Abolish OPM? What the Administration’s Proposal Would Do

On Thursday the Administration released its report on government reorganization. The recommendations (all 130 pages of them) cover a wide range of federal activities, from agriculture programs to research grants to energy programs. One of the proposals that is getting a lot of attention is the proposal to disestablish the Office of Personnel Management and move its functions to the Executive Office of the President and to the General Services Administration, which would be renamed as the Government Services Agency. Since word of the proposal was first reported by Federal News Radio on Wednesday, I have been getting questions about what it means and how feasible it is.

I have made suggestions in the past regarding the structure of OPM, the potential for conflict of interest in the agency selling services where it makes policy, and the way in which OPM’s overly broad responsibilities detract from its core mission of formulating government wide workforce policy. In one of those posts in 2016 I said “OPM’s most critical missions are policy and oversight. They are the reason the agency and its predecessor, the Civil Service Commission, were created. I believe policy and the advisory services that go with it have gotten a bit lost in the shuffle in OPM. Policy initiatives that could make a tremendous difference for the government, such as simplifying job classification and hiring, improving performance management, improving the SES, and other reforms that can be done through better and more flexible regulations, do not get the attention they deserve.”

My recommendations focused more on strengthening OPM and getting it out of some of the businesses that detract from its core mission. The biggest of those distractions is background investigations. Half of OPM’s people and dollars are devoted to those. They are so large that the OPM Director has to either (a) expend serious time dealing with them, or (b) ignore a billion dollar program that makes up half of the agency. Neither of those options is good for the core mission of workforce policymaking. I suggested moving background investigations to another agency, so I am pleased to see the Administration’s proposals going in that direction.

The proposals go much farther than that and disestablish OPM and move all of its work elsewhere. That is where reasonable people may disagree about what it really means. The Administration’s proposal says the move will elevate the policymaking function by moving it into the Executive Office of the President. The report says

The 2.1 million-person civilian workforce represents one of the Federal Government’s largest and most impactful investments. Like any large corporation, the Government is only as effective as its people. Yet the Government Accountability Office has designated strategic human capital management as a high-risk area since 2001, because the Federal Government does not do an effective job attracting, managing, and retaining a skilled workforce. An extensive literature review documents these failings. The causes are varied, but addressing them effectively requires an optimized management structure that is centrally situated, empowered to view the Federal workforce holistically, and free to focus on core strategic and policy concerns …

This proposal is an opportunity to elevate the Federal workforce management function and maximize the operational efficiency of human capital services. The civil service system is overdue for an overhaul, and that overhaul would best be implemented under a new management structure that is more focused on core priorities and that has not been molded around the existing, archaic framework of civil service rules and regulations.

Once complete, a transition into the EOP could create a more streamlined personnel management unit that is less expensive to operate. Such a unit would also support centralized coordination of all personnel policies for Federal employees, eliminating the confusing matrix of who does what today, as well as several key gaps in policy that are inhibiting the streamlining of mission support services. Centralizing human capital operational services at the General Services Administration (GSA) should provide economies of scale and significant cost-avoidance based on reductions in contract and IT duplication as well as increased data sharing and availability.

The proposal would move OPM’s core policymaking responsibility into the Executive Office of the President as a separate organization. Other EOP organizations include the Office of Management and Budget, the Council of Economic Advisers, and the National Security Council. That move is one aspect of the proposal that some find troubling. Federal News Radio reports that the American Federation of Government Employees, the largest union representing government workers, called the move “a straightforward attempt to politicize the civil service.” The Senior Executives Association supports the move, and told me they view it as elevating the workforce policy functions. If we dig into it a bit more, I think we will find that it is less political than it might appear. Today, OPM’s Director is a Senate-confirmed presidential appointee, as are the Deputy Director and the General Counsel. The OPM Director reports to the president. In the proposed organization, the workforce policy chief would do the same. President Obama’s OPM Director, John Berry, told me once that the Office of Management and Budget was the “big dog” and OPM was the flea. Putting workforce policy in EOP will make it the organizational peer (although probably with less status) of the Director of OMB, promoting it to “big dog” or at least “medium dog” status. I believe that may be a good move, if the office is actually staffed with enough people to do the work. I have believed for many years that OPM does not devote enough resources to policy and analysis. If that work does move to EOP, it needs to be resourced properly. To reduce the likelihood that it would be politicized, the new office should be run by a Senate-confirmed presidential appointee and, like the current role of OPM Director, serve a fixed 4-year term.

Moving the rest of the work to GSA is not what I proposed, but if done carefully and with significant planning, it could work. The most critical functions other than policy and background investigations are insurance and retirement programs. OPM’s insurance programs are excellent and many would argue that the Federal Employees Health Benefits program is a best in class operation. The retirement services group is much better than it gets credit for being. While everyone focuses on the retirement backlog, they pay less attention to the fact that these folks are working with old paper records that are housed in a cave. The Administration is still considering exactly how to handle those functions, including perhaps moving them to a different agency (such as the Social Security Administration). Because they are so critical to the federal workforce, I suggest they move to the newly constituted GSA intact. If all of the work that moves to GSA remained intact, under a new Commissioner of Workforce Services, they could continue to function effectively.

The reimbursable services currently housed in the HR Solutions group at OPM would also transfer into GSA. They include services such as advertising vacancies for agencies, running the government’s job posting site, USAJobs, and a wide variety of fee-for-service HR services. While some of its products and services could eventually transition to the private sector, others could function effectively in GSA. One of the most critical is OPM’s Center for Leadership Development, which includes the Federal Executive Institute and other leadership training programs. Because the quality of leadership in government is essential to successful performance, I believe that group should remain intact. If moved to GSA, it should be a separate unit within the workforce services group.

The Administration’s proposal is not what I recommended, but it addresses most of my concerns and I believe it could result in workforce policy getting the attention it deserves. It would also create a greater focus on digitization and data, which is essential to management of a 21st century workforce. I might disagree with some of the details, but there is enough goodness in the proposal that I believe it should not be reflexively dismissed. I do think the proposal might have gotten a more open-minded response if it did not follow proposals to cut federal benefits and curtail collective bargaining. If we want to elevate workforce policy, how we handle benefits, pay and collective bargaining would be more appropriately handled by the proposed office. Because those proposals are unlikely to be fully implemented soon (if at all), it is not too late to approach pay and benefits from a bipartisan perspective with the intent to bring the civil service system into the 21st century.

I do not expect these proposals to sail smoothly through Congress. OPM was created by statute (the Civil Service Reform Act of 1978), and it cannot be disestablished by Executive Order. We are likely to hear that these are radical proposals that will destroy the civil service. We will also hear that they do not go far enough and we should be doing much more to downsize government. If we try to separate the politics from the good government solutions we should be pursuing, we may find that this proposal can be implemented in a way that would make a positive difference for the American people and the public servants who work on their behalf every day. It is worth considering.

Senate Version of National Defense Authorization Act Offers Reforms

The primary vehicle for advancing civil service reform in the Department of Defense (and often the rest of government) is the annual National Defense Authorization Act (NDAA). The 2019 NDAA is no exception. The Senate Armed Services Committee (SASC) recently completed its markup of the bill and moved it on to the full Senate. The bill is hundreds of pages, but the SASC published an excellent Executive Summary that addresses the highlights. The bill contains several provisions that are of interest to federal workers. Some apply only to Defense civilians, while others apply government wide. As always, remember that DOD is often the proving ground for reforms that will eventually be rolled out to other agencies. Let’s take a look at the 2019 NDAA and see what it offers for federal workers, and what effects it may have if passed.

Chief Human Capital Officer. The bill renames the Under Secretary for Personnel and Readiness as the Under Secretary for Personnel and clarifies its role as the DOD Chief Human Capital Officer. This change is significant. Since passage of the Chief Human Capital Officers Act, DOD has bounced the CHCO role around a bit, assigning it the Under Secretary for Personnel and Readiness, the Deputy Assistant Secretary for Civilian Personnel Policy, and the Assistant Secretary of Defense for Manpower and Reserve Affairs. Those positions have been political appointees and career officials. The role is currently assigned to Anita Blair, who is Deputy Assistant Secretary for Civilian Personnel Policy and an appointee. There are two issues to consider on this one. First is the political vs career question. Should CHCOs be political appointees? I served as CHCO for the Department of Homeland Security as a political appointee. When I left, I recommended the job be converted to career, primarily to make it more likely that the person who filled the job would actually know something about the work. While Ms. Blair is a political appointee, she is also a highly experienced HR professional. Moving the CHCO designation up in the organization makes it more likely that the title and the work of the CHCO will not be in the same place. If this provision becomes law, the Under Secretary will be designated as the CHCO, but the Deputy Assistant Secretary for Civilian Personnel Policy will almost certainly continue to do the work. My recommendation would be that the Senate drop the language and leave the CHCO role where it is.

Limitations on Major Headquarters. The bill includes language that would limit headquarters levels by limiting funds. It says “In any fiscal year after fiscal year 2020, the aggregate amount that may be obligated and expended on major headquarters activities may not exceed an amount equal to 1.6 percent of the average amount authorized to be appropriated for the Department of Defense (including for overseas contingency operations) over the 10 fiscal years ending with the preceding fiscal year.” It limits the Office of the Secretary of Defense to “not more than an amount equal to 0.4 percent of the average amount authorized to be appropriated for the Department of Defense (including for overseas contingency operations) over the 10 fiscal years ending with the preceding fiscal year.” Military department headquarters are limited to 1 percent. Congress continues to show interest in the size of headquarters operations relative to the entire department, so this provision is a means of dealing with it without prescribing a particular limit on staffing. It differs from the version of the NDAA in the House of Representatives, which includes a section titled “Comprehensive Pentagon Bureaucracy Reform and Reduction.” The House version requires a 25 percent cut in certain management functions. The Senate approach of limiting headquarters functions to a percentage of total spending seem to be a less complicated and more executable approach.

Security Clearances. These provisions require an expedited clearance process for mission critical positions, as well as mandating that DOD report on the feasibility of implementing a “Clearance in Person Concept.” Clearance in person would “permit an individual who has been granted a national security clearance to maintain eligibility for access to classified information, networks and facilities after the individual has separated from service to the Federal Government or transferred to a position that no longer requires access to classified information.” It would also “ensure that, unless otherwise directed by the Security Executive Agent, the individual’s security clearance would be recognized as current, regardless of employment status, with no further need for investigation or revalidation until the individual obtains a position requiring access to classified information.” There is widespread agreement that the security clearance processes in government need reform. This approach is one of several being considered, and could be beneficial if it is feasible to implement.

Strategic Defense Fellows Program. This is described as “a civilian fellowship program designed to provide leadership development and the commencement of a career track toward senior leadership in the Department.” Limited to 60 participants per year, the program would require participants to have recent (within 2 years) graduate degrees or to receive a graduate degree within 6 months of entering the program. Fellows would be paid at the GS-10 level, and would receive a 1-year excepted service appointment, after which they could be converted to a permanent appointment. The advanced pay rate, opportunity to engage in interesting and meaningful work, and exclusive nature of the program would most likely mean the department would have no trouble finding high quality applicants. As long as such a program did not devolve into a sort backdoor political appointment, it could be a useful program.

Senior Executive Service Qualifications Review Boards (QRB). DOD would receive a 2-year exemption from having new SES appointments reviewed by an OPM QRB. The authority would be limited to 50 appointment per year, and would expire after 2 years. DOD would be required to report on its use of the authority, and assess whether it speeds the hiring process and how it affects quality of hires. Proposals to reform the QRB process are not uncommon, and this one is a reasonable approach that would most like ensure that it does no harm.

Direct Hire Authority for recent Science, Technology, Engineering and Mathematics Graduates. This provision is limited to DOD science and technology reinvention laboratories and Major Range and Test Facilities, and applies only to graduates of minority serving institutions. It is a good start, but might be even more helpful if it applied to the entire department and to every accredited school.

Expedited Hiring Authority for College Graduates and Post-Secondary Students. This provision would be applied government wide and would provide for appointments at GS-11 and below for students and recent graduates (within 2 years). It provides an extension for military service members. It is not a direct hire authority, because it requires that the positions be advertised. Agencies would have to follow regulations prescribed by OPM, and appointments would be limited to 15 percent of the number of competitive appointments an agency made to similar positions during the previous fiscal year. Since the Federal Career Intern Program was abolished, the number of federal employees under 30 has dropped precipitously. This provision is an excellent first step in reversing that trend.

Voluntary Separation Incentive Payments (Buyouts). The cap on buyouts would be raised to $40,000 for the rest of the government (DOD is already at $40,000) and then indexed to the Consumer Price Index. This provision has been needed for a long time and is a good step toward giving agencies better tools to manage workforce reductions and realignments.

I expect to see the practice of rolling out reforms in DOD and then expanding them to continue. The NDAA is one of the “must-pass” bills the Congress deals with annually, and it typically has strong bipartisan support. DOD’s mission gives it a stronger basis for getting reforms and it has a generally good record of implementing them successfully.