76 or any other administrative regulation, directive or policy, unless the goal, target or quota is based on considered research and sound analysis of past analysis and is consistent with the stated mission of the department or agency. Such prohibition would not limit the implementation or enforcement of the Government Performance and Results Act or prevent any agency of the executive branch from subjecting work performed by federal employees or private contractors to public-private competitions or conversions.

EXPLANATION OF AMENDMENTS

The provisions of the substitute are explained in this report.

COMMITTEE CONSIDERATION

On May 8, 2003, the Committee met in open session and ordered reported favorably the bill, H.R. 1836, as amended, by roll call vote, a quorum being present.

ROLLCALL VOTES

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APPLICATION OF LAW TO THE LEGISLATIVE BRANCH

Section 102(b)(3) of Public Law 104-1 requires a description of this bill to the legislative branch. This bill would make changes to certain areas of Federal civil service, such as the Department of Defense civilian workforce, the National Aeronautics and Space Administration, the Securities and Exchange Commission, and government-wide improvements, in order to improve the flexibility and competitiveness of Federal human resources management. The government wide provisions would apply to civil service positions within the legislative branch.

STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS OF THE COMMITTEE

In compliance with clause 3(c)(2) of rule XIII and clause (2)(b)(1) of rule X of the Rules of the House of Representatives, the Committee's oversight findings and recommendations are reflected in the descriptive portions of this report.

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

Clause 3(c)(4) of rule XIII of the Rules of the House of Representatives requires a statement of the Committee's general performance goals and objectives for reported measures that authorize funding. This bill does not authorize funding.

CONSTITUTIONAL AUTHORITY STATEMENT

Under clause 3(d)(1) of rule XIII of the Rules of the House of Representatives, the Committee must include a statement citing the specific powers granted to Congress to enact the law proposed by H.R. 1836. The constitutional authority to regulate the civil service of the Federal government lies within the Necessary and Proper clause of Article I, Section Eight of the United States Constitution.

UNFUNDED MANDATE STATEMENT

Section 423 of the Congressional Budget and Impoundment Control Act (as amended by Section 101(a)(2) of the Unfunded Mandate Reform Act, P.L. 104-4) requires a statement whether the provisions of the reported include unfunded mandates. In compliance with this requirement the Committee has received a letter from the Congressional Budget Office included herein.

COMMITTEE ESTIMATE

Clause 3(d)(2) of rule XIII of the Rules of the House of Representatives requires an estimate and a comparison by the Committee of the costs that would be incurred in carrying out H.R. 1836. However, clause 3(d)(3)(B) of that rule provides that this requirement does not apply when the Committee has included in its report a timely submitted cost estimate of the bill prepared by the Director of the Congressional Budget Office under section 402 of the Congressional Budget Act.

BUDGET AUTHORITY AND CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

With respect to the requirements of clause 3(c)(2) of rule XIII of the Rules of the House of Representatives and section 308(a) of the Congressional Budget Act of 1974 and with respect to requirements of clause (3)(c)(3) of rule XIII of the Rules of the House of Representatives and section 402 of the Congressional Budget Act of 1974, the Committee has received the following cost estimate for H.R. 1836 from the Director of Congressional Budget Office:

U.S. Congress,

Congressional Budget Office,

Washington, DC, May 15, 2003.

Hon. TOM DAVIS,
Chairman, Committee on Government Reform,
House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 1836, the Civil Service and National Security Personnel Improvement Act.

If you wish further details on this estimate, we will be pleased to provide them. The CBO staff contact is Matthew Pickford.

Sincerely,

Douglas Holtz-Eakin,

Director.

Enclosure.

H.R. 1836--Civil Service and National Security Personnel Improvement Act

Summary: H.R. 1836 would make governmentwide and agency-specific amendments to civil service law. Major provisions of the bill with budgetary impacts would:

Most of the costs of implementing the bill would be funded through appropriations. Assuming appropriation of the necessary amounts, CBO estimates that such costs would total about $300 million in 2004 and about $7.6 billion over the 2004-2008 period. Those

amounts assume a savings of $1.5 billion over the 2004-2008 period from applying OSHA regulations on asbestos exposure to cases involving back pay for DoD workers. This estimate does not include costs for implementing section 102, which would provide DoD with additional flexibility to operate its human resources management system. CBO does not have sufficient information about how DoD might implement those authorities to estimate their cost.

We also estimate the enacting H.R. 1836 would increase direct spending by about $200 million over the 2004-2013 period because the bill would increase retirement benefits for certain workers with part-time service.

H.R. 1836 contains an intergovernmental mandate as defined in the Unfunded Mandates Reform Act (UMRA). However, CBO estimates that any costs to state, local, or tribal governments from that mandate would be insignificant and would not, therefore, exceed the threshold established in UMRA ($59 million in 2003, adjusted annually for inflation). The bill contains no new private-sector mandates as defined in UMRA.

Estimated costs to the Federal Government: The estimated budgetary impact of H.R. 1836 is shown in the following table. The costs of this legislation fall within many budget functions. 



----------------------------------------------------------------------------------------------------------------


                                                By fiscal year, in millions of dollars--                        


                                                                                    2004 2005  2006  2007  2008 


----------------------------------------------------------------------------------------------------------------


CHANGES IN SPENDING SUBJECT TO APPROPRIATION                                                                    


Human Capital Performance Fund:                                                                                 


Estimated Authorization Level                                                        500  509   520   531   545 


Estimated Outlays                                                                    400  507   518   529   542 


Continue Human Capital Performance Fund Raises:                                                                 


Estimated Authorized Level                                                             0  473 1,035 1,640 2,291 


Estimated Outlays                                                                      0  454 1,012 1,616 2,265 


Asbestos Differential Pay Savings:                                                                              


Estimated Authorization Level                                                       -290 -290  -290  -290  -290 


Estimated Outlays                                                                   -290 -290  -290  -290  -290 


Modification of Overtime Pay Cap:                                                                               


Estimated Authorization Level                                                        107  147   151   156   161 


Estimated Outlays                                                                    103  145   151   156   161 


Administration of Flexible Spending Accounts:                                                                   


Estimated Authorization Level                                                         22   28    33    39    44 


Estimated Outlays                                                                     20   27    33    38    44 


Senior Executive Service and Performance:                                                                       


Estimated Authorization Level                                                         23   31    31    31    31 


Estimated Outlays                                                                     21   31    31    31    31 


Reservists Pay:                                                                                                 


Estimated Authorization Level                                                         40   18    14    10     7 


Estimated Outlays                                                                     37   21    14    10     7 


NASA Personnel and Workforce Practices:                                                                         


Estimated Authorization Level                                                         15   17    19    22    22 


Estimated Outlays                                                                      6   13    18    21    22 


Total:                                                                                                          


Estimated Authorization Level                                                        417  933 1,513 2,139 2,811 


Estimated Outlays                                                                    297  908 1,487 2,111 2,782 


CHANGES IN DIRECT SPENDINIG                                                                                     


CSRS computation for part-time service:                                                                         


Estimated Authorization Level                                                          4   10    14    18    21 


Estimated Outlays                                                                      4   10    14    18    21 


----------------------------------------------------------------------------------------------------------------


This estimate excludes any costs for implementing section 102, which would create a new human resources management system for DoD; allow DoD to give certain employees outside the United States the same pay and benefits as the Foreign Service or Central Intelligence Agency; require DoD, to the maximum extend practicable, to adjust rates of compensation for civilian employees at the same rate as military personnel; and allow DoD to provide additional pay to attract highly qualified experts. All of these authorities could potentially affect federal spending.

CBO cannot estimate the budgetary impact of implementing these provisions because DoD has not indicated how it would supplant--or improve upon--the personnel system currently governing the department; how many employees would benefit from receiving the same pay and benefits as the Foreign Service or Central Intelligence Agency (the number is classified); whether or how it might institute pay parity between its civilian employees and military

members; or how many people it might hire under the authority to provide additional pay to attract highly qualified experts.

Basis of estimate:  For the estimate, CBO assumes that H.R. 1836 will be enacted by the end of fiscal year 2003. We assume that the necessary amounts will be appropriated for each year and that outlays will occur at historical rates for similar programs.

Spending subject to appropriation

CBO estimates that seven sections of the bill would have significant impacts on spending subject to appropriation. The following paragraphs discuss those costs.

Human Capital Performance Fund. Section 401 of the bill would authorize the appropriation of $500 million in 2004 and such sums as necessary for each subsequent year for the Office of Personnel Management (OPM) to establish a Human Capital Performance Fund. The fund would be available for agencies to give pay raises to employees based on superior performance or the possession of skills critical to an agency's mission. Those increases in pay would be in addition to regular cost-of-living pay raises given to civilian federal employees and would represent permanent increases in an employee's base pay. Federal civilian pay and benefits currently cost about $140 billion governmentwide.

H.R. 1836 would allow only the initial pay raise to be made from the Human Capital Performance Fund. For this estimate, CBO assumes that the Human Capital Performance Fund would be continued at $500 million a year, adjusted for anticipated inflation, for the next five years. We estimate that the program would cost $2.5 billion over the 2004-2008 period.

In subsequent years, after pay raises made through the Human Capital Performance Fund are in place, each federal agency would have to cover the cost of continuing the pay raise from its regular appropriation. CBO estimates that maintaining the resulting higher pay levels and adjusting them for anticipated cost-of-living increases would cost participating agencies $5.2 billion over the 2005-2008 period. Thus, in total, we estimate that implementing this provision would cost $7.7 billion over the next five years.

Asbestos Differential Pay. Under Section 204, federal wage-grade employees would be subject to the same standards as general schedule employees when determining eligibility for environmental differential pay (EDP) due to exposure to asbestos. Under current law,

general schedule employees are entitled to 8 percent hazard differential pay if they are exposed to asbestos that exceeds the permissible exposure limits established by OSHA. The current EDP standard for wage-grade employees entitles them to the same 8 percent of pay but does not set an objective measure for determining the level of asbestos exposure necessary to qualify for EDP. In several instances when wage-grade employees have sought back pay for EDP, arbitrators have found in favor of the employees when asbestos levels were below those consistent with OSHA standards. Based on information from DoD on prior and pending arbitration rulings, CBO expects that implementing section 204 would reduce the amount of back pay federal agencies would be required to pay for EDP due to asbestos exposure. Assuming those cases would be handled administratively, CBO estimates that establishing OSHA standards for asbestos EDP would save $290 million in 2004 and $1.5 billion over the 2004-2008 period, assuming appropriations to DoD and other affected agencies are reduced by the estimated amounts.

Modification of the Overtime Pay Cap. Under current law, overtime pay for work in excess of 40 hours per week for federal managers, supervisors, and other employees exempted under the Fair Labor Standards Act (FLSA) is limited to a set rate of roughly $32 an hour (one and a half times the normal rate for a general schedule (GS) grade 10 (GS-10), step 1, employee). Employees who earn salaries above GS-12, step 5, receive overtime pay at a rate that is, on an hourly basis, less than their regular pay.

Section 201 would raise the overtime pay rate to either one and one-half times the hourly rate of a GS-10, step 1, or the hourly rate of the basic pay of the employee, whichever is greater. Although this change would not affect employees at GS-12, step 5, and lower, those above this pay rate would earn their hourly rate of pay for overtime work. Based on information from the Office of Personnel Management (OPM) on the number of FLSA-exempted employees at each grade and information on overtime worked, CBO estimates that implementing the proposal would cost approximately $100 million in 2004 and $0.7 billion over the 2004-2008 period.

About 680,000 federal employees at GS-10 and above are exempt from the FLSA, which is about 36.7 percent of the general schedule (and related) workforce. For this estimate, CBO assumes that this employee group worked 37 percent of all overtime performed by FLSA-exempt employees. We also assume that those overtime hours are distributed proportionately across GS-10 through GS-13 employees, with GS-14 and GS-15 employees working one-third of the hours. CBO estimated the cost of the proposal by calculating the cost of those overtime hours at the set rate under current law and then calculating the cost of that same amount of overtime at the set rate or the employee's hourly rate, whichever is greater.

Federal Flexible Benefits Plan Administrative Costs. Under current law, federal employees will be allowed to enroll in a flexible spending account (FSA) program offered

through the Office of Personnel Management (OPM) beginning in May 2003. A FSA is an employee benefit that allows employees to set aside money, on a pre-tax basis, for health care and dependent care expenses. The administrative costs to the program will be paid by participating employees based on a formula to collect $48 annually for each health care account and 1.5  percent of the total dependent care account.

Section 211 would prevent any fees from being charged to Federal employees for the administrative costs to operate the FSAs. Based on information from the Federal judiciary's FSA program and the operation of private FSAs, CBO estimates that about 10 percent of Federal employees will initially enroll in the plan, and we expect participation to grow to about 20 percent of Federal employees over the next five years. Under the bill, administrative costs of operating the plans would be subject to appropriation of the necessary amounts. Based on the fees OPM plans to charge participants and expected employee participation rates, we estimate that implementing this provision of the bill would cost about $160 million over the 2004-2008 period.

Senior  Executive Service (SES) Performance Provisions. Under current law, SES employees are paid at six different pay levels. Base pay is capped at Level IV of the Executive Schedule ($134,000)  and the maximum pay with the locality-based comparability adjustment is set at Level III of the Executive Schedule ($142,500). SES employees receive the same annual across-the board pay raises and locality-based comparability adjustments that GS employees receive.

Effective January 1, 2004, section 209 would eliminate the six SES pay levels and raise the cap on base pay to $142,500. Locality adjustment to SES pay would be eliminated.  The proposal would affect roughly 7,900 employees.

The legislation specifies that no SES employee would experience a reduction in the rate of basic pay in the first year after this legislation is enacted, and CBO assumes that this would continue to be true after the first year. Because  the salaries of many SES employees are at the current caps (or are expected to reach such caps over the next few years), raising the cap on base pay would allow those employees to get pay raises. Assuming that executive level salaries (and thus the caps) are raised by the full amount authorized under current law by the Ethics Reform Act, CBO estimates that the legislation would cost $145 million over the 2004-2008 period.

Federal Employee Reservists Pay. Section 212 would authorize an increase in Federal salaries to pay for any difference between civilian and military compensation for Federal employees called to active duty in the uniformed service or National Guard following enactment of the bill. CBO estimates that implementing this provision would cost

$37 million in 2004 and $89 million over the 2004-2008 period. Those payments would be subject to the availability of appropriated funds.

Based on information from DoD, CBO estimates that Federal employees account for approximately 120,000 positions or almost 15 percent of the total Ready Reserve (which includes the Selected Reserve and the Individual Ready Reserve/Inactive National Guard). For this estimate, we assume that 15 percent of those reserves called to active service at any time are Federal employees.

In a 2000 DoD survey of 35,000 reserve personnel, 59 percent of all reservists (including Federal employees) reported either no difference in their income while on active-duty military status, or an increase in their income while on active duty. Forty-one percent reported a loss of income during mobilization and deployment. For this estimate, CBO assumes that these self-reported survey data are accurate and applicable to the current call-up of reservists and National Guard forces.

Of the 41 percent of survey respondents who reported a loss of income during military reserve service, most (about 70 percent) said their income was reduced by $3,750 or less while on active duty. One the other hand, some reported much larger losses. For example, approximately 7 percent of those reporting an income loss indicated a loss of $37,000 to $50,000 annually. Considering the loss in income reported by all survey respondents and the number who reported no loss or an increase in salary, CBO estimates that the average annual reduction in salary while serving in the active-duty military is about $3,000.

The cost of implementing the legislation following enactment depends on the size of the future reserve force, which in turn depends on the duration of the military operation in Iraq and the force size required for it, as well as the size and duration of any future military conflicts, all of which are very  uncertain. For this estimate, CBO assumes that the total number of reservists on active duty will decline to 88,000 person-years in fiscal year 2004 and to about 15,000 person-years by 2008. If the number of reservists called to active duty were to remain at current levels over the 2004-2008 period, the cost of implementing section 208 would be significantly greater. Based on the above assumptions about the future size of the reserve force, CBO estimates that an average of about 13,000 federal employees will be on active-duty military service in fiscal year 2004, diminishing to approximately 2,000 by 2008.

NASA Personnel and Workforce Practices. Subtitle B would allow NASA to modify its personnel and workforce practices in several ways. NASA would be allowed to pay higher amounts to attract and retain individuals with special expertise, exchange personnel with industrial firms, and expand the use of limited term appointments. In addition, the bill would authorize the appropriation of $10 million a year for a new science and technology

scholarship program. Based on information from NASA, CBO estimates that implementing this subtitle would cost $15 million a year, depending on how extensively the agency uses some of the new authorities.

Direct spending

CBO estimates that one section of H.R. 1836 would increase direct spending by $206 million over the 2004-2013 period. That cost is displayed in the following table and described below.



ESTIMATED DIRECT SPENDING EFFECT OF H.R. 1836


-----------------------------------------------------------------------------------------------------------------------------------


                                             By fiscal year, in millions of dollars--                                              


                                                                                 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 


-----------------------------------------------------------------------------------------------------------------------------------


Change in Civil Service Retirement Benefits:                                                                                       


Estimated Budget Authority                                                          4   10   14   18   21   24   26   28   30   31 


Estimated Outlays                                                                   4    0   14   18   21   24   26   28   30   31 


-----------------------------------------------------------------------------------------------------------------------------------


Civil Service Retirement Benefits for Part-Time Service. Section 202 would alter the way retirement benefits under the Civil Service Retirement System (CSRS) are calculated for workers with part-time service. The bill would apply to workers who performed work prior to April 7, 1986, have some part-time service, and retire after the bill is enacted. Based on information from OPM, CBO estimates that this provision would cost $4 million in 2004, $67 million over the 2004-2008 period, and $206 million over the 2004-2013 period.

Under current law, benefits for CSRS workers with part-time service are calculated using a two-step process. For workers with service prior to April 7, 1986, the current formula uses the highest salary the worker actually earned to reflect the part-time employment. For work on or after April 7, 1986, the formula uses a deemed salary (what the worker would have been earning if the worker had been working full time) to determine benefits and applies a pro-rata factor to adjust for part-time service. In effect the current formula tends to treat new retirees with part-time service early in their careers more favorably than those whose part-time service comes at the end of their careers.

Section 202 would calculate CSRS benefits for all part-time service according to the formula currently used to determine benefits for service performed on or after April 7, 1986. To ensure that benefits under the new formula would not be smaller than benefits calculated

under the current formula, part-time service performed prior to April 7, 1986, would be credited as full time. CBO estimates this provision would affect benefits for several thousand new CSRS retirees each year. Depending on an individual employee's work history, benefits for those retirees could be more than 30 percent higher than they would be if calculated under the current formula.

Federal Long-Term Care Insurance Program. Section 207 would expand eligibility for the federal long-term care insurance program to former employees of the District of Columbia, former employees who have not attained the minimum age to qualify as annuitants, and retired reservists who have not reached the age of 60. CBO estimates that this provision would have no significant net cost.

The federal government does not contribute to enrollees' premiums for this program, and the private insurers are required to reimburse OPM for its expenses in administering the plan. Therefore, net federal spending for the long-term care insurance program is insignificant. Under the bill, the federal government would incur some new costs to inform additional people of their eligibility (primarily consisting of postage and printing more brochures about plan choices) and to register new participants. Those additional costs would be charged to the insurance carriers and OPM would be reimbursed for its expenses.

Estimated impact on state, local, and tribal governments: H.R. 1836 would authorize the Secretary to appoint older Americans to positions in the excepted service, and--notwithstanding any other provision of law--protect any retirement benefits they may be receiving from being reduced as a result of that appointment. To the extent that under current law retirement benefits provided by state, local, or tribal governments might be reduced for a beneficiary hired by the Secretary, enacting this provisions would prohibit such reductions and thereby impose an intergovernmental mandate as defined in UMRA. However, according to the National Association of State Retirement Administrators, few, if any, jurisdictions require such benefit reductions under current law. Therefore, CBO estimates that any costs to state, local, or tribal governments from the mandate would be insignificant and would not exceed the threshold established in UMRA ($59 million in 2003, adjusted for inflation).

Estimated impact on the private sector: H.R. 1836 contains no new private-sector mandates as defined in UMRA.

Previous CBO estimate: On May 1, 2003, CBO transmitted a cost estimate for S. 593, the Reservists Pay Secretary Act of 2003, as introduced by Senator Richard J. Durbin on March 11, 2003, which is similar to section 212 of H.R. 1836. However, S. 593 would authorize a retroactive pay differential for federal employees who, as members of the uniformed services or National Guard, were called to active duty military service since September 11, 2001: H.R. 1836 would not. Therefore, the estimated costs of section 212 are lower than those for S. 593.

Estimate prepared by: Federal Costs: Matthew Pickford and Kathleen Gramp, Ellen Hays, Michelle S. Patterson and Sunita D'Monte, Geoffrey Gerhardt, and Alexis K. Ahlstrom. Impact on State, Local, and Tribal Governments: Victoria Heid Hall. Impact on the Private Sector. Paige Piper/Bach.

Estimate approved by: Robert A. Sunshine, Assistant Director for Budget Analysis.

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED




TITLE 5, UNITED STATES CODE


* * * * * * *

PART III--EMPLOYEES


* * * * * * *

SUBPART D--PAY AND ALLOWANCES




51.

Classification

5101

* * * * * * *

54.

Human Capital Performance Fund

5401

* * * * * * *

Subpart I--Miscellaneous

* * * * * * *

98.

National Aeronautics and Space Administration

9801

99.

Department of Defense National Security Personnel System

9901

* * * * * * *



Subpart B--Employment and Retention


CHAPTER 31--AUTHORITY FOR EMPLOYMENT




SUBCHAPTER I--EMPLOYMENT AUTHORITIES

Sec.

3101. General authority to employ.

* * * * * * *

3114. Appointment of accountants, economists, and examiners by the Securities and Exchange Commission.

* * * * * * *



SUBCHAPTER I--EMPLOYMENT AUTHORITIES


* * * * * * *

Sec. 3111. Acceptance of volunteer service




* * * * * * *



* * * * * * *

Sec. 3114. Appointment of accountants, economists, and examiners by the Securities and Exchange Commission






























* * * * * * *

Subpart D--Pay and Allowances


* * * * * * *

CHAPTER 53--PAY RATES AND SYSTEMS


* * * * * * *



SUBCHAPTER VIII--PAY FOR THE SENIOR EXECUTIVE SERVICE.

5381. Definitions.

 [Struck out->][ 5382. Establishment and adjustment of rates of pay for the Senior Executive Service. ][<-Struck out] 

5382. Establishment of rates of pay for the Senior Executive Service



* * * * * * *

SUBCHAPTER I--PAY COMPARABILITY SYSTEM


* * * * * * *

Sec. 5304. Locality-based comparability payments




* * * * * * *













































* * * * * * *

SUBCHAPTER IV--PREVAILING RATE SYSTEMS


* * * * * * *

Sec. 5343. Prevailing rate determinations; wage schedules; night differentials




* * * * * * *





* * * * * * *



* * * * * * *

SUBCHAPTER VII--MISCELLANEOUS PROVISIONS


* * * * * * *

Sec. 5379. Student loan repayments










* * * * * * *

SUBCHAPTER VIII--PAY FOR THE SENIOR EXECUTIVE SERVICE


* * * * * * *

 [Struck out->][ Sec. 5382. Establishment and adjustment of rates of pay for the Senior Executive Service ][<-Struck out]










Sec. 5382. Establishment of rates of pay for the Senior Executive Service








Sec. 5383. Setting individual senior executive pay




* * * * * * *



* * * * * * *

CHAPTER 54--HUMAN CAPITAL PERFORMANCE FUND




 Sec.

 5401. Purpose.

 5402. Definitions.

 5403. Human Capital Performance Fund.

 5404. Human capital performance payments.

 5405. Regulations.

 5406. Agency plan.

 5407. Nature of payment.

 5408. Appropriations.



Sec. 5401. Purpose




Sec. 5402. Definitions






























Sec. 5403. Human Capital Performance Fund
















Sec. 5404. Human capital performance payments


















Sec. 5405. Regulations
















Sec. 5406. Agency plan
































Sec. 5407. Nature of payment




Sec. 5408. Appropriations




CHAPTER 55--PAY ADMINISTRATION


* * * * * * *



SUBCHAPTER IV--DUAL PAY AND DUAL EMPLOYMENT

5531. Definitions.

* * * * * * *

5538. Nonreduction in pay while serving on active duty in a reserve component.

* * * * * * *



SUBCHAPTER I--GENERAL PROVISIONS


* * * * * * *

Sec. 5504. Biweekly pay periods; computation of pay


























































* * * * * * *

SUBCHAPTER IV--DUAL PAY AND DUAL EMPLOYMENT


* * * * * * *

Sec. 5538. Nonreduction in pay while serving on active duty in a reserve component








































SUBCHAPTER V--PREMIUM PAY


* * * * * * *

Sec. 5542. Overtime rates; computation








* * * * * * *

Sec. 5545. Night, standby, irregular, and hazardous duty differential




* * * * * * *





* * * * * * *

Subpart E--Attendance and Leave


* * * * * * *

CHAPTER 63--LEAVE


* * * * * * *

SUBCHAPTER II--OTHER PAID LEAVE


* * * * * * *

Sec. 6323. Military leave; Reserves and National Guardsmen
















* * * * * * *

Subpart F--Labor-Management and Employee Relations


* * * * * * *

CHAPTER 73--SUITABILITY, SECURITY, AND CONDUCT




SUBCHAPTER I--REGULATION OF CONDUCT

Sec.

7301. Presidential regulations.

7302. Post-employment notification.

* * * * * * *



SUBCHAPTER I--REGULATION OF CONDUCT


* * * * * * *

Sec. 7302. Post-employment notification






* * * * * * *

SUBCHAPTER V--MISCONDUCT


* * * * * * *

Sec. 7353. Gifts to Federal employees






* * * * * * *



* * * * * * *

Subpart G--Insurance and Annuities


* * * * * * *

CHAPTER 83--RETIREMENT


* * * * * * *

SUBCHAPTER III--CIVIL SERVICE RETIREMENT


* * * * * * *

Sec. 8339. Computation of annuity




* * * * * * *



* * * * * * *













* * * * * * *

CHAPTER 90--LONG-TERM CARE INSURANCE


* * * * * * *

Sec. 9001. Definitions








* * * * * * *













* * * * * * *





* * * * * * *



* * * * * * *

Subpart I--Miscellaneous


* * * * * * *

CHAPTER 98--NATIONAL AERONAUTICS AND SPACE ADMINISTRATION




SUBCHAPTER I--WORKFORCE AUTHORITIES

Sec.

9801. Definitions.

9802. Planning, notification, and reporting requirements.

9803. Workforce authorities.

9804. Recruitment, redesignation, and relocation bonuses.

9805. Retention bonuses.

9806. Term appointments.

9807. Pay authority for critical positions.

9808. Assignments of intergovernmental personnel.

9809. Enhanced demonstration project authority.

9810. Voluntary separation incentive payments.

9811. Limitations relating to bonuses.

SUBCHAPTER II--PERSONNEL PROVISIONS

9831. Definitions.

9832. NASA-Industry exchange program.

9833. Science and technology scholarship program.

9834. Distinguished scholar appointment authority.

9835. Travel and transportation expenses of certain new appointees.

9836. Annual leave enhancements.

9837. Limited appointments to Senior Executive Service positions.

9838. Superior qualifications pay.



SUBCHAPTER I--WORKFORCE AUTHORITIES


Sec. 9801. Definitions


























Sec. 9802. Planning, notification, and reporting requirements
































































Sec. 9803. Workforce authorities




















Sec. 9804. Recruitment, redesignation, and relocation bonuses














































Sec. 9805. Retention bonuses


































Sec. 9806. Term appointments




























Sec. 9807. Pay authority for critical positions








































Sec. 9808. Assignments of intergovernmental personnel




Sec. 9809. Enhanced demonstration project authority




Sec. 9810. Voluntary separation incentive payments






















Sec. 9811. Limitations relating to bonuses






SUBCHAPTER II--PERSONNEL PROVISIONS


Sec. 9831. Definitions




Sec. 9832. NASA-Industry exchange program




























































































Sec. 9833. Science and technology scholarship program






























































Sec. 9834. Distinguished scholar appointment authority










































Sec. 9835. Travel and transportation expenses of certain new appointees






























Sec. 9836. Annual leave enhancements












































Sec. 9837. Limited appointments to Senior Executive Service positions














































Sec. 9838. Superior qualifications pay


























CHAPTER 99--DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM




Sec.

9901. Definitions.

9902. Establishment of human resources management system.

9903. Attracting highly qualified experts.

9904. Employment of older Americans.

9905. Special pay and benefits for certain employees outside the United States.



Sec. 9901. Definitions








Sec. 9902. Establishment of human resources management system












































































































































































Sec. 9903. Attracting highly qualified experts






































Sec. 9904. Employment of older Americans


















Sec. 9905. Special pay and benefits for certain employees outside the United States












-

TITLE 18, UNITED STATES CODE


* * * * * * *

PART I--CRIMES


* * * * * * *

CHAPTER 11--BRIBERY, GRAFT, AND CONFLICTS OF INTEREST


* * * * * * *

Sec. 207. Restrictions on former officers, employees, and elected officials of the executive and legislative branches




* * * * * * *













* * * * * * *



* * * * * * *



* * * * * * *

Sec. 209. Salary of Government officials and employees payable only by United States




* * * * * * *



* * * * * * *

CHAPTER 93--PUBLIC OFFICERS AND EMPLOYEES


* * * * * * *

Sec. 1905. Disclosure of confidential information generally




* * * * * * *

-

SECTION 203 OF THE NATIONAL AERONAUTICS AND SPACE ACT OF 1958


FUNCTIONS OF THE ADMINISTRATION




* * * * * * *







* * * * * * *

-

SECTION 125 OF THE ACT OF JANUARY 8, 1988


AN ACT Making technical corrections relating to the Federal Employees' Retirement System, and for other purposes.


SEC. 125. ELIGIBILITY OF CERTAIN INDIVIDUALS TO PARTICIPATE IN THE THRIFT SAVINGS PLAN.




* * * * * * *







* * * * * * *







* * * * * * *

MINORITY VIEWS


Over the past century, Congress has developed a comprehensive set of laws to prevent the patronage system that ruled the federal government during the first 100 years of the country's existence. Until the Civil Service Act of 1883, federal jobs were often awarded through the spoils system. Civil service jobs went to supporters of elected officials and loyal party members, which often led to incompetence and corruption.

With the passage of H.R. 1836, this Committee has embarked on the path of reversing many of the legislative reforms of the past century. The bill strips away fundamental rights from almost 700,000 civilian employees at the Department of Defense (DoD)--approximately one-third of all federal civilian employees. The bill also opens the door for the rest of the federal workforce to have their rights taken away as well.

We agree that DoD needs certain flexibilities to allow it to operate more effectively and more efficiently. We want the strongest possible national defense and are willing to give DoD the tools it needs to  modernize its workforce. However, H.R. 1836 goes well beyond those flexibilities by giving DoD a blanket waiver from large parts of the civil service laws.

In two hearings before the Committee, DoD witnesses provided virtually no details about how it would exercise these flexibilities and no rationale for why statutory protections of employee rights should be waived. Often, the only rationale DoD provided for such waivers was that the Department of Homeland Security received the same waivers last year. However, the creation of the Homeland Security Department was a unique situation involving the combination of more than 20 different agencies from different parts of the federal government. Congress reasoned that the new Secretary of Homeland Security needed flexibilities to quickly organize the different components and functions. The Homeland Security Department was an experiment, not a precedent.

The bill approved by the Committee on a party-line vote is an improvement over the proposal initially submitted by DoD. On balance, however, H.R. 1836 still gives far too little direction to DoD without providing any meaningful safeguards to employees.

Our views on specific provisions in H.R. 1836 and the Committee's process for considering the bill are set forth below.

I. EXPEDITED CONSIDERATION OF BILL


Members of the Committee on both sides of the aisle argued that a bill of this magnitude deserves careful and thoughtful consideration by Congress. However, DoD did not send its personnel proposal to Congress until April 10, 2003, and the bill was not introduced until April 29, 2003.

Prior to marking up the bill, the Committee held only one subcommittee hearing and one full committee hearing--both in the eight days prior to the markup. Eight days was not enough time to consider a bill that will affect one-third of federal civilian

employees and will likely become the de factor personnel system for the entire federal government. At the subcommittee hearing, Chairwoman Jo Ann Davis stated: `We're doing this so quickly and so fast that I can't say I'm very comfortable. I'm not anxious to run forward and vote for something when I just don't know what it's going to do to 700,000 people. * * * I think we're all concerned with the sweeping power that would be given.'

DoD also failed to consult with interested parties about its legislative proposal. DoD never formally consulted with unions representing DoD employees during the development of the proposal. We also were not briefed on the proposal until after it was submitted to Congress.

Finally, we believe this bill is premature because the personnel provisions of the Homeland Security Act--the precedent for many of the changes sought by DoD--have not been implemented. Congress should wait until the Department of Homeland Security has implemented its new personnel system, before deciding that this novel approach should be extended to other agencies.

II. PERSONNEL PROVISIONS


We believe that H.R. 1836 provides a blank check to DoD to create a new personnel system for its almost 700,000 civilian employees without providing any details about what it would do. DoD has stated only that the new personnel system would be based on: (1) existing demonstration projects within the Department; and (2) DoD's civilian human resources strategic plan.

Existing DoD demonstration projects cover approximately 30,000 employees, many of whom are scientists and engineers, at research labs. It is an open question as to whether these limited demonstration projects can be extrapolated to a more diverse workforce that is over 20 times larger the demonstration projects. At a minimum, more research is needed before DoD is granted such broad pay and hiring flexibilities.

DoD's reliance on its human resources strategic plan is also problematic. In a report issued in March 2003 GAO found DoD's strategic plan to be wholly inadequate:

 The human capital strategic plans GAO reviewed for the most part lacked key elements found in fully developed plans. Most of the civilian human capital goals, objectives, and initiatives were not explicitly aligned with the overreaching missions of the organizations. Consequently, DoD and the components cannot be sure that strategic goals are properly focused on mission achievement. Also, none of the plans contained results--oriented performance measure to assess the impact of their civilian human capital initiatives (i.e., programs, policies, and processes). Thus, DoD and the components cannot gauge the extent to which their human capital initiatives contribute to achieving their organizations' mission. Finally, the plans did not contain data on the skills and competencies needed to successfully accomplish future mission; therefore, DoD and the

components risk not being able to put the right people, in the right place, and at the right time, which can result in diminished accomplishments of the overall defense mission. * * * Moreover, the civilian strategic plans did not address how the civilian workforce will be integrated with their military counterparts or sourcing initiatives. 1

 [Footnote]

[Footnote 1: General Accounting Office, DOD Actions Needed to Strengthen Civilian Human Capital Strategic Planning and Integration with Military Personnel and Sourcing Decisions (Mar. 2003) (GAO-03-475).]

At the Civil Service Subcommittee hearing, Comptroller General David Walker underscored these points, testifying that he had `serious concerns' about the proposal and that the Pentagon needs to improve its management systems to demonstrate that adequate safeguards would be in place to minimize the chance of abuse. Mr. Walker testified: `Unfortunately, based on GAO's past work most existing federal performance appraisal systems, including a vast majority of DoD's system, are not currently designed to support systems, including a vast majority of DoD's system, are not currently designed to support a meaningful performance-based pay system.'

Despite GAO's criticisms of DoD's human resources strategic plan--and DoD's failure to adequately address these criticisms--H.R. 1836 essentially allows the Department to implement a new personnel system modeled after the strategic plan.

Of equal concern is DoD's inability to justify the need for these sweeping flexibilities. At the subcommittee hearing, Undersecretary of Defense David Chu testified that the new personnel system would make DoD into a more `agile' force but was unable to explain how the current personnel system had in any way hindered DoD's efforts to wage war in Iraq.

Based on pre-markup negotiations and amendments passed during the markup, several changes were made to the initial proposal submitted by DoD in April. Some of these changes improved the bill. Most significantly, the number of waivable chapters under Title 5 of the U.S. Code was scaled back from 12 provisions in the original DoD proposal to the six chapters that were waived in the homeland security bill. A provision exempting the DoD personnel regulations from notice and comment requirements was dropped. A provision allowing the Defense Secretary to invoke national security and trump the Office of Personnel Management was modified to require that the national security exception be the President's decision. And standards were added to the bill to require that a performance-based pay system incorporate elements of accountability and transparency.

Nevertheless, efforts by minority members to improve the bill during the markup were rejected on party-line votes. Minority amendments were defeated that would have: required DoD to submit a legislative proposal detailing its new personnel system prior to any authorities being granted; limited any new flexibilities only to DoD managers; and required DoD to receive an unqualified audit opinion before it could exercise any authorities.

III. LACK OF PROTECTION FOR EMPLOYEE RIGHTS


In its proposal, DoD sought a complete waiver from four chapters of the Title 5 of U.S. Code that protect fundamental rights of federal employees.

DoD sought waivers from Chapters 43, 75, and 77, which relate to due process and appeal rights. These chapters set forth basic employee protections, such as the right to have advance notice of suspension or removal, the right to respond in writing, the right to be represented by an attorney, and the right to a written decision explaining the action. In addition, these chapters set forth a procedure for employees to challenge personnel actions to the Merit Systems Protection Board (MSPB) and the Equal Employment Opportunity Commission (EEOC) and receive backpay for wrongful termination actions.

DoD also sought a waiver from Chapter 71, which relates to employees collective bargaining rights. Chapter 71 protects the rights of employees to join unions, requires that agencies and unions bargain in good faith, and prohibits discrimination based on union membership.

Even as DoD argued for a complete waiver from these chapters of Title 5, DoD witnesses continued to maintain that they were not revoking the rights contained in these chapters. Deputy Defense Secretary Paul Wolfowitz explained:

[W] are not talking about stripping all of those basic protections of civil service. In fact, we are very much keeping the basic prohibitions on prohibitive personnel practices. We are keeping appeals process in place. We are simply making it easier to hire people that ought to be hired, easier to reward people that ought to be rewarded.

When Mr. Wolfowitz was asked about employee protections against race and sex discrimination, he explained: `We are certainly not trying to change anything in the way that people are protected against that kind of discrimination.'

Notwithstanding DoD's reassurance, the Department's new ability to waive Chapters 43, 75, and 77 effectively precludes employees from having a statutory remedy to redress employment discrimination or wrongful termination actions. DoD has not stated what due process and appeals provisions will be adopted in place of the current system. The amendment offered by Representative McHugh that was adopted by the Committee is an improvement upon DoD's initial proposal but still gives the Department too much discretion to determine what kind of due process and appeal rights will be given to their employees.

Two amendments by Representative Norton to strengthen the due process and appeals provisions were defeated on party-line votes. However, the Committee did adopt an amendment by Representative Norton to prohibit any DoD employee from serving on the new employee appeals panel, thus ensuring the panel's independence. Representative Norton's amendment also required that the Department consult with EEOC in designing its personnel regulations.

With regard to collective bargaining rights, DoD was unable to justify its request for a complete waiver from Chapter 71. In only one area--the ability of DoD to bargain with unions at the national level, instead of the local level--was the Department able to identify a potential problem that needed to be addressed. Under Secretary of Defense David Chu explained: `[T]here's no proposal here for anyone to lose his or her collective bargaining rights. * * * The proposal is designed to facilitate bargaining at the national level. That is the proposal.' Mr. Wolfowitz stated: `I read [the bill] as consolidating collective bargaining at the national level. Collective bargaining will still be very much a part of the process.'

 On the issue of national-level bargaining, we are sympathetic to DoD's arguments and are willing to give DoD the requested flexibility. However, there was great skepticism about DoD waiving all collective bargaining obligations. No explanation was given for the need to waive the obligations in 5 U.S.C. Sec. 7116 that DoD not `encourage or discourage membership in any labor organization by discrimination in connection with hiring' and that DoD `negotiate in good faith with a labor organization.'

Notwithstanding DoD's statement that it welcomes national-level bargaining, H.R. 1836 provides no guarantees that DoD will engage in collective bargaining at all. The bill requires only that the Department engage in `collaboration' with unions in the development of the new personnel system. If the Defense Secretary decides to implement any part of the proposal over the objections of labor organizations, the bill gives the Secretary the discretion to do so after notifying Congress.

In those instances in which DoD chooses to engage in collective bargaining, the bill specifically removes the current requirement that any agency-union impasses be mediated by the Federal Services Impasse Panel, whose members are all appointed by the President. Without any impasse resolution procedure--and without any legal duty to bargain in good faith--the Defense Department could always bargain to impasse and then unilaterally impose its will on employees.

Rep. Lynch offered two amendments that would have restored Chapter 71 and several key collective bargaining rights. Both amendments were defeated on party-line votes.

IV. OTHER BILL PROVISIONS


A. SEC provisions

The Securities and Exchange Commission (SEC) has sought flexibilities to hire accountants, economists, and compliance examiners to improve oversight of U.S. corporations. We support this flexibility but contend that these flexibilities should be temporary to meet current hiring needs caused by the passage of the Sarbanes-Oxley Act. An amendment by Representative Kanjorski to sunset these flexibilities at the end of FY 2008 was defeated.

B. NASA provisions

The National Aeronautics and Space Administration (NASA) also sought a variety of workforce flexibilities relating to greater pay and hiring authority. We believe, however, that it is premature to expand NASA's authorities at this time. An outside board headed by Admiral Harold Gehman is currently investigating the Columbia space shuttle accident and has indicated that it is examining whether workforce issues played a role in the accident. Until the board issues its report, Congress should not grant far-reaching waivers to NASA.

On the merits of NASA's request, we are most concerned about NASA's request to remove the current restriction that demonstration projects be limited to no more than 5,000 employees. This provision would allow NASA to exempt the entire agency from most federal civil service laws. We also are concerned about a provision in the bill that would allow employee exchanges between NASA and outside contractors. This provision could give contractors undue influence over NASA's operations and might create potential conflict of interest problems by allowing private sector detailees to NASA to review contract proposals from their competitors.

The NASA provisions of H.R. 1836 were improved during the markup. The Committee accepted an amendment by Representative Jo Ann Davis to require NASA to consider employee input into any workforce flexibilities employed by the agency. The Committee also accepted an amendment by Representative Kucinich to prohibit NASA supervisors from receiving more than 15% of the relocation, retention, and recruitment bonuses authorized under the bill.

C. Hatch Act provision

The manager's substitute amendment contained a provision relating to the Hatch Act that was never discussed with us prior to the Committee markup. This provision is intended to help one person, Alan White, who is currently being prosecuted by the Office of Special Counsel (OSC) for an alleged Hatch Act violation. The provision would prevent OSC from prosecuting Mr. White, while also prohibiting OSC from publicly discussing the case.

We believe this is a private relief measure that has no place in this legislation. The provision also has implications beyond Mr. White by creating a loophole for federal employees to avoid Hatch Act prosecution. Moreover, the provision imposes a `gag order' on OSC that will prevent the OSC from disclosing information about its cases to the media and public. According to OSC, disclosure of enforcement actions and accomplishments is important to deter violations and ensure accountability.

On May 13, 2003, Elaine Kaplan, the head of OSC, sent a letter to the chairman and ranking minority member of the House Armed Services Committee about this provision of H.R. 1836. In this letter, Ms. Kaplan states the provision `would significantly undermine OSC's ability to effectively enforce compliance with the Hatch Act.' A copy of this letter is attached to these views.

D. Other provisions

During the markup, the Committee accepted other amendments offered by minority members:

 An amendment by Representatives Bell and Lantos was passed giving federal employees called up for duty in the military reserves the difference between their reserves salary and their civilian salary.

 An amendment by Representative Van Hollen was passed prohibiting agencies from charging fees to employees for setting up flexible spending accounts.

 An amendment by Representative Ruppersberger was passed requiring agencies to conduct annual employee surveys.

In addition, an amendment by Representative Van Hollen was defeated which would have provided all federal civilian employees with the same pay increases as the military.

V. CONCLUSION


Although we support giving DoD the tools it needs to modernize its workforce, we cannot support H.R. 1836 in its current form. As reported by the Committee, the bill is a blank check to DoD to develop a new personnel system for its almost 700,000 civilian employees, without providing meaningful safeguards for those employees.

Henry A. Waxman.

Tom Lantos.

Major R. Owens.

Edolphus Towns.

Paul E. Kanjorski.

Bernard Sanders.

Carolyn B. Maloney.

Elijah E. Cummings.

Dennis J. Kucinich.

Danny K. Davis.

John F. Tierney.

Wm. Lacy Clay.

Diane E. Watson.

Stephen F. Lynch.

Chris Van Hollen.

Linda T. Sanchez.

C.A. Dutch Ruppersberger.

Eleanor Holmes Norton.

Jim Cooper.

Chris Bell.











 




 
  
     

        
 
          


          


          

         

      		
    





  
     

       

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